201 KAR 11:011. Definitions for 201 KAR Chapter 11.

RELATES TO: KRS 324.010(1), 324.046(1), 324.111(1), (2), (3), (4), (6), 324.117(1), (5), 324.160(4)(j), (m), (r), 324.410(1), 324.420(1), (2), (3), (4), (5)

STATUTORY AUTHORITY: KRS 324.117(5), 324.281(5), 324.282

NECESSITY, FUNCTION, AND CONFORMITY: KRS 324.117(5) requires the commission to promulgate an administrative regulation to define false, misleading, or deceptive advertising. KRS 324.281(5) and KRS 324.282 require the Real Estate Commission, with the approval of the executive director of the Kentucky Real Estate Authority, to promulgate administrative regulations necessary to implement KRS Chapter 324. This administrative regulation defines terms used in the implementation of KRS Chapter 324.

Section 1. Definitions.

(1) "Academic credit hour" means:

(a) One (1) college semester hour; or

(b) Sixteen (16) fifty (50) minute hours of actual classroom attendance.

(2) "Advertising" or "advertisement" means any manner, method, or activity by which a

licensee of the commission makes known a specific property for sale or lease or any services for which a real estate license is required. Advertising does not include:

(a) Private communications between a licensee and a client or prospective client; or

(b) Directional or pointer signs that only provide directions to a listed property and include no identifying licensee or brokerage information.

(3) "Affiliated licensee" means a sales associate or a broker who is affiliated with a principal broker.

(4) "Agency" means the specific consensual relationship between the principal broker and the client for a contemplated transaction, by oral or written agreement.

(5) "Agency consent agreement" means the form prescribed by the commission and used by a principal broker and a client to establish the agency relationship in writing.

(6) "Branch office" means a physical place of business for a real estate brokerage company in addition to the main office location that the commission may enter to inspect required documents or allegations of violations of KRS Chapter 324.

(7) "Broker-affiliated training program" means one (1) or more post-license education courses offered for post-license educational credit provided or sponsored by a principal broker.

(8) "Business relationship" means any arrangement, other than the current real estate transaction, if a licensee and a party have or had a mutual, ongoing financial interest in any company, corporation, or other income-producing venture, including any prior representation by the licensee for the party's purchase, lease, or sale of real estate.

(9) "Client" means:

(a) A person or persons, or entity or entities, for whom a licensee provides real estate brokerage services:

1. Who has entered into a written agreement with a principal broker for provision of real estate brokerage services;

2. With whom or for whom a licensee completes an offer to purchase or lease for real estate; or

3. For whom a licensee otherwise by oral agreement performs acts of real estate brokerage; and

(b) For the purposes of selling or leasing real estate, the client is the person or persons, or entity or entities, authorized to sell or lease the subject real estate.

(10) "Commercial transaction" means a transaction other than the sale of a single-family residential property, multifamily property containing four (4) units or less, or single-family residential lot.

(11) "Company" means an office or firm, headed by a principal broker, formed to offer real estate brokerage services, which is organized as:

(a) A registered business entity;

(b) Sole proprietorship; or

(c) Another business arrangement.

(12) “Condominium” means:

(a) The absolute ownership of a unit in a multi-unit building based on a legal description of the airspace the unit actually occupies; or

(b) A separate dwelling unit in a multi-unit development, plus an undivided interest in the ownership of the common elements in the building or development, which are owned jointly with the other condominium unit owners.

(13) "Confidential information" means:

(a) Information received or sent, verbally or in writing including transaction paperwork and files, by a licensee, that may materially compromise the negotiating position of a client or prospective client.

(b) Confidential information includes information that is not required to be disclosed by law; and

1. Is provided to a licensee by a client or prospective client to a real estate transaction;

2. Describes or affects the client or prospective client’s bargaining position or motivation; or

3. Is designated in writing as confidential by the client or prospective client.

(14) "Consumer" means a person or entity with whom a licensee exchanges information that is public in nature, but otherwise does not perform acts of real estate brokerage and with whom no written or oral agency agreement or fiduciary relationship exists.

(15) "Continuing education course" means a course approved pursuant to the requirements set forth in KRS 324.085(1) and 201 KAR Chapter 11.

(16) "Contract deposit" means earnest money delivered to a licensee in conjunction with a real estate sales contract after:

(a) The offer or counteroffer is accepted; and

(b) An executory contract exists.

(17) "Delivery" means transmission of an item to a party by:

(a) Mail;

(b) Facsimile transmission;

(c) Electronic mail;

(d) Hand; or

(e) Other legal means.

(18) "Designated agency" means a type of agency prescribed by KRS 324.121(2).

(19) "Designated agent" means one (1) or more licensees designated by the principal broker

in accordance with KRS 324.121(1) to provide real estate brokerage services to a client.

(20) "Distance education course" means a continuing or post-license education course or a

pre-license course that:

(a) Is taught in a setting in which the teacher and the student are in separate locations; and

(b) Uses instructional methods that include internet-based training, computer-based training (CBT), satellite transmission, or teleconferencing.

(21) "Dual agency" means a type of agency in which:

(a) The principal broker and all affiliated licensees simultaneously represent, in the same transaction, buyer and seller, or lessor and lessee, as clients of the principal broker in a limited fiduciary capacity; or

(b) In companies that practice designated agency, only the principal broker or a designated manager is a dual agent for that transaction pursuant to KRS 324.121(2).

(22) "Duplex" means two (2) residential units sharing a single roof.

(23) "Education cycle" means the time period commencing on January 1 of each year and ending at 11:59 p.m. on December 31 of each year.

(24) "Family relationship" means any known familial relationship between a licensee and party.

(25) "Fourplex" means four (4) residential units sharing a single roof.

(26) "Fraud" or "fraudulent dealing" means a material misrepresentation that: (a) Is:

1. Known to be false; or

2. Made recklessly;

(b) Is made to induce an act;

(c) Induces an act in reliance on the misrepresentation; and

(d) Causes injury.

(27) "Guaranteed sales plan" means an offer or solicitation to guarantee the:

(a) Sale of an owner's real estate; or

(b) Purchase of the owner's real estate if the owner's real estate is not sold by the licensee.

(28) "Initial sales associate license" means an original Kentucky sales associate license issued by the commission for the first time or a Kentucky sales associate license re-issued to a person who formerly held a license issued by the commission.

(29) "Licensee" means a person properly licensed as a broker or sales associate to perform acts of real estate brokerage in accordance with KRS Chapter 324 and 201 KAR Chapter 11.

(30) "Personal relationship" means a platonic or nonplatonic friendship between a licensee and a party.

(31) "Post-license education course" means a course approved by the commission that satisfies a portion of the forty-eight (48) hours of education required by KRS 324.085(2).

(32) "Pre-license course" means a course approved by the commission that satisfies an education requirement to obtain a real estate sales associate license.

(33) "Promotional activities" means every solicitation or attempt to bring about the sale, exchange, lease, assignment, license, or award with regard to a timeshare interest in real estate.

(34) "Prospective client" means a person or entity who has not entered into a written or oral agreement with a principal broker to provide real estate brokerage services, but to whom a licensee offers real estate brokerage services or from whom a licensee receives confidential information related to a contemplated real estate transaction.

(35) "Renewal cycle" means the time period commencing on April 1 of each year and ending on March 31 two (2) calendar years thereafter.

(36) "Security deposit" is defined by KRS 383.545(13).

(37) "Single agency" is the type of agency if the principal broker and all affiliated licensees of the real estate brokerage company act as an agent for a buyer or seller, or a lessor or lessee, as the client on the same side of a transaction.

(38) "Single family residential real estate dwelling" means any:

(a) Stand-alone residential unit;

(b) Manufactured home permanently attached to land; or

(c) Residential unit otherwise conveyed on a unit-by-unit basis, even if the unit is part of a larger parcel of real estate containing more than two (2) detached residential units.

(39) "Team" or "teams" is a group of licensees working together who are:

(a) Affiliated with the same principal broker;

(b) Led by a team leader; and

(c) Representing themselves to the public utilizing the same authorized alternate or assumed name to brand, advertise, and broker real estate.

(40) "Team leader" means an individual who is designated by his or her principal broker to

be the head of the team.

(41) "Timeshare" means an arrangement under which one may acquire, for a period of time,

the right to use and occupy property, for a recurring block of time. A timeshare may be:

(a) A timeshare estate, if a freehold estate or an estate for years is conveyed;

(b) A vacation lease, if a buyer purchases the right to occupy a specific accommodation for

a specified time period over a specified number of years;

(c) A vacation license or club membership, if a buyer acquires the right to occupy an undesignated unit at certain real property or properties during a specific time each year for a specific number of years; or

(d) Variations of paragraphs (a) through (c) of this subsection that result in the acquisition of the right to use real property for a limited period of time in recurring intervals for a number of years.

(42) "Townhouse” means a type of residential dwelling with two (2) floors that is connected to one (1) or more dwellings by a common wall or walls. Title to the unit and lot vest in the owner who shares a fractional interest with other owners in any common areas.

(43) "Transactional brokerage" means a form of brokerage service or services provided to either or both parties to a transaction if the licensee owes to the parties only the duties owed to a consumer and if confidential information is not relayed between the parties by the licensee, unless so directed by the sending party.

(44) "Triplex" means three (3) residential units sharing a single roof.

(45) "Unrestricted license" means a license that is not under any order of limitation or discipline by another jurisdiction's regulatory body.

(46) "Without delay" means as soon as reasonably possible based on the availability of the licensee and the client, and subject to any written agreement between them as to how and when written offers will be submitted.

(47) "Without unreasonable delay" means:

(a) For contract deposits or money belonging to others, within three (3) business days of the receipt by the principal broker or an affiliated licensee of the principal broker; or

(b) For notice required by KRS 324.360(8), within seventy-two (72) hours of the listing agent’s receipt of the prospective purchaser’s written and signed offer to purchase.

201 KAR 11:105. Advertising.

RELATES TO: KRS 324.117, 324.160(4)(d), (6)

STATUTORY AUTHORITY: KRS 324.117, 324.281(5), 324.282

NECESSITY, FUNCTION, AND CONFORMITY: KRS 324.281(5) and KRS 324.282 require

the Kentucky Real Estate Commission, with the approval of the executive director of the Kentucky Real Estate Authority, to promulgate administrative regulations to carry out and enforce the provisions of KRS Chapter 324. KRS 324.117(5) requires the commission to promulgate administrative regulations to define false, misleading, or deceptive advertising. KRS 324.117(6) requires the commission to promulgate administrative regulations to define the manner in which licensees may utilize any internet electronic communications for advertising or marketing. This administrative regulation establishes certain standards for real estate advertising practices, including internet advertising.

