Several important changes are proposed in the Real Estate Commission (KREC)/Kentucky Association of Realtors (KAR) -supported legislation currently before the General Assembly. These proposals were made after extensive review and recommendations by real estate attorneys, industry groups, licensees, and other interested parties. The KAR and the KREC worked together in an attempt to create a bill which would serve both consumer and licensee interests. We believe that the final bill proposal does just that.
Below are summaries of the proposed bill by categories. PLEASE NOTE THESE PROPOSED CHANGES HAVE NOT YET BEEN ENACTED.
DISCIPLINARY PROCESS
The disciplinary process would be changed to include a staff review of each complaint prior to the KREC forwarding a copy to the licensee. This would allow the KREC to quickly dismiss frivolous cases. In addition, consumers would be prevented from being able to bring actions that should actually be in small claims court by virtue of the proposed deletion of restitution as a disciplinary remedy. Another proposed change would allow the KREC to issue a private reprimand which would not be published in the newsletter if a licensee violates KRS Chapter 324.
The Commission has also proposed a change to investigate any licensee or applicant who has been convicted of a misdemeanor offense which involves moral turpitude. The bill would also allow probationary periods and fines to be increased to provide a viable alternative to suspension or revocation for less serious cases.
EDUCATION and LICENSURE ISSUES
Proposed changes include the creation of a broker management skills course to better equip brokers for the daily supervisory duties involved in overseeing licensees.
There is also a proposal on the table which would allow the KREC to require a criminal records check on all licensure applicants. The KREC currently must accept the applicant's word that he or she has no serious criminal history. Several states have found that this check reveals a significant number of applicants who have felony convictions in other states.
RELOCATION COMPANY ISSUES
The committee has also proposed a comprehensive statute which regulates the actions of relocation companies in this state. This statute would prohibit after-the-fact referral fees and other perceived abuses by some relocation companies. Any improper threat by a relocation company would lead to disciplinary action if the violator is licensed or criminal prosecution if the violator is unlicensed. The proposed law is modeled after the Tennessee statute which is already in effect and which has broad approval in the industry.
DESIGNATED AGENCY AND SELLER DISCLOSURE
Several changes are proposed to the designated agency statute to make it more "user-friendly" for real estate companies. Currently, brokers are held responsible for knowing all the facts relative to real estate transactions, unless designated agency is used. The new proposal would eliminate this imputation of knowledge for all transactions, not just those involving designated agency.
The bill also includes several clarifications and improvements to the seller's disclosure law. For instance, the proposed law clarifies that licensees are prohibited from completing the form themselves and explains more clearly that a seller should fill in all of the required information. This change would eliminate much liability which could be placed upon a licensee who fills out the form.
INTERNET
The proposed law includes a mandate that the KREC create a regulation providing licensees guidance relative to advertising and other promotion on the Internet.
In conclusion, the License Law Committees established by both the Commission and the Kentucky Association of Realtors have worked very hard to put together a comprehensive package of proposed changes to the licensing laws. We hope this bill will benefit both licensees and consumers alike. We will keep you posted as to the bill's progress through the legislative session.
Comments from the Chair
by: Sue Teegarden, Chairman
As you all know, the Commission implemented a new core law course in 1999. Fully one-fourth of Kentucky's active licensees should have completed this course by now. The course was designed to give a one-day overview of the real estate laws in this Commonwealth and to assist licensees in updating themselves on any changes in the laws.
The feedback the Commission received the first year was outstanding. Licensees have really enjoyed the classes and appreciate the material being presented. The course is updated periodically as laws change and licensees can be assured that they are receiving the most current information available. What's more, the Commission has carefully and painstakingly selected the best educators to present these classes. The Commission periodically monitors the core courses to ensure consistency and quality across the state. The licensees who have attended a core course seem to recognize the level of talent in the instructors as well as their ability to cover so much material in a short amount of time.