Section 1. Consent Required to Advertise a Specific Property.

(1)(a) A licensee shall not:

1. Advertise real estate for sale or lease without the written consent of the owner;

2. Place signage or another advertisement on any private or listed property without the

written consent of the owner; or

3. Promote or advertise a specific property listed by another principal broker unless the licensee has requested and obtained written consent from the listing principal broker.

(b) Nothing in paragraph (a)1. through 3. of this subsection shall prohibit a licensee from utilizing public information, including information regarding real estate closed by another licensee, to market his or her real estate brokerage services to consumers.

(2) A licensee who served as a buyer’s agent may advertise his or her role in a sale after a closing has occurred if the advertisement clearly and visibly states that the licensee’s

participation was as the buyer’s agent.

Section 2. Content Required.

(1)(a) The principal broker, or his or her designee, shall establish written standards for review and approval of advertising activity of the real estate company and affiliated licensees to ensure compliance with KRS Chapter 324 and 201 KAR Chapter 11.

(b) Pursuant to KRS 324.160(6), a principal broker shall be held liable for acts by an affiliated licensee or licensees that the principal broker knew or should have known about that are in violation of either the principal broker’s standards for review and approval, or KRS Chapter 324 and 201 KAR Chapter 11.

(2) All advertisements shall include:

(a) The full name of the real estate brokerage company registered with the commission; or (b) The full name of the principal broker registered with the commission, with a clear designation of principal broker status.

(3)(a) An advertisement may include in written text an affiliated licensee’s first and last name, or an alternate or assumed name as set forth in Section 4 of this administrative regulation, as registered with the commission, if the principal broker has informed the commission of the affiliated licensee’s first and last name, or alternate or assumed name being used.

(b) Each affiliated licensee shall be limited to the use of one (1) nickname in place of, or along with, the licensee’s first name, and it shall be the responsibility of each individual licensee to inform the commission of the nickname being used. A nickname shall not be used unless the nickname is reflected on the licensee’s online services portal before use.

Section 3. Display of Content Required.

(1) The content required by Section 2(2) of this administrative regulation shall be displayed in written text. The content shall:

(a) Be clear and visible to a typical observer of the advertisement; and

(b) Not be false, misleading, or deceptive.

(2)(a) The content permitted by Section 2(3) of this administrative regulation shall not appear larger than the content required by Section 2(2) of this administrative regulation.

(b) The requirements of paragraph (a) of this subsection shall not apply to the following promotional materials that advertise a licensee:

1. Hats;

2. Pens;

3. Notepads;

4. Apparel;

5. Name tags; and

6. The sponsorship of charitable and community events.

(c) The commission shall waive the requirements of paragraph (a) of this subsection for

specific promotional materials not stated in paragraph (b) of this subsection upon finding the proposed promotional material would not constitute false, misleading, or deceptive advertising.

(3)(a)1. For purposes of real estate company or licensee advertisement via internet, social media, or other digital or online forms of advertisement, every individual viewable page or post shall constitute a separate advertisement; and

2. Each advertisement shall contain the content required by Section 2(2) of this administrative regulation in the page or post header, or visible on the page or post without the observer scrolling or otherwise navigating the page or post to view the content required; or

(b) If a page or post cannot reasonably comply with Section 2(2) of this administrative regulation, the advertisement shall include a clickable direct link, that is clear, visible, and identifiable as a link, to a page, post, or user account profile that contains the content required displayed in accordance with paragraph (a)2. of this subsection.

(4) Advertisements that include an audiovisual presentation shall include an audible announcement or written display of the content required by Section 2(2) of this administrative regulation at the beginning of the advertisement.

(5) Any internet, social media, and other digital or online form of advertising that was true and accurate at the time it was made shall not be in violation.

(6) A logo that does not contain written text of the content required by Section 2(2) of this administrative regulation shall not constitute a substitute for the content required.

(7) If the licensee’s principal business location is outside Kentucky, the advertisement shall: (a) Indicate that the licensee holds a Kentucky license to broker real estate; and

(b) Include the regulatory jurisdiction of the licensee’s principal business location.

(8) The requirements established by this administrative regulation shall not apply to logos, brands, or directional and open house signs if the logo, brand, directional, and open house signs do not contain the name of a sales associate.

Section 4. Use of Alternate or Assumed Names. (1) More than one (1) licensee, whether a team, group, other business arrangement, or real estate brokerage company, may collectively use an alternate or assumed name for advertising with the written approval of the principal broker.

(2) Prior to allowing the use of an alternate or assumed name in advertising, a principal broker shall:

(a) Register, or ensure the registration of, the alternate or assumed name with the commission; and

(b) Ensure that the alternate or assumed name is populated in the principal broker’s or affiliated licensee’s online services portal.

(3) An alternate or assumed name shall not:

(a) Contain terms that may lead the public to believe the licensee or licensees approved to use the alternate or assumed name is offering real estate brokerage services independent of the principal broker, unless the alternate or assumed name is for the real estate brokerage company; or

(b) Be used by more than one (1) group of licensees within the principal broker’s brokerage company, unless the alternate or assumed name is for the real estate brokerage company.

(4) An alternate or assumed name may include reference to a name or person, if the name or person has not lost the ability to engage in real estate brokerage through administrative discipline or by operation of law.

(5) If the alternate or assumed name applies to a team or group, the alternate or assumed name shall end with the word "team" or "group."

Section 5. False, Misleading, or Deceptive Advertising.

(1) False, misleading, or deceptive advertising is prohibited pursuant to KRS 324.117(1).

(2) An advertisement is false, misleading, or deceptive, if the advertisement:

(a) Is known or reasonably should have been known to be false or contrary to fact at the time of placement of the advertisement;

(b) Misleads or misinforms the general public in any manner; or

(c) Would lead a reasonable observer to believe that real estate brokerage services were being offered by an affiliated licensee or licensees independent of their real estate brokerage company or principal broker.

Section 6. Guaranteed Sales Plans.

(1) If a licensee advertises a guaranteed sales plan, the licensee shall disclose in writing whether:

(a) A fee is charged for participation;

(b) The real estate shall meet qualifications for participation;

(c) The purchase price under a guarantee of purchase of the owner's real estate shall be determined by the licensee or a third party;

(d) The owner of the real estate shall purchase other real estate listed for sale by the licensee or his or her designee; and

(e) An exclusive buyer agency agreement is required.

(2) The advertisement may be in print or electronic display, on radio, or on television and shall be clear and understandable.

(a) For print or electronic display advertising, the letters shall be at least twenty-five (25) percent the size of the largest letter in the advertisement;

(b) For television advertising, written communication shall appear on the screen:

1. At least three (3) seconds for the first line of lettering and at least one (1) second for each additional line of lettering; and

2. In letters that shall be at least eighteen (18) video scan lines in size for uppercase letters or at least twenty-four (24) video scan lines for uppercase capital letters if uppercase capitals and lowercase letters are used.

Section 7. Client Advertising.

Consistent with KRS 324.117(4), a licensee shall advise his or her client of the advertising obligations contained in this administrative regulation.

Section 8. Effective Dates. The commission shall begin enforcement of Section 3 of this administrative regulation six (6) months after the effective date of this administrative regulation.

201 KAR 11:121. Standards of professional conduct.

RELATES TO: KRS 324.010(3), 324.111, 324.112, 324.121, 324.160, 324.281(5), 324.310, 324.360, 381.9203(1), (3), 383.580, 24 C.F.R. 3500, 44 C.F.R. 64.3(b), 12 U.S.C. 2601-2617

STATUTORY AUTHORITY: KRS 324.121, 324.160(4)(e), 324.281(5), 324.282, 324.360

NECESSITY, FUNCTION, AND CONFORMITY: KRS 324.281(5) and 324.282 require the Real Estate Commission, with the approval of the executive director of the Kentucky Real Es- tate Authority, to promulgate administrative regulations necessary to carry out and enforce the provisions of KRS Chapter 324. KRS 324.121 authorizes a principal broker to designate an affiliated licensee to act as agent for a seller or lessor, buyer or lessee, or prospective buyer to the exclusion of all other licensees associated with the principal broker. KRS 324.360(2) requires the commission to promulgate an administrative regulation authorizing a seller's disclosure of conditions form with content as set forth by KRS 324.360(3). KRS 324.160(4)(e) authorizes the commission to take disciplinary action if a licensee acts for more than one (1) party in a transaction without the knowledge of all parties. This administrative regulation establishes requirements for designated agency; the required Seller's Disclosure of Property Condition form; a specific process and form for disclosing prior relationships between parties in a residential transaction; standards and requirements, to inform and set certain standards for licensees and to protect the public, regarding delivery of signed documents, broker supervision, broker record retention, sales associate affiliation and termination, and written agreements between licensees and consumers to provide real estate brokerage services, including standards for listing and purchase contracts; and behavior considered improper conduct.

Section 1. Improper Conduct.

(1) In addition to the obligations and prohibitions set forth in KRS 324.160, a licensee shall not:

(a) Accept or agree to accept, or offer or agree to offer, anything of value to another person in violation of the federal Real Estate Settlement Procedures Act, 12 U.S.C. 2601 through 2617 ("RESPA").. This provision shall not affect paying or receiving referral fees between principal brokers for brokerage services;

(b) Refuse or prohibit any prospective purchaser from viewing or inspecting real estate listed for sale or lease with the real estate brokerage company with which the licensee is affiliated, without the written and signed direction of the listing or leasing client. This provision shall not be construed to permit otherwise unlawful discrimination;

(c) Offer real estate for sale or lease without written consent from the person or persons, or entity or entities authorized to sell or lease the subject real estate;

(d) Fail to satisfy one (1) or more of the following fiduciary duties owed to the licensee's client:

1. Loyalty;

2. Obedience to lawful instructions;

3. Disclosure;

4. Confidentiality;

5. Reasonable care and diligence; and

6. Accounting;

(e) Fail to satisfy one (1) or more of the following duties owed to the licensee’s prospective client:

1. Good faith;

2. Fair dealing; and

3. The duty of confidentiality;

(f) Fail to satisfy one (1) or more of the following duties owed to a consumer or to any other party in a transaction:

1. Good faith; and

2. Fair dealing;

(g) Enter an ongoing team or group relationship with any other licensee at the same brokerage company without the written consent of the principal broker;

(h) Induce any party to a contract for sale or lease to break the contract for the purpose of substituting in lieu thereof a new contract for sale or lease with another client;

(i) If advertising real property at an absolute auction, sell the advertised property to anyone other than the highest bona fide bidder on the day of the auction; and

(j) If dually licensed as an auctioneer and real estate licensee, before a real estate licensee commences an auction, the licensee shall disclose his or her status as a real estate licensee to potential purchasers and whether he or she intends to bid during the auction.