This course is not only praised in Kentucky but has also been recognized on a national level. This past October, I attended the Association of Real Estate License Law Official's National Convention in Savannah, Georgia. At the awards banquet, the core course received the award as the best mandatory continuing education course of 1999. I was so honored to accept this award on behalf of the Commission and I again want to congratulate Ms. Poliskie and the entire curriculum and design committee members who developed this tremendous course.
In 2000, all licensees whose birthdays fall in April, May or June must complete the core course. In addition, any licensee who wishes to take his or her license out of escrow must take the core course before being reactivated. Anyone else who wants to take the core course before his or her allotted year may certainly sign up, with the understanding that preference goes to those who are required to take the course that year.
For those who are required to take the course this year: I recommend that you take it earlier rather than later and do not wait until the last minute. Classes sometimes fill up fast and are limited to 75 participants, so you may not be able to get into a class if you wait until the end of the year.
From the Director's Desk by: Norman Brown, Executive Director
Well, Y2K has come and gone very smoothly here at the Commission, and the staff is looking forward to an exciting and productive new millennium.
Our website has been receiving thousands of hits, and we hope it is providing you with up-to-date and helpful information.
One of our biggest goals at the end of the last century was to increase settlements and to decrease hearings in the legal department. We intend to continue that trend into 2000 and beyond. A year ago, it would take approximately one year from the time a hearing was ordered until the hearing could be held. At present, hearings are scheduled within two to three months of the Commission's vote.
Not only have we reduced the amount of time it takes to schedule a hearing, but the entire complaint time has now been reduced. By doing this, licensees do not have to wait one to two years for the outcome of their cases. We understand that having a pending complaint at the Commission is a stressful time for licensees and we hope that we can continue to alleviate many of the incumbent stress.
In addition, the Commission is still placing a premium value on settling every case - if possible. Almost all parties are offered a settlement conference for which the Commission supplies a skilled and qualified mediator. The Commission's staff attorney attends all of these settlement conferences and assists the parties in reaching a mutually agreeable and beneficial settlement.
The feedback we have received about these settlements has been very positive. Consumers and licensees alike seem to feel relieved that they can have a stake in the outcome of their cases.
The legal department hopes that with the implementation of the new core course, the proposed legislation and increased communication between licensees and the Commission, understanding will improve and complaints will thereby decline.
Is Your Birthday in April, May or June?
If your Birthday is in April, May or June and you are an active licensee subject to the continuing education requirement, you MUST complete the Kentucky Core Course by December 31, 2000. For a list of providers, please call our Fax-On-Demand at 1-888-573-2329 and request document #607.
Our featured staff spotlight this month is Linda Poliskie, the Commission's Education Director. Linda has been at the Commission longer than any other staff member, having started here in 1971. Linda began in the Licensing Department. She then became the Secretary to the Executive Director. Linda has been the Education Director since 1989. Linda has also served on the Board of Directors for the Real Estate Educators Association for six years.
Over the years, Linda has been instrumental in developing the Commonwealth's continuing education program. She was especially key in conceptualizing and developing the new core course over the past few years. Linda frequently travels to classes around the state to audit and monitor Commission-approved classes and instructors to ensure that the level of continuing education classes remains top-notch.
Linda says, "I am very proud of all that we have accomplished in continuing education over the last decade. I have worked hard to ensure that licensees are kept up-to-date with all of the latest law changes through the implementation of the new core course and improved standards for continuing education courses."
Outside of work, Linda enjoys cooking, Jazzercise and needlework. Linda lives with her Husband, Vic, and children, Jennifer and Jonathan.
PERMANENT LICENSES WILL BE ISSUED AT RENEWAL
The license you receive at renewal this year will be a permanent one. The license will still expire every year on March 31st, but a new license will not be issued every year. New licenses will only be printed when there has been a change in the license status. If you need to make a change to your license, it must be returned to the Commission before a new license will be issued.
ERRORS & OMISSIONS INSURANCE - KNOWING WHEN A CLAIM IS MADE AND HOW TO REPORT IT!