(2) The fiduciary duty of confidentiality, if owed, shall survive the termination of the Agency Consent Agreement contemplated in Section 6 of this administrative regulation.

(3) It shall not be considered improper conduct for a licensee to advertise the fee or other compensation the principal broker agrees to charge for his or her services.

(4) It shall not be considered improper conduct for a licensee to offer rebates, discounts, or other inducements to consumers, prospective clients, or clients to use the licensee’s services or truthfully advertise the same.

(5) It shall not be considered improper conduct for a licensee to use his or her registered nickname in place of the licensee’s first name anytime the licensee shall identify himself or herself on an official document or to the commission.

Section 2. Submission of Written Offers.

(1) If a principal broker has entered into a written listing agreement, or any other written agreement, under the terms of which the principal broker agrees to provide real estate brokerage services for a fee, compensation, or other valuable consideration for the client, the principal broker shall provide, unless specifically waived or modified by the client in writing, for real estate that is the subject of the written agreement, the following services:

(a) Accept delivery and submit to the client, without delay, all written offers to lease or purchase;

(b) Accept all earnest money deposits that are presented to the principal broker or an affiliated licensee of the principal broker;

(c) Until the completion of the transaction, assist the client in developing, communicating, negotiating, and presenting offers, counteroffers, and notices that relate to offers and counteroffers; and

(d) Answer the client’s questions relating to offers, counteroffers, notices, and contingencies involved in the lease or purchase.

(2)(a) Each principal broker, or an affiliated licensee of the principal broker, who represents a client shall, without delay, submit all written offers to lease or purchase real estate from the principal broker’s client to the person or legal entity authorized to sell or lease the property or to the principal broker, or an affiliated licensee of the principal broker, who has entered into a written agreement according to subsection (1) of this section. A licensee representing a seller shall submit a notice in writing through electronic, text, or other media to the licensee representing a buyer of the date and time when the offer was presented to the seller.

(b) If the principal broker is acting as a transactional broker, the principal broker shall follow the lawful instructions of the parties and provide the brokerage services as outlined in the transactional brokerage agreement.

(3) Failure to comply with this section shall constitute gross negligence in violation of KRS 324.160(4)(v).

Section 3. Listing and Purchase Contracts.

(1) A listing contract completed by or at the direction of a licensee shall include the:

(a) Listing price of the property, unless the sale is to be by auction;

(b) Date and time of the signing of the listing contract for all parties who sign;

(c) First and last name of the principal broker and the full name of the real estate brokerage

company;

(d) Effective date and time of listing and advertising, if different;

(e) Date of expiration of the listing contract;

(f) Fee, compensation, or other valuable consideration agreed upon between the principal broker and the client;

(g) Address or a general description of the real estate sufficient to identify the parcel or parcels;

(h) Signatures and printed names of all parties necessary to affect a sale of the property, including any dower or courtesy considerations or the official representative of a legal entity, that is the subject of the listing agreement;

(i) Special directions of the client concerning limitations or restrictions on showings; and

(j) Date, time, and initials for all changes on the contract prior to acceptance.

(2) An offer to purchase completed by, or at the direction of, a licensee shall include the:

(a) Purchase price or a valid escalation clause with the maximum purchase price;

(b) Amount of contract deposit, if given, who is to hold the deposit, and the time period to deliver the deposit;

(c) Date and time of signing of the offer for all parties who sign;

(d) Date and time when the offer expires;

(e) Address or a general description of the real estate sufficient to identify the parcel or parcels;

(f) Signatures of all parties making the offer and the printed first and last name of the licensee who completed or directed the completion of the offer;

(g) Date, time, and initials for all changes on the contract prior to acceptance;

(h) Provision setting forth the date by which, or the date range within, the closing shall occur and when possession shall be given to the buyer; and

(i) Proposed payment terms.

(3) A counteroffer completed by, or at the direction of, a licensee shall include any amendments to any term required by subsection (1) and (2) of this section and:

(a) Date and time of signing of the counteroffer for all parties who sign;

(b) Date and time when the counteroffer expires;

(c) Signatures of all parties making the counteroffer;

(d) The first and last name of the licensee who completed or directed the completion of the offer, if not found on the original offer or a previous counteroffer; and

(e) Date, time, and initials for all changes on the contract prior to acceptance.

(4)(a) If a licensee presents an offer to purchase real estate for which an executory contract to sell the property is already in existence, the offer shall include language that indicates in writing that the offer is contingent upon the nonperformance of the existing executory contract.

(b) The contingency language required by paragraph (a) of this subsection shall indicate the disposition of any contract deposit and be:

1. Inserted by the licensee who completes or prepares the offer to purchase, if licensee is aware of the existing contract; or

2. Made by the listing licensee as a counteroffer.

(5) If financing is involved, a contract providing for the purchase of property shall specifically state:

(a) The manner in which the purchase shall be financed; and

(b) The amount of any encumbrance and whether it is to be underwritten by the seller or a commercial institution or otherwise.

(6) Any agreement for compensation, including rebates and inducements, from a licensee to his or her client shall be in writing.

(7)(a) Prior to the expiration of a current listing agreement, another licensee shall not contact the seller to obtain a subsequent listing agreement.

(b) Notwithstanding paragraph (a) of this subsection, a licensee may discuss newly listing the seller’s property that is currently listed if:

1. The seller initiates contact with the new licensee to obtain a new listing contract;

2. The proposed listing contract states that it shall not take effect until the expiration of the seller’s current listing contract with the original licensee; and

3. The licensee and seller properly complete and sign the Seller-Initiated Listing Form. Nothing in this subsection shall prohibit a licensee from approaching a seller to list the seller’s property following the seller’s cancellation of their current listing contract or expiration of the current listing contract.

(8) If a licensee fails to comply with the requirements in this section, the licensee's conduct and dealings shall be considered improper in violation of KRS 324.160(4)(u).

Section 4. Required Disclosures.

(1) A licensee shall direct the seller-client of a single family residential real estate dwelling, duplex, triplex, fourplex, condominium, or townhouse to accurately complete and sign the Seller's Disclosure of Property Condition form required by KRS 324.360, including all necessary initials and signatures, unless the seller-client refuses and documents his or her refusal, or the licensee documents the seller-client refusal, on the Seller's Disclosure of Property Condition form.

(2) A licensee who is involved in the brokerage of a condominium transaction shall advise the client in writing of the client’s right to receive the Condominium Seller's Certificate required by KRS 381.9203(1) and the purchasing client’s right to void the sales contract consistent with KRS 381.9203(3).

Section 5. Prospective Client Disclosures.

(1) A licensee shall complete, time and date, and deliver to the appropriate prospective client the commission’s Guide To Agency Relationships at the earliest of the following times:

(a) Prior to entering into a contemplated written agreement to provide real estate brokerage services for compensation with a prospective client;

(b) Prior to entering into a contemplated oral agreement to provide real estate brokerage services with a prospective client; or

(c) Prior to signing an agency consent agreement.

(2) The licensee shall solicit the signature of the prospective client on the Guide to Agency Relationships as acknowledgement by the prospective client of his or her receipt. The licensee shall maintain a record that the prospective client signed the Guide to Agency Relationships. If the prospective client refuses to, or does not, sign the Guide to Agency Relationships upon receipt, the licensee shall document the delivery, or attempted delivery, including a date and time, to the appropriate prospective client.

(3) The completed Guide to Agency Relationships shall provide or include:

(a) The agency relationships available between the licensee and client or party in Kentucky;

(b) The first and last name of the licensee completing the form, the first and last name of the principal broker of the licensee, and the full name of the licensee's real estate company;

(c) The name of the prospective client; and

(d) The signature, time, and date of signing by the prospective client.

(4) The provisions of this section shall not apply to:

(a) The sale of real estate at auction; or

(b) A commercial transaction.

Section 6. Agency Consent Agreement.

(1) Prior to entering into a written agreement to provide real estate brokerage services or completing, or directing the completion of, a contract, offer, or lease for a real estate transaction:

(a) The licensee shall complete and deliver the Agency Consent Agreement to the prospective client; and

(b) Seek and obtain written consent to the Agency Consent Agreement from the prospective client.

(2) The commission’s Agency Consent Agreement shall provide:

(a) The first and last name of the client, the first and last name of the licensee or licensee's and principal broker, and the full name of the real estate brokerage company;

(b) The specific agency relationship proposed between the principal broker of the real estate brokerage company, and any affiliated licensee of the real estate brokerage company, and the prospective client;

(c) If applicable, any known business, family, or personal relationship the licensee has with another party to the contemplated transaction who is not a party to the Agency Consent Agreement and an explanation of the nature of the relationship or relationships;

(d) Whether the transaction involves an unrepresented party; and

(e) Disclosure of prior contact with a former prospective client who is involved in the presently contemplated real estate transaction.

(3) The Agency Consent Agreement shall be updated, and written consent obtained, if the agency relationship initially established later changes.

(4) The provisions of this section shall not apply to a:

(a) Sale of real estate at auction; or

(b) Commercial transaction.

(5) The form of agency identified in the most recent Agency Consent Agreement shall terminate upon either:

(a) The provision of the agreed upon services; or

(b) At the closing of the contemplated real estate transaction.

Section 7. Affiliation.

(1) The principal broker shall be the owner of all written contracts for provision of real estate brokerage services, including items such as listing contracts, purchase contracts, and exclusive agency agreements.

(2) When a principal broker, or a licensee acting on behalf of the principal broker, enters into a written agreement with a client, an agency relationship is formed, and the client is the principal.

(3) Absent operating as a designated agency company, each licensee affiliated with the real estate brokerage company shall have the same agency relationship with respect to a client, prospective client, or party as the principal broker in an in-house transaction.

(4) If only one (1) broker is affiliated with a company, he or she shall be the principal broker.

(5) If one (1) or more additional licensees is affiliated with the company, one (1) broker shall be the principal broker registered with the commission.