Understanding your real estate errors and omissions (E&O) policy is extremely important. In the event you have a claim, your coverage may depend on timing and proper reporting. The 2000/2001 group policy is written on a "claims-made" basis. This means that coverage is provided only for those claims that are made against you during the policy period.
Many of you may be familiar with "occurrence" policies. Homeowners and automobile policies are typically written on an occurrence basis. This means coverage is provided for losses which occurred during the time the policy is in force. To illustrate, assume you were involved in a car accident in December 1998 and are served with a lawsuit related to that accident in May 2000. Since your automobile coverage is written on an occurrence basis, you must report this claim to the insurance company which provided your coverage in December 1998 (the date of the occurrence). Coverage for this claim will be determined by the terms of your 1998 policy.
In a real estate E&O claim, if you were the listing agent for the sale of a home that closed in December 1998 and you were served with a lawsuit related to that sale in May 2000, since your E&O coverage is written on a claims-made basis, you must report the claim to the insurance company which provided your coverage in May 2000, the date the claim was made. Coverage will be determined by the terms of your 2000 policy.
It is important to know when a claim has been made under the terms of your policy and to report it promptly. Under the group policy issued by Frontier Insurance Company, coverage is provided for a written claim first made against the insured and reported to Frontier during the policy period. A claim is any demand for money or services, the filing of a law suit or the institution of arbitration proceedings which name the Insured as the defendant. The claim must allege an error, omission or negligent act relating to the rendering of, or failure to render, professional services as a real estate licensee.
If, for example, you are served with a lawsuit in May 2000, but received a letter from the buyer of the property demanding money to make repairs in December 1998, then the claim was actually "made" in December 1998. Since the claim was made on the date the initial letter was received, it should be reported to the insurance company which provided the coverage in December 1998.
The type of policy you have determines when and how a claim must be reported. Your current group policy requires the claim to be reported to Frontier, in writing, during your policy period. Written notice must be given as soon as possible after the claim is made (and no later than 60 days after you become aware of such claim). The written notice must include the time, place and other pertinent details relating to the claim. Failure to report a claim in a timely manner could jeopardize the coverage provided by the policy. Frontier has created a simple claim reporting form, however, for assistance reporting a claim, please call (800) 637-7319.
This is an informational piece only and is not intended to fully disclose the coverage terms and conditions. Consult the insurance policy for actual terms and conditions of coverage. All applications are subject to underwriting review by the company.
It is that time of year again. Time for ALL licensees (active and inactive) to renew their licenses by March 31, 2000. Renewal forms are being mailed to principal brokers and licensees who are in escrow. If you are a principal broker or a licensee in escrow and do not receive a renewal form by March 15, 2000, please contact the Commission.
ACTIVE LICENSEES
- Active licensees renew through their principal broker. Active brokers owe $55.00 plus errors and omissions insurance and active sales associates owe $50.00 plus errors and omission insurance. If you have questions, check with your principal broker first before calling the Commission.
ESCROW LICENSEES
- Brokers whose licenses are in escrow owe $55.00.
- Sales Associates whose licenses are in escrow owe $50.00
- Renewal forms are mailed to the licensee's home address.
PRINCIPAL BROKERS
- Review the 2000 License Renewal Instructions carefully before completing the renewal form.
- Read the renewal form to ensure that all licensees affiliated with your company are listed.
- If you make adjustments to the names listed on the form, be sure to adjust the total amount.
- Send only ONE check or money order for the entire renewal amount. If you have a branch office a separate check should be sent to cover the fees for the branch office.
- Have a Kentucky bank official sign and verify the escrow account information.
- Sign the renewal form.
LATE RENEWALS
- Renewal fees received with a US postmark of April 1, 2000 - May 14, 2000 will be subject to a penalty of $100. Renewal fees received after May 15, 2000 will be subject to a penalty of $200. This penalty fee is in addition to the regular renewal fees.
REMINDERS
- Cash is not accepted at the Commission. Please send a check or money order.
- Make sure renewals are postmarked by March 31, 2000.