(6)(a) Unless there is a written contract stipulating otherwise, a licensee shall, upon termination of his or her affiliation with his or her principal broker, immediately turn over to the principal broker all records described in Section 9(1)(a)-(h) of this administrative regulation obtained during his or her affiliation regardless of whether the information was originally received from his or her principal broker, copied from the records of the principal broker, or acquired by the licensee during his or her affiliation.

(b) Nothing in paragraph (a) of this subsection shall require an affiliated licensee to deliver to the principal broker records which the principal broker is not under an obligation to retain consistent with this administrative regulation or records which are already in the principal broker’s possession.

(7)(a) A principal broker may be principal broker of more than one real estate brokerage company.

(b) A principal broker shall not also be an affiliate broker at another real estate brokerage company, except for as provided in KRS 324.112(5).

(8) A sales associate or broker affiliated with a principal broker shall only be affiliated with one principal broker at one office, or branch office, location.

(9) A real estate brokerage company may have more than one (1) physical office location, including branch offices.

Section 8. Facsimile and Digital Transmissions.

(1) A licensee may use facsimile (FAX) devices and digital transmissions to transmit and receive documents according to the provisions of KRS Chapter 369 and 201 KAR Chapter 11.

(2) A document received by facsimile devices or digital transmissions shall be immediately placed in the licensee's file and retained as required by this administrative regulation.

Section 9. Principal Broker Duties and Prohibitions.

(1) A principal broker shall confidentially preserve, either in hard copy or digital format, for five (5) years following its consummation or failure, records in one (1) file relating to any real estate transaction, which shall include:

(a) Any written offers to lease or purchase the real estate; (b) The acquisition and disbursement of any monies;

(c) Listing and sales contracts or leases;

(d) Closing sheets;

(e) Seller’s Disclosure of Property Condition and Condominium Seller's Certificate forms;

(f) Agency Consent Agreement forms;

(g) Guide to Agency Relationships forms; and

(h) Timeshare records.

(2) A principal broker who engages in property management shall also confidentially preserve, either in hard copy or digital format, for five (5) years:

(a) Property management agreements;

(b) Leases;

(c) Monthly owner statements and reports;

(d) Owner and unit ledgers; and

(e) Bank statements relating to property management.

(3) If the death or incapacity of the principal broker occurs, records required to be maintained pursuant to this section shall be maintained by:

(a) A new principal broker or a designated manager, so designated previous to the time of the death or incapacity of the principal broker to maintain the records;

(b) The real estate brokerage company of the principal broker at the time of the death or incapacity of the principal broker, if the company continues to be an active company;

(c) A licensee designated by the commission to maintain the records and serve as the principal custodian of the records, without any liability or obligation, other than to confidentially maintain the records and to provide the records to a party as required by law or by demand of the commission; or

(d) Any appointee of the commission who will agree to maintain the records and serve as the principal custodian of the records, without any liability or obligation, other than to confidentially maintain the records and to provide the records to a party as required by law or by demand of the commission.

(4) At the time of signing all documents, the principal broker, or an affiliated licensee of the principal broker, shall ensure that a copy of all documents are delivered to all parties executing the documents if the document has been provided, prepared by, or at the direction of the principal broker or an affiliated licensee of the principal broker.

(5) The principal broker, an affiliated licensee of the principal broker, shall ensure that a debit and credit type closing statement is furnished to a client upon closing a real estate transaction unless the financial institution, title agency, the attorney involved, or other authorized individuals, has prepared the closing statement.

(6) A principal broker shall not be a party to an exclusive listing contract which contains an automatic continuation of the period of the listing beyond the fixed termination date set forth therein.

(7) If a principal broker permits teams, a principal broker shall notify the commission in writing of the alternate or assumed name used by the team and the name of the team leader before permitting team advertising.

(8) If a principal broker authorizes team, group, or other business arrangements between affiliated licensees, the principal broker shall:

(a) Offer, at a minimum, company procedures for advertising, agency relationships and handling confidential information, management and operations specific to team, group, or other business arrangements between affiliated licensees;

(b) Designate a licensee who shall be responsible, along with the principal broker and designated manager, for the operations of the team, group, or other business arrangement. The designated licensee shall be referred to as the "team leader" regardless of how the team, group, or other business arrangement labels itself;

(c) Maintain a current list of all affiliated licensees, employees, office personnel, and clerical staff who are a part of each individual team, group, or other business arrangement; and

(d) Notify the commission in writing of the first and last name and license number of the team leader.

(9) A principal broker shall ensure any employee or unlicensed personal assistant, salaried or independently contracted, employed by, retained by, or under the direction of the principal broker or any affiliated licensee, are in compliance with the applicable provisions of KRS Chapter 324 and 201 KAR Chapter 11.

(10) A principal broker shall implement and maintain an appropriate information security system that shall:

(a)1. Notify licensees, management, employees, officer personnel, and clerical staff of company policy and procedures related to confidential information, including in-person interactions or discussions in the office environment;

2. Prohibit the disclosure of confidential information by licensees, management, employees, office personnel and clerical staff;

3. Require notification to each client involved in a transaction, if the principal broker becomes aware of an unauthorized or inadvertent disclosure of confidential information relating to that transaction; and

4. Prohibit an employee from assisting more than one (1) designated agent in the same transaction if the designated agents represent different clients in that transaction.

(b) Nothing in this provision shall prohibit a licensee who is party to an Agency Consent Agreement from maintaining a separate individual client file containing confidential information.

(11) A principal broker of a real estate brokerage company that practices designated agency shall require that all documents that contain confidential information relating to a client be kept in an individual file maintained by the principal broker and accessed only by the principal broker, designated manager, or designated agent appointed by the principal broker to represent the individual.

(12) A principal broker who appoints a designated manager of the real estate brokerage company, a registered company branch, team, group, or other business arrangement shall notify the commission in writing of the name of the designated manager within ten (10) days of the appointment.

Section 10. Property Management.

(1) A principal broker, or an affiliated licensee, shall not engage in property management without a current written property management agreement.

(2) A property management agreement shall contain, at a minimum:

(a) The full name and address of the principal broker’s real estate brokerage company as registered with the commission;

(b) The name and address of the client for whom the property is being managed;

(c) The address of the real estate being managed and the number of units;

(d) The effective dates of the agreement, and a provision stating whether the client agrees to automatic annual renewal;

(e) A provision stating the method for early termination;

(f) The amount of, or the method for computing, the amount of compensation to the principal broker;

(g) The amount of, or the method of determining, the minimum security deposit to be collected from tenants for each unit managed;

(h) The name and address of the bank where the principal broker’s escrow or management account is held, and, consistent with KRS 383.580(1), the account number. This information shall also be contained in the lease;

(i) A provision which is in accord with KRS 383.580 setting forth the procedures governing returning or retaining the security deposit. This provision shall also be contained in the lease;

(j) A provision setting forth the conditions under which the principal broker may pay expenses related to the real estate being managed;

(k) A statement setting forth the date when the principal broker shall send the client an accounting of the transactions related to the real estate being managed;

(l) A copy of the form of the lease document which the principal broker shall have the tenant sign shall be attached to the agreement;

(m) A provision whereby the client certifies that he or she has received a duplicate copy of the agreement and the attached lease form; and

(n) The signature and date of signature of the client and the principal broker.

(3) A principal broker shall maintain, in electronic or written form:

(a) An owner ledger for each client of real estate being managed;

(b) A unit ledger for each unit in the real estate being managed; and

(c) Upon the written request of the client of the property being managed, the principal broker shall provide a unit ledger by tenant.

(4) Money received shall be deposited into an escrow or management account of the principal broker within three (3) business days of receipt.

(5) The amount of money received shall be entered into the owner and unit ledgers.

(6) A receipt shall be given for money received.

(7) Expenses paid by the principal broker shall be documented by invoice or receipt, by unit,

and retained with a principal broker’s records.

(8) Adjustments to a security deposit shall be made in accordance with KRS 383.580. Adjustments shall also be entered on the owner and unit ledgers.

(9) On the date determined by the parties, a principal broker shall send a monthly accounting to a client of transactions related to the real estate being managed, by unit.

(10) Within sixty (60) days of the termination of a management agreement, a principal broker shall send the client a final accounting that contains any transaction that occurred after the last monthly accounting.

(11) A principal broker who has an ownership interest in the real estate being managed shall:

(a) Maintain a unit ledger for each unit in the real estate being managed; and

(b) Comply with KRS 383.580 relating to receipt, deposit, and adjustment of tenant security deposits.

Section 11. Incorporation by Reference.

(1) The following material is incorporated by reference:

(a) "Seller-Initiated Listing Form", KREC Form 403, 10/2019;

(b) "Seller's Disclosure of Property Condition", KREC Form 402, 12/2019;

(c) "Condominium Seller’s Certificate", KREC Form 404, 10/2019;

(d) "Guide to Agency Relationships", KREC Form 400, 10/2019;

(e) "Agency Consent Agreement - Buyer", KREC Form 401B, 10/2019;

(f) "Agency Consent Agreement - Seller", KREC Form 401S, 10/2019.

(2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Kentucky Real Estate Commission, 656 Chamberlin Avenue, Suite B, Frankfort, Ken- tucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m. This material is also available from the commission's Web site: www.krec.ky.gov. 

201 KAR 11:170. Education provider requirements.

RELATES TO: KRS 324.010(7), 324.046(1), (2), (5), 324.085, 324.090, 324.160(1)(c), (4)(u), 324.281(7)

STATUTORY AUTHORITY: KRS 324.010(7), (8), 324.046(1), (2), 324.085, 324.160, 324.281(5), 324.282

NECESSITY, FUNCTION, AND CONFORMITY: KRS 324.281(5) and 324.282 require the Real Estate Commission, with the approval of the executive director of the Kentucky Real Estate Authority, to promulgate administrative regulations necessary to implement KRS Chapter 324. KRS 324.010(7) and (8) authorize the commission to approve a real estate school. KRS 324.046(1) and (2) require an applicant for initial licensure as a broker or sales associate to have completed the specified number of courses from an approved or accredited real estate school. KRS 324.085(4) and (5) require the commission to promulgate administrative regulations necessary to implement the continuing education, post-licensure education, and instructor qualification requirements of KRS 324.085. KRS 324.046(1)(a) requires the commission to promulgate an administrative regulation determining the required course content of a brokerage management skills course for all broker applicants. This administrative regulation establishes the requirements and application procedures for approval as a real estate school, post-licensing education provider, and a continuing education provider; the requirements and application procedures for approval of instructors and courses for license credit; procedures for implementing the requirements for post-license education and the requirements for courses offered through distance education; the requirements of the brokerage management skills course; and incorporates the curriculum by reference.

Section 1. Education Providers.

(1)(a) Accredited institutions and approved real estate schools may teach:

1. Pre-licensing education;

2. Post-licensing education;

3. Continuing education; and

4. Broker curriculum education.

(b) Consistent with KRS 324.010(7)(b), National Association of Realtors (NAR) recognized

programs that meet the following criteria shall be an approved real estate school:

1. Has a school administrator;

2. Is an affiliated organization with NAR or the Kentucky Realtors; and

3. Would otherwise be regulated by Kentucky Commission on Proprietary Education, but the program is entitled to exemption from certification by Kentucky Commission on Proprietary Education.

(2) National Association of Realtors (NAR) recognized programs that do not meet the criteria established in subsection (1)(b) in this section shall only teach:

(a) Post-licensing education;

(b) Continuing education; and

(c) Designation courses toward broker curriculum.

(3) Governmental bodies shall only teach post-licensing education and continuing education.

(4) Broker-affiliated training programs may teach post-licensing education.

Section 2. Accredited Institutions and Approved Real Estate Schools; Initial Application for Provider Approval.

(1) To apply for initial certification, an approved real estate school shall submit:

(a) A completed Education Provider Application and Renewal Form, KREC Form 101, signed by the education provider’s administrator or representative;

(b) A copy of the license or certification from the Kentucky Commission on Proprietary Education, if applicable;

(c) A sample copy of an official transcript or certificate that will be issued by the school;

(d)1. A copy of a sample contract or agreement, to be signed by the student, that outlines the class schedule, assignments or projects, examination requirements, grading system, and attendance requirements;

2. An approved real estate school offering a pre-licensing course shall include a statement in the school application that a criminal conviction may, consistent with KRS Chapter 335B and 201 KAR 11:210, Section 6, prevent an applicant from qualifying for licensure under KRS 324.045;

(e)1. An acceptable explanation of how the provider will verify a student’s identity, ensure the student completes the course, and maintain the anonymity of student evaluations;

2. For classroom courses, at a minimum, the provider shall require a student to sign in and sign out of each course; and

(f) Any documentation necessary to explain an answer on the application.

(2) To apply for renewal of an approved real estate school’s approval, an approved real estate school shall submit an Education Provider Application and Renewal Form, KREC Form 101, signed by the education provider’s administrator or representative, outlining any changes in the information submitted pursuant to subsection (1) of this section.

(3) After the initial approval, an approved real estate school shall renew annually consistent with subsection (2) of this section.

(4) An approved real estate school shall notify the commission in writing within ten (10) days of a substantive change in the information submitted on the initial or renewal application or in an attachment thereto.

Section 3. Education Provider; Initial Application for Provider Approval.

(1) To apply for initial certification, an education provider offering continuing education or post-license education shall submit:

(a) An Education Provider Application and Renewal Form, KREC Form 101, signed by the education provider’s administrator or representative;

(b) A sample copy of an official transcript or certificate that will be issued by the provider;

(c)1. An acceptable explanation of how the provider will verify a student’s identity, ensure the student completes the course, and maintain the anonymity of student evaluations;

2. For classroom courses, at a minimum, the provider shall require a student to sign in and sign out of each course; and

(d) Any documentation necessary to explain an answer on the application.

(2) To apply for renewal of an education provider’s approval, the education provider shall submit an Education Provider Application and Renewal Form, KREC Form 101, signed by the education provider’s administrator or representative, outlining any changes in the information submitted pursuant to subsection (1) of this section.

(3) After the initial approval, an education provider shall renew annually consistent with subsection (2) of this section.

(4) An education provider shall notify the commission in writing within ten (10) days of a substantive change in the information submitted on the initial or renewal application or in an attachment thereto.

Section 4. Education Course Curriculum Requirements.

(1) All courses shall consist of topics that:

(a) Are generally applicable to real estate, including the other professions governed by the Kentucky Real Estate Authority; or

(b) Are specific to Kentucky real estate license law and regulation.

(2) To be approved as an education course, a course shall:

(a) Increase the student's knowledge of the real estate brokerage business; and

(b) Protect the public interest.

(3) Education providers approved by another real property board under the Kentucky Real Estate Authority may submit courses approved by the primary real property board to the commission for approval as a post-licensing and continuing education course.

(4) A course that is solely motivational or considered to be personal development in nature shall not be approved.

(5) The curriculum for a sales associate pre-license course at an approved real estate school shall:

(a) Be conducted for a maximum of nine (9) hours during a calendar day; (b) Include course content on each of the following topics:

1. Introduction to the real estate business;

2. Real property and the law;

3. Forms of ownership and interests in real estate;

4. Land description;

5. Transfer of title;

6. Title records;

7. Real estate brokerage;

8. Real estate agency;

9. Client representation agreements and required disclosures;

10. Real estate contracts;

11. Real estate financing;

12. Closing a real estate transaction;

13. Real estate taxes and other liens;

14. Real estate appraisal and land valuation analysis;

15. Leases;

16. Fair Housing;

17. Property Management;

18. Land Use controls and property development;

19. Environmental issues in the real estate transaction; and

20. Kentucky real estate licensing law.

(c)1. Instruction on all topics, except Kentucky specific law and regulation, shall be from a text approved by the commission.

2. To have a text approved by the commission, an education provider shall submit to the commission the proposed text and a written explanation of how the text covers the course content on the required topics.

(d) Be a course for academic credit consisting of content focused on real estate, but shall not be a continuing education unit, examination preparation or review, experiential education, or competency testing;

(e) Include a scenario-based practicum or project applicable to the practice of real estate brokerage that:

1. Is to be completed by the individual student, without peer assistance, before sitting for the final examination;

2. Contemplates the use of at least three (3) commission approved transaction related forms;

3. Requires completion of:

a. A real estate purchase contract or a real estate listing contract; and

b. A market analysis of property value.

4. Requires application of topics covered in the sales associate pre-licensing course relating to a transaction based experience; and

5. Is graded on a pass-fail scale.

(f) Be designated specifically as a real estate course by an approved education provider;

(g) Include a closed-book monitored final examination that shall:

1. Consist of 100 multiple choice questions which shall evaluate the student’s practical application of real estate principles;

2. Require a passing score of at least seventy-five (75) percent; and

3. Cover all aspects of material covered in the course, including applicable Kentucky licensing laws and administrative regulations; and

(h)1. The pre-licensing provider shall not allow a student to take the final examination more than three (3) times, unless the student retakes the sales associate pre-licensing course;

2. A student may retake the final examination no earlier than the fourth day following the date of a failure;

3. After the second failure, the pre-licensing provider shall provide the student with documentation of the area or areas of deficiency and the opportunity for additional training on the student’s area or areas of deficiency consistent with the provider’s student enrollment agreement.

(6) Approved pre-license education providers and instructors shall take appropriate steps to maintain the confidentiality of the final examinations. These steps shall include:

(a) Storing examinations and answer keys in a secure place accessible only to the school administrator and the instructor;

(b) Prohibiting students from retaining copies of the final examination and answer sheets;

(c) Monitoring students continuously during examinations; and

(d) Notifying the commission if an examination is compromised.

(7) The curriculum for a post-license education course shall be in hourly increments from

one (1) to nine (9) hours with one (1) hour of course credit allowed for each fifty (50) minutes of actual instruction and consist of thirty-two (32) hours from the courses established in paragraphs (a) and (b) of this subsection and sixteen (16) hours as established in paragraph (c) of this subsection:

(a) The three (3) hour Commission Licensee Compliance course, which shall instruct new licensees on:

1. License statuses and the administrative processes relative to keep a license active and in good standing;

2. A review of controlling definitions;

3. A review of agency principles;

4. Overview of commission duties and functions and relationships with other governmental bodies, regulatory bodies, and professional associations; and

5. A review of disciplinary procedures and administrative case studies. (b) The requirements in each of the following course topics:

1. Six (6) hours in Agency;

2. Six (6) hours in Contracts;

3. Three (3) hours in Finance;

4. Three (3) hours in Advertising;

5. Three (3) hours in Disclosure;

6. Three (3) hours in Fair Housing;

7. Three (3) hours in Technology and Data Security; and

8. Two (2) hours in Risk Management; and (c) Sixteen (16) additional hours in approved mandatory courses in excess of the prescribed hours listed in paragraph (b) of this subsection or in the following elective topics chosen by the licensee:

1. Real Estate Auctions;

2. Anti-trust;

3. Appraisals

4. Home inspections;

5. Land Use;

6. Property Rights;

7. Property Management;

8. Real Estate Investments; and

9. Business Planning.

(d) Contain course content, objectives, and assessments that include scenario-based case studies designed to ensure the application of current real estate information and knowledge to practical brokerage scenarios.

(e) If a licensee takes a post-licensing education course with the same course number more than once, the licensee shall only receive credit for one (1) course completion.

(8)(a)The curriculum for a continuing education course shall be in hourly increments from one (1) to nine (9) hours with one (1) hour of continuing education allowed for each fifty (50) minutes of actual instruction.

(b) If a licensee takes a continuing education course with the same course number more than once in an education cycle, the licensee shall only receive credit for one (1) course completion.

(9) All course content required by this administrative regulation shall be submitted to the commission for review and consideration prior to the approval of the course.

Section 5. Pre-license Course Approval for Sales Associates.

(1) To obtain approval for a sales associate pre-license course, an approved education provider shall submit a Pre-license Course Application and Renewal Form, KREC Form 102, for each course for which approval is sought, at least ninety (90) days prior to the scheduled offering of a pre-license education course. The approval shall be valid for one (1) year. The completed form shall by accompanied by:

(a) A completed detailed Course Outline broken into four (4) hour increments to include, if applicable, teaching methods, learning objectives for the course, auxiliary aids, quizzes or examinations, and materials for each course.

(b) The course description and objectives;

(c) A description of the course practicum;

(d) When the final examination shall be conducted;

(e) The textbooks being used and how material will be taught in conjunction with completion of the projects and the final exam;

(f) A copy of the final examination question bank and answer key;

(g) A copy of all written material that the instructor will use in the classroom, including a copy of the curriculum that follows the mandated guidelines, if applicable;

(h) A completed Instructor Affiliation Form, KREC Form 104, for each instructor who will teach a course; and

(i) The nonrefundable initial review fee of seventy-five (75) dollars.