- Your cancelled check is your receipt.
COMMISSION HOSTS SUCCESSFUL REAL ESTATE EDUCATORS' CONFERENCE
The Commission held its annual Real Estate Educators Conference last November. Patricia Anderson, Chair of the ARELLO Distance Education Council, presented a three hour workshop to provide Kentucky educators with insight on the process required for the certification of distance education programs. The Commission recently adopted these standards for all distance education classes and requires all providers to be ARELLO certified as to the format and design of the course. The Commission will still be required to review the content of the course for its applicability to the real estate industry.
Dr. Beverly McCormick of Morehead State University presented a three hour workshop that provided suggestions and tips on how to improve teaching skills and how to incorporate various active learning techniques into the classroom. Commission Counsel, Jeff Blair, and Staff Attorney, Lee Harris, reviewed the agency statutes and regulations and also covered some of the proposed changes to the license law. Executive Director, Norman Brown, provided an overview of the Commission's activities for the past year and projections for the future.
Over fifty representatives from Kentucky colleges, universities, proprietary schools and continuing education providers attended this conference.
Commissioner Betty Kaiser recognized the members of the Core Course Design Committee who were present at the conference and congratulated them on behalf of the Commission. The Kentucky Core Course had just received the award for the Best Mandatory Continuing Education Program from the Association of Real Estate License Law Officials.
JAMES F. "TRIPP" WILLIAMS: (Murray) Case No. 94-0229:
Violoation: The Commission found Williams in violation of KRS 324.160(1)(b) for making any substantial misrepresentation or failing to disclose a known defect which substantially affects the value of a property by failing to tell the Complainant Mary Rascoe that he had an easement through the property he sold to her.
Disposition: Williams' license was suspended for a period of one year, and he was further ordered to pay Mary Rascoe restitution in the amount of $4565.00 and to attend six additional hours of continuing education.
RUSSELL HINKLE: (Falls of Rough) Case No. 99-0029:
Violoation: The Commission found Hinkle in violation of KRS 324.160(1)(j) for being convicted of a felony while holding a real estate license issued by the Commission.
Disposition: Hinkle's license was ordered suspended for six months. The suspension will be probated for a period of one year. During this year, if Hinkle commits any violation of KRS Chapter 324 or 201 KAR Title 11, his license will be summarily suspended for the six month period. If he does not commit any further violations, his license will not be suspended. In addition, the Commission ordered Hinkle to pay a fine in the amount of $500.00.
ANGEL DOSTAL & JOHN TARTER: (Liberty) Case No. 98-0112:
Violoation: The Commission found Angel Dostal in violation of KRS 324.160(1)(q) for violating 201 KAR 11:400 for failing to provide an Agency Disclosure Form. The Commission found Tarter in violation of KRS 324.160(3) for failing to adequately supervise his sales associates by failing to inform his sales associates that Agency Disclosure Forms were required to be provided in all real estate transactions involving a licensee in this state.
Disposition: The Commission ordered Dostal to pay a fine in the amount of $250.00 and to attend the core course. The Commission ordered Tarter to pay a fine in the amount of $500.00 and to attend the core course as well.
ALAN K. SHOEMAKER: (Louisville) Case No. 98-0147:
Violoation: The Commission found Mr. Shoemaker in violation of KRS 324.160(1)(o) for failing to respond to an investigation ordered by the Commission.
Disposition: The Commission ordered Mr. Shoemaker's license to be suspended for 90 days and further ordered him to provide proof of mental competence to practice real estate before his license would be reinstated.
GAYLE DADISMAN: (Lawrenceburg) Case No. 97-0058
Violoation: The Commission found Dadisman in violation of KRS 324.160(1)(q) through a violation of 201 KAR 11:350 for failing to provide a Seller's Disclosure of Property Conditions Form to the buyers.
Disposition: The Commission ordered Dadisman to attend six hours of continuing education in addition to the hours already required under Kentucky law.