(2) To renew approval for a sales associate pre-license course, an approved education provider shall submit:

(a) A separate completed Pre-license Course Application and Renewal Form, KREC Form 102, for each course, at least ninety (90) days prior to the current expiration of the pre-license education course;

(b) The nonrefundable renewal review fee of twenty-five (25) dollars; and

(c) A detailed abstract of changes made to the course, course materials, and other required attachments since the initial application or most recent course renewal.

(3) An education provider shall notify the commission in writing within ten (10) days of a substantive change in the information submitted on the initial or renewal application for a sales associate pre-license course or in any attachment thereto.

(4) Every five (5) years an approved education provider shall submit a complete Pre-license Course Application and Renewal Form, KREC Form 102, for each course approval is sought, at least ninety (90) days prior to the scheduled offering of a pre-license education course.

(5) Nothing in this section shall prevent the commission from requesting the current version of a course from an approved education provider during the five (5) year review period.

Section 6. Continuing and Post-license Education Course Approval.

(1) To obtain approval for a continuing education or post-license education course, an approved education provider shall submit a completed Continuing and Post-license Education Course Application and Renewal Form, KREC Form 103. The approval shall be valid for one (1) year.

(2) At least sixty (60) days prior to the scheduling of a continuing or post-license education course, an approved education provider wishing to offer a continuing or post-license education course shall submit:

(a) A Continuing and Post-license Education Course Application and Renewal Form, KREC Form 103, and either:

1. The nonrefundable initial review fee of twenty-five (25) dollars for classroom courses or seventy-five (75) dollars for distance education courses; or

2. The nonrefundable renewal review fee of fifteen (15) dollars; and

(b) A completed detailed Course Outline broken into fifty (50) minute increments, to include, if applicable, learning objectives for the course, teaching methods, auxiliary aids, quizzes or examinations, materials, and the policies of the provider;

(c) The textbooks or course materials being used;

(d) A copy of the final examination question bank and answer key, if the course is a distance education course; and

(e) A completed Instructor Affiliation Form, KREC Form 104, for each instructor who will teach a course.

(3) A provider shall:

(a) Award each attendee listed on the roster who completes the course a course completion certificate that contains:

1. The licensee’s name;

2. The licensee’s license number;

3. The course completed, including the type of education, course title, and course number; 4. The date of completion; and

5. Signature of the school administrator or course provider representative.

(b) Submit to the commission, within ten (10) days of the student completing an approved continuing or post-license education course, unless the course is completed after December 21 of the calendar year in which case the deadline shall be on or before 11:59 p.m. December

31:

1. An attendance roster through the provider’s online portal; and

2. A Course Evaluation, KREC Form 106, completed by each attendee listed on the roster;

and

(c) Include a notice or warning that if the continuing education course is taken after December 21 of the calendar year, the licensee’s license may be cancelled if the course is not timely completed; and

(d) Subject only to space limitations, make the course available to all licensees, unless the course is offered by a broker-affiliated training program.

(4) A course provider may be disciplined by the commission if a course provider fails to submit all attendance and evaluation forms completed and returned by students to the course provider.

(5) A course that has been previously approved within the same education cycle may be conducted by another provider if:

(a) The same instructor teaches the course;

(b) The same number and type of credits are awarded for the course;

(c) The content of the course is the same; and

(d) The hosting provider submits a completed Provider Host Form, KREC Form 105, to the commission thirty (30) days prior to conducting the course.

(6) To renew approval for a continuing or post-license education course, an approved education provider shall submit:

(a) A completed Continuing and Post-license Education Course Application and Renewal Form, KREC Form 103, for each course approval is sought, at least sixty (60) days prior to the current expiration of the continuing or post-license education course, and

(b) A detailed abstract of changes made to the course, course materials, and other required attachments since the initial application or most recent course renewal.

(7) An education provider shall notify the commission in writing within ten (10) days of a substantive change in the information submitted on the initial or renewal application for a continuing or post-license education course or in any attachment thereto.

(8) Every five (5) years an approved education provider shall submit a complete Continuing and Post-license Education Course Application and Renewal Form, KREC Form 103, for each course approval is sought, at least ninety (90) days prior to the scheduled offering of a continu- ing or post-license education course.

(9) Nothing in this section shall prevent the commission from requesting the current version of a course from an approved education provider during the five (5) year review period.

Section 7. Pre-license Course Approval for Broker Curriculum.

(1) To obtain approval for a broker management or broker curriculum course, an approved education provider shall submit a Pre-license Course Application and Renewal Form, KREC Form 102, for each course approval is sought. The approval shall be valid for one (1) year.

(2) To satisfy the education prerequisites contained in KRS 324.046(1)(a), an applicant for a broker’s license shall complete a broker management skills course. The broker management skills course shall:

(a) Satisfy three (3) academic credit hours of the applicant's twelve (12) academic credit hours of real estate courses required to become a broker;

(b)1. Instruction on all topics, except Kentucky specific law and regulation, shall be from a text approved by the commission.

2. To have a text approved by the commission, an education provider shall submit to the commission the proposed text and a written explanation of how the text covers the course content on each of the required topics.

(c) Be a three (3) academic hour comprehensive review of all the skills necessary to run a brokerage office in accordance with the applicable Kentucky licensing laws and administrative regulations relating to real estate and the standards of practice for a broker pertaining to adequate supervision of all affiliated licensees, including:

1. Leadership and management skills;

2. Communications and decision-making;

3. Analyzing the business environment;

4. Analyzing the market;

5. Developing a business plan, including structuring the organization, business systems,

and finances;

6. Business policies and procedures;

7. Marketing and advertising;

8. The practical and legal realities of staffing;

9. Recruiting, selecting, and hiring the staff;

10. Professional development;

11. Critiquing operations; and

12. Managing risk.

(d)1. Include a scenario-based practicum or project that shall require each student to develop a sample business plan, a sample financial plan and an office policy and procedure manual. The practicum shall;

2. Be completed by the individual student, without peer assistance, before sitting for the final examination;

3. Require application of topics covered in the broker pre-licensing curriculum;

4. Be graded on a pass-fail scale; and

5. Be allotted up to one hour of course credit for completion and review of this requirement. (e)1. Require each student to take a comprehensive, closed-book examination consisting of at least seventy-five (75) multiple choice questions;

2. The examination shall be submitted to the commission for approval prior to use in the course;

3. The passing score for the examination shall be a minimum score of seventy-five (75) percent;

4. The broker pre-licensing provider shall not allow a student to take the final examination more than three (3) times, unless the student retakes the broker management skills course;

5. A student may retake the final examination no earlier than the fourth day following the date of a failure;

6. After the second failure, broker pre-licensing provider shall provide the student with documentation of the area or areas of deficiency and the opportunity for additional training on the student’s area or areas of deficiency consistent with the provider’s student enrollment agreement.

(f) The education provider shall report a course completion certificate to the commission through the provider’s online services portal within ten (10) days of issuing the certificate to the student.

(3) To be approved as a pre-licensing course for broker curriculum, a course shall cover one of the following topics:

(a) Federal Housing and Lending Law;

(b) Kentucky Real Estate Law and Regulation;

(c) Real Estate Finance;

(d) Real Estate Marketing;

(e) Property Management;

(f) Real Estate Investment;

(g) Real Estate Appraisal;

(h) Home Inspection;

(i) Real Estate Auction;

(j) Construction and Blueprints;

(k) Land Use Planning and Zoning;

(l) Commercial Real Estate;

(m) Real Estate Development; and

(n) Urban Planning.

(4) In addition to being specific to the course topics listed in subsection (3) of this section, each pre-licensing course for broker curriculum shall include:

(a) A comprehensive review specific to the course topic of all the relevant laws necessary to run a brokerage office in accordance with the applicable Kentucky licensing laws, administrative regulations, and federal laws, if applicable, relating to real estate and the standards of practice for a broker;

(b) An extensive review of case studies; and

(c) Instruction on personnel management and leadership models.

(5) In addition to being specific to the course topics listed in subsection (3) of this section, each pre-licensing course for broker curriculum shall be in either three (3) academic credit hour or six (6) academic credit hour intervals and shall not be accredited for continuing education credit.

(6) Within ten (10) days of completion of an approved broker curriculum course, the provider shall submit to the commission:

(a) An attendance roster; and

(b) A Course Evaluation Form, KREC Form 106, completed by each attendee listed on the roster.

(7) If a licensee takes a broker pre-license course with the same course number more than once, the licensee shall only receive credit for one (1) course completion.

(8) To renew approval for a broker management or broker curriculum course, an approved education provider shall submit:

(a) A completed Pre-license Course Application and Renewal Form, KREC Form 102, for each course approval is sought, at least ninety (90) days prior to the current expiration of the broker management or broker curriculum course; and

(b) A detailed abstract of changes made to the course, course materials, and other required attachments since the initial application or most recent course renewal.

(9) An education provider shall notify the commission in writing within ten (10) days of a substantive change in the information submitted on the initial or renewal application for a broker management or broker curriculum course or in any attachment thereto.

(10) Every five (5) years an approved education provider shall submit a complete Pre-license Course Application and Renewal Form, KREC Form 102, for each course for which approval is sought, at least ninety (90) days prior to the scheduled offering of a the broker management or broker curriculum course.

(11) Nothing in this section shall prevent the commission from requesting the current version of a course from an approved education provider during the five (5) year review period.

Section 8. Broker Electives.

(1) To obtain approval for a broker elective course, an approved education provider shall submit a Continuing Education and Post-License Education Course Application and Renewal Form, KREC Form 103, for each course for which approval is sought, consistent with Section 6 of this administrative regulation. The approval shall be valid for one (1) year.

(2) The content of a broker elective course shall be:

(a) An NAR designation course; or

(b) A course tailored to the supervisory functions of managing and operating a real estate brokerage company beyond the scope of what is covered in a sales associate pre-licensing course.

Section 9. Distance Education Standards for Approval.

(1) Continuing education, post-license education, and pre-license courses conducted for academic credit in an accredited college or university via interactive television shall include:

(a) Two (2) way audio and video connections between the instructor and the student; and

(b) College or university personnel stationed at each remote site to handle technology problems that may arise and to monitor attendance of students.

(c) The program shall be one that has been properly approved by the college accrediting body as fulfilling the requirements for academic credit.

(2) A course initially approved for classroom instruction shall not be offered for distance education unless additional approval consistent with this section is obtained from the commission.