JEANNETTE FRANCK CAMPBELL: (Cox's Creek) Case No. 99-0096:
Violoation: The Commission entered into a Settlement Agreement with Campbell in which she stipulated to a violation of KRS 324.160(1)(j) for being convicted of a felony while holding a real estate license in this Commonwealth.
Disposition: Campbell agreed to accept a formal reprimand from the Commission and to attend ten (10) hours of continuing education in addition to the hours already required by law. Campbell also agreed to have her license placed on probation until the end of her supervised release on April 21, 2002.
MATTHEW E. PERKINS: (Ashland) Case No. 99-0104:
Violoation: Perkins violated KRS 324.160(1)(j) by being convicted of a felony while holding a real estate license in this Commonwealth.
Disposition: The Commission entered into a Settlement Agreement with Perkins whereby he agreed to have his license placed on one year's probation beginning from the date of his release from prison. Perkins also agrees to attend ten (10) hours of continuing education in addition to the six hours already required by law and to accept a formal reprimand from the Commission. Finally, Perkins agreed to never seek to obtain a broker's license in this state so he will never be in charge of an escrow account.
GARY B. DORRIS: (Owensboro) Case No. 98-0030:
Violoation: The Commission found Respondent Dorris in violation of KRS 324.160(1)(s) for gross negligence in his handling of a real estate closing and KRS 324.160(1)(q) for violating 201 KAR 11:121, Section 1(4) for failing to act in accordance with a fiduciary standard towards a client.
Disposition: The Commission ordered Dorris to attend six hours of continuing education in addition to the six hours already required by law.
JUDY LYNCH: (Lexington) Case No. 98-0014:
Violoation: The Commission found that Lynch had violated 201 KAR 11:121, Section 1(2) by publishing advertisements which offered inducements to the general public.
Disposition: The Commission ordered Lynch to modify her advertisements in order to comply with that regulation.
OWNERS'/BUILDERS' RESPONSIBILITIES UNDER KRS CHAPTER 324
Under KRS 324.020(2), any licensee who is also an owner or a builder-developer must follow the licensing laws when transacting business. In other words, a licensee who sells his or her own property or a builder who sells a home he or she has built must complete all the required forms and otherwise follow the mandates of KRS Chapter 324 and Title 201 KAR Chapter 11. An owner or a builder-developer who fails to follow the strictures of KRS Chapter 324 and 201 KAR Chapter 11 could be subject to disciplinary action if a complaint is filed with the Commission.
The reasons behind this requirement are many. First of all, the General Assembly and the Commission want to ensure that all licensees in this state act in a professional and ethical manner - even when dealing with their own properties. Secondly, if licensees follow the laws even in their own dealings, consumers will be totally and completely informed and there will be no room for confusion among the parties to any transaction. Without this requirement, it is easy to see how a consumer could be potentially confused or mislead.
Although it is not specifically required under the law, it is perhaps best to advertise from the outset that you hold a license with the Commission but that you are working for yourself. Then, the consumer will have no expectations of representation from the beginning.
Do you have an unusual real estate story that would interest or benefit our readers. If so, please write Michelle Cameron here at the Commission. Stories will be selected and published in future issues of the Real Estate News.
ATTENTION: REAL ESTATE EDUCATORS
The Real Estate Educators Association Region 7 Conference will be held at the Preston Hotel in Cincinnati, Ohio on March 24 & 25, 2000, beginning with registration at noon on Friday.
The featured presenter for this conference will be REEA's 1998 Educator of the Year Dianna Brouthers, DREI from Rock Hill, South Carolina. Ms. Brouthers will conduct two workshops-Tips and Techniques for Teaching Buyer Agency and Adult Learning that Makes Sense. Other presenters include Dr. Don Bodley from Lexington; Alec Hagerty from Ohio, and Neil Osborne from Canada. REEA President John Stovall from Colorado will also be in attendance.
All real estate educators are welcome to attend. For more information contact Linda Poliskie, Region 7 Vice President at 502-425-4273.