(3)(a) Consistent with this administrative regulation, an approved provider shall submit:

1. a. A completed Pre-license Course Application and Renewal Form, KREC Form 102 or

b. A completed Continuing Education and Post-licensing Education Course Application and

Renewal Form, KREC Form 103.

(b) In addition to the attachments required by the appropriate course application form, thecourse application shall include:

1. A complete copy of the program on the medium that is to be used or a link to the internet site where the course is located;

2. A copy of the final examination question bank and key for each course; and

3. The appropriate non-refundable course review fee.

(4) The course shall:

(a) Be divided into learning units, modules, or chapters to provide mastery of the material.

Each unit shall contain learning objectives that are sufficient to ensure that the course will likely be mastered by the student upon completion of the material;

(b) Require quizzes at the end of each learning unit, module, or chapter to assess the student's performance before proceeding to the next learning unit, module, or chapter;

(c) Require a final examination consistent with subsection (6) of this section;

(d) Provide a method for tracking the length of time a student spends on the course; and

(e) Prohibit a student from bypassing the course materials to advance directly to the end-of-module quizzes or exercises that are included to assess the student's performance.

(5)(a) Each course shall have the approved instructor available to answer questions from students.

(b) The provider shall have reasonable oversight to monitor a student’s work and electronic access in order to ensure that the student completing the work and receiving credit is the one who is enrolled in the course.

(6) For all distance education courses, the student shall pass a final exam covering the content of the course and real estate laws and administrative regulations that apply to those content areas with a score of at least seventy-five (75) percent.

(a) If the course is a continuing education or post-license education course, the final exam shall:

1. Be included as the last module of the course; and

2. Have a minimum of five (5) questions for each approved hour of education.

(b) If the course is a pre-license education course, the final exam shall:

1. Contain a minimum of fifty (50) items for a three (3) academic credit hour course or contain a minimum of 100 items for a six (6) academic credit hour course;

a. Each course shall have an item bank from which the final examination questions shall be pulled.

b. The bank shall contain multiple choice items and have forty (40) percent more questions than required on the final examination, so that retake exams will contain unique new questions.

2. Be monitored by the approved instructor for the course or another individual designated by the instructor who is not a relative or a business associate of the student;

3. If another individual is designated to monitor the exam, the monitor shall be:

a. A certified librarian;

b. A public school administrator;

c. A College professor;

d. Other real estate instructor associated with the school offering the course; or

e. A monitor from a qualified online test monitoring service;

4. The monitor shall:

a. Sign a statement certifying that he or she is not affiliated with the student in any way;

b. Verify that the person taking the examination is the person registered for the course;

c. Observe the student taking the exam;

d. Assure that the student does not use aids of any kind;

e. Assure that a calculator is nonprogrammable;

f. Assure that limitations on the final examination are not exceeded;

g. Certify to the provider in a notarized statement that all requirements for the final examination have been met; and

h. Assure that any student's mobile device, cell phone, or camera is shut down and put away, while at the test site.

(7) Prior to awarding a student credit for a distance education course, the education provider shall require each student to complete an affidavit that includes the date of completion and the student's signature, which may be provided electronically. The affidavit shall certify that the student has personally completed all components of the course and the final exam with no academic assistance.

(8) Credit shall be denied and disciplinary action taken if it is determined that a student received academic assistance on the final exam.

(9) To obtain credit for a distance education course, a student shall complete the course within the time frame allotted by the school for pre-license courses or within the education cycle for continuing and post-license education, unless the student is completing the course to comply with an order of the commission.

(10)(a) The completion date for all courses shall be the latest of the dates upon which the student completes the final examination with a passing score of at least seventy-five (75) percent and submits the student affidavit.

(b) The student shall submit the course evaluation and student affidavit to the provider from whom the course was taken.

(11)(a) The provider shall ensure that approved instructors are available to assist students who have questions regarding:

1. The technology used in the delivery;

2. The course content; or

3. The completion requirements.

(b) A student shall not be required to call more than one (1) person to obtain answers to questions about the course.

(12) The provider shall include a detailed explanation of how the course measures, documents, and records the student completion of the material, and any activities or exercises required to achieve mastery of the material.

(13)(a) The provider shall obtain an evaluation from each student.

(b) An evaluation may be submitted to the provider electronically and a copy of each form shall be returned along with the attendance roster and other documents required by the commission for continuing education courses.

Section 10. Course Instructor Qualifications and Approval.

(1) A person not approved pursuant to this administrative regulation shall not teach an education course for credit.

(2) To be approved, an instructor shall have:

(a) Qualifying education or experience:

1. A bachelor's or post-graduate degree from a college or university duly accredited by a nationally recognized rating or accrediting organization, in a field directly related to the nature of the course, such as real estate, business, law, or finance;

2. An associate degree in real estate from a college or university duly accredited by a nationally recognized rating or accrediting organization;

3. Completed five (5) consecutive years of full-time experience in the real estate related subject area that he or she is teaching; or

4. A combination of teaching, education, and full-time experience in real estate totaling five (5) years; and

(b) Sufficient and thorough knowledge of the subject area of the course he or she is teaching, familiarity of the provisions of Kentucky real estate licensing law and administrative regulations, and the importance of those provisions on the subject area of the course; and

(c)1. Effective on January 1, 2021, have completed a mandatory educator training course within the twelve (12) months preceding the approval or renewal as an instructor from the commission, unless one of the following exemptions apply:

a. The instructor is a national level or unique speaker and training poses an impractical burden;

b. The instructor has taken a similar course in another jurisdiction within the preceding twelve (12) months;

c. The instructor teaches two (2) or fewer courses each year; or

d. The instructor has earned a Distinguished Real Estate Instructor designation or a comparable advanced designation.

2. The mandatory educator training course shall include a minimum of three (3) fifty (50) minute blocks of instruction consisting of:

a. Classroom management principles and Generally Accepted Practices of Education;

b. Fundamentals of instruction in adult education; and

c. A review of any pertinent changes to Kentucky or federal real estate brokerage laws and

administrative regulations and current real estate brokerage principles. (3) To apply for approval, an instructor shall submit:

(a) An Instructor Application and Renewal Form, KREC Form 100; (b) A copy of the instructor’s current resume;

(c) Any information necessary to explain an answer on the application;

(d) A license certification from each jurisdiction where the instructor holds a professional license; and

(e) A certification of completion for the instructor course.

(4) Instructor approval shall last for one (1) year.

(5) To renew, an instructor shall submit the Instructor Application and Renewal Form, a certification of completion for the instructor course, and note any changes from the materials submitted in subsection (3) of this section.

(6) The commission shall maintain a roster of approved instructors who are eligible to be added to an approved course upon submission of a completed Instructor Affiliation Form, KREC Form 104.

(7) Approval of an instructor may be withdrawn, probated, or suspended by the commission for:

(a) A violation of a provision of KRS Chapter 324 or the administrative regulations promulgated thereunder;

(b) Falsification of material submitted to the commission;

(c) Failure to provide to the commission requested material;

(d) While acting as an instructor, engaging in brokerage activity with an enrolled student while present in an educational facility;

(e) Soliciting an investment from a student;

(f) Attempting to recruit a student to a real estate company while acting as an instructor;

(g) Receipt of a complaint or poor evaluation related to the conduct of the instructor;

(h) Improper or unprofessional conduct or communication during course instruction, including comments that are clearly derogatory, not germane to the course’s subject matter, or are intended to offend a particular student or group of students;

(i) Permitting a student to receive credit for a course if the licensee arrives more than ten (10) minutes after the scheduled start of the course or any break during the course; or

(j) Failure to abide by the Generally Accepted Principles of Education or other documented deficiencies in classroom management.

Section 11. Evaluation of Instructors.

(1) The commission shall review each Course Evaluation Form, KREC Form 106, submitted.

(2) Within the commission’s determination, the commission may monitor an instructor’s course.

(3) The commission monitor shall submit a recommendation to the commission regarding whether the instructor shall be allowed to continue to teach courses.

(4) Based on the recommendation of the commission monitor, and the comments from the monitored class, the commission shall:

(a) Take no further action; or

(b) Take disciplinary action.

(5) If the commission issues a probationary order, the commission shall establish the length and terms of the probationary period as well as the date of any class to be monitored.

(6) At the conclusion of the probationary period, the commission shall determine if the instructor's approval shall continue.

(7) If the commission determines that instructor approval shall be suspended, the instructor shall not be allowed to teach any commission-approved education courses unless approval is reinstated.

(8) The commission shall notify the instructor and the school of its decision in writing.

(9)(a) Any instructor who has been suspended from teaching education courses may apply for reinstatement by submitting:

1. An application for approval to the commission; and

2. An explanation detailing how the applicant cured the deficiency which resulted in suspension; and

(b) After submission of the documents in paragraph (a) of this subsection and consideration by the commission, the commission shall approve or deny the instructor's request for reinstatement.

Section 12. Monitoring and Withdrawal of Provider Approval.

(1) An approved education provider shall ensure that all instructors shall abide by the Generally Accepted Principles of Education as adopted by the Real Estate Educators Association.

(2) An approved education provider shall permit inspection and monitoring by the commission, or its designee, to evaluate the administration or operation of any approved real estate school or approved provider education course and to evaluate the performance of instructors.

(3) An approved education provider shall not:

(a) Advertise, or permit an advertisement to be made, in conjunction with the business of a principal broker or a real estate brokerage company;

(b) Discuss, induce, or promote affiliation with a principal broker or a real estate brokerage company;

(c) Submit an application or renewal that contains false, inaccurate, or misleading information;

(d) Violate the provisions of this administrative regulation as it relates to the establishment or conduct of the provider, any instructor, or any course material; or

(e) Directly or indirectly attempt, or allow an official, employee, or a person on their behalf, to reconstruct the real estate licensing examination or portion of the examination.

(4) If an approved education provider’s approval may be subject to withdrawal for the reasons set forth in this section, the commission shall:

(a) Give written notice to the school of the intent to withdraw approval and the reasons therefor; and

(b) Give the school an opportunity to address the notice, in writing, within thirty (30) days of the date of the notice of intent to withdraw approval.

Section 13. Records Retention.

(1) An approved education provider shall maintain accurate records on each student enrolled in a course for three (3) years.

(2) A record shall include each student's record of courses completed or attempted, academic hours awarded, final grades, and test scores, if applicable.

(3) A certificate of completion shall be:

(a) Included in the records of each student; and

(b) Delivered to each student upon completion of a course.

Section 14. Instructors to Receive Credit for Teaching.

(1) A licensee who teaches an approved continuing education course shall receive credit on an hour-for-hour basis, not to exceed three (3) hours per calendar year.

(2) To obtain continuing education credit, the instructor's name shall be added to the education attendance roster for the course.

(3) The instructor shall not receive credit more than once in a calendar year for teaching a specific course.

Section 15. Effective Date.

The first provider application, course approval application, and instructor application for each provider, course, or instructor received after the effective date of this administrative regulation shall be considered an initial application for purposes of the application and renewal processes prescribed in this administrative regulation.

Section 16. Incorporation by Reference.

(1) The following material is incorporated by reference:

(a) "Instructor Application and Renewal Form", KREC Form 100, 07/19;

(b) "Education Provider Application and Renewal Form", KREC Form 101, 07/19;

(c) "Pre-license Course Application and Renewal Form", KREC Form 102, 07/19;

(d) "Continuing and Post-license Education Course Application and Renewal Form", KREC

Form 103, 07/19;

(e) "Instructor Affiliation Form", KREC Form 104, 07/19;

(f) "Provider Host Form", KREC Form 105, 07/19;

;

(g) "Course Evaluation Form", KREC Form 106, 07/19; and

(h) "Generally Accepted Principles of Education", KREC Form 107, 07/19.

(2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Kentucky Real Estate Commission, 656 Chamberlin Avenue, Suite B, Frankfort, Ken- tucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m. This material is also available from the commission's Web site: www.krec.ky.gov

201 KAR 11:190. Consumer and administrative complaints; discipline; administrative hearings.

RELATES TO: KRS 324.045, 324.046, 324.150, 324.151, 324.160, 324.170, 324.200, 324.281(5)

STATUTORY AUTHORITY: KRS 324.151(1), (3), 324.160, 324.170, 324.281(5), 324.282

NECESSITY, FUNCTION, AND CONFORMITY: KRS 324.281(5) and KRS 324.282 require the commission, with the approval of the executive director of the Kentucky Real Estate Authority, to promulgate administrative regulations necessary to implement KRS Chapter 324. KRS 324.151(1) and (3) require the commission to establish the required forms for a complaint and answer. KRS 324.160 authorizes the commission to order sanctions. KRS 324.170(1) re- quires the commission to schedule and conduct an administrative hearing in accordance with the provisions of KRS Chapter 13B prior to denying an application for license, before ordering any disciplinary action, or before suspending or revoking a license. This administrative regulation establishes supplemental administrative hearing procedures for matters before the commission, the informal settlement process for entry of agreed orders, the required forms for a complaint or an answer, the standards for filing a sworn statement to the real estate commission, and the supplemental provisions relating to consumer access to the commission's Research, Education, and Recovery Fund.

Section 1. Filing a Complaint.

(1) A complaint shall:

(a) Be filed on the Sworn Statement of Complaint, KREC Form 300;

(b) Allege a prima facie case of specific violation of KRS 324.160 by a licensee or a case of

unlicensed brokerage against an unlicensed individual;

(c) State the basis of the complaint fully, including the name of the principal broker, if known;

(d) Be notarized by a notary public; and

(e) Include a copy of all the following documents relevant to the complaint or a written explanation of why the documents are unavailable:

1. Listing contract;

2. Purchase contract;

3. Seller's Disclosure of Property Condition form, incorporated by reference in 201 KAR

11:121;

4. Agency Consent Agreement and the Guide to Agency Relationships forms, incorporated

by reference in 201 KAR 11:121;

5. Settlement statement; and

6. Any other documentation to support a claim or alleged violation.

(2) The complaint shall be filed no more than one (1) year from:

(a) Actual knowledge of the cause of action; or

(b) The time circumstances would reasonably have put the complainant on notice of the cause of action.

Section 2. Complaint Review, Answers, and Replies.

(1) Upon receipt of a complaint, commission staff shall review the complaint to determine whether the complaint states a prima facie violation of KRS Chapter 324.

(2) If a supplement to the complaint is required because the original complaint was deficient, the supplement shall be filed on Sworn Supplement to Complaint, KREC Form 302 and notarized.

(3)(a) If the commission staff determine the complaint alleges a prima facie case of a specific violation of KRS 324.160, the complaint shall be served for an answer on the licensee as established in KRS 324.151(2).

(b) A responding licensee shall file a Sworn Answer to Complaint, KREC Form 301 in accordance with KRS 324.151(3).

(4) The answer shall:

(a) State an answer to the complaint;

(b) Be notarized by a notary public; and

(c) Include a copy of the following documents or a written explanation of why the documents are unavailable:

1. Listing contract;

2. Purchase contract;

3. Seller's Disclosure of Property Condition form, incorporated by reference in 201 KAR

11:121;

4. Agency Consent Agreement and the Guide to Agency Relationships forms, incorporated by reference in 201 KAR 11:121;

5. Settlement statement; and

6. Any other documentation to rebut a claim or alleged violation.

(5)(a) The complainant may file one (1) reply to the respondent’s Sworn Answer to Complaint within ten (10) days of receiving the respondent’s Sworn Answer to Complaint;

(b) The respondent may file one (1) reply to complainant’s reply within ten (10) days of receiving the complainant’s reply; and

(c) All replies shall be notarized and include any documents necessary to support or rebut an allegation or a violation.

(6)(a) For purposes of calculating filing deadlines prescribed by this administrative regulation, the commission shall follow the Kentucky Rules of Civil Procedure.

(b) A request for an extension of any filing deadline prescribed by this administrative regulation shall be made directly to the office of general counsel and shall be granted or denied. If the request is denied, the requester shall have the opportunity to appeal the decision to the commission at its next scheduled meeting.

(7) The commission shall not entertain motions with regard to pending complaints.

Section 3. Complaint Screening Committee.

(1)(a) The commission chair may create at least one (1) complaint screening committee.

(b) Each complaint screening committee shall consist of no more than three (3) commissioners.

(2) The complaint screening committee shall:

(a) Review complaints, supplements, answers, and replies consistent with the Complaint Review Process Chart;

(b) Order investigation or further investigation;

(c) Review investigative reports;

(d) Determine whether the commission’s Research, Education, and Recovery fund shall be at issue; and

(e) Make recommendations as to the disposition of the pending complaint to the full commission.

(3) The committee may be assisted by the commission staff and counsel.

(4)(a) Prior to the complaint screening committee’s review of an investigative report, the commission’s investigator shall notify the respondent that he or she may request a copy of the commission’s investigation report to review and address factual matters contained in the investigation report.

(b) In the investigator’s determination, the report and exhibits shall be redacted to protect personal and sensitive information relating to witnesses.

(c) If the respondent believes a factual discrepancy exists in the investigation report, he or she shall notify the investigator in writing within five (5) days of receiving the report for review and provide the investigator with supporting documentation to rebut the factual discrepancy, if available.

(d) The investigator shall make any changes necessary based on his or her review of the respondent’s notification.

(5) The committee shall report its findings and recommendations for disposition of complaints to the full commission in the form of a motion, and the commission shall:

(a) Dismiss the complaint without an administrative hearing if the facts or evidence do not indicate a prima facie case for a violation of KRS Chapter 324; or

(b) Find a violation of a provision of KRS Chapter 324 or 201 KAR Chapter 11 and issue notice of proposed action against the licensee consistent with KRS Chapter 13B.

(6) The commission, through the complaint screening committee, may engage in informal settlement negotiations, consistent with Section 5 of this administrative regulation.

(7) A commissioner shall recuse himself or herself from any matter relating to an administrative hearing or final order that resolves a case if he or she:

(a) Performed or directed some or all of the investigation;

(b) Has a personal or business relationship with either the complainant or any respondent;

(c) Is the complainant, a respondent, or a witness;

(d) Believes that his or her impartiality may fairly be called into question; or

(e) Is advised to recuse by the office of general counsel or the executive director of the Kentucky Real Estate Authority.

(8) The commission shall notify the complainant and respondent in writing of its decision regarding the disposition of a complaint.

Section 4. Withdrawal of a Complaint. A complainant may withdraw a complaint if:

(1)(a) An answer has not been filed; and

(b) The withdrawal is made within twenty (20) days of the date the complaint was received by the respondent; or

(2)(a) There is good cause for the withdrawal; and

(b) The commission approves the withdrawal.

(3) Nothing in this section shall prevent the commission from filing its own complaint against a licensee.

Section 5. Settlement by Informal Proceedings.

(1) At any time following the filing of a complaint and answer, the commission, through its legal counsel, may enter into informal settlement proceedings with a licensee for the purpose of expeditiously resolving any disciplinary matter.

(2)(a) The commission shall approve or reject all settlement proposals.

(b) Any matter to which a licensee and the commission's legal counsel have stipulated that is rejected by the commission shall not thereafter bind the parties or the commission.

(3) The commission may employ mediation as a method of resolving the matter informally.

(4) All proposed agreed orders shall be signed by the licensee and shall advise the licensee that by entering into an agreed order, the licensee expressly acknowledges that the licensee is fully and completely informed of the due process rights afforded to the licensee and that the licensee knowingly, willingly, and voluntarily agrees to waive those rights and enter into an agreed order.

Section 6. Standards for Filing a Sworn Statement.

Any licensee found to have misrepresented facts in any sworn statement shall be subject to disciplinary proceedings by the commission and the commission may seek a criminal indictment for perjury.

Section 7. Emergency Orders and Hearings.

(1) Consistent with KRS 324.150(1)(b) and KRS 13B.125, the commission may issue an emergency order prior to conducting a hearing if an alleged escrow account violation warrants emergency action.

(2) An escrow account violation shall warrant emergency action if:

(a) A licensee is alleged to have committed two (2) or more escrow account violations;

(b) A licensee is alleged to have committed one (1) escrow account violation in excess of $500; or

(c) A substantiated threat to the public’s health, safety, or welfare exists.

(3) An emergency order authorized pursuant to this section shall be signed by the executive director, the chair of the commission, and one (1) member of the complaint screening committee. The order shall be served upon the licensee who is the subject of the emergency order pursuant to KRS 13B.125.

(4) An emergency order issued pursuant to this section may be served on the appropriate financial institution to order an escrow account be frozen until further orders of the commission or a court of competent jurisdiction.

(5) A licensee who is the subject of an emergency order issued pursuant to this section may request an emergency hearing in accordance with KRS 13B.125.

Section 8. Recovery Fund Proceedings.

(1) If the Commission determines that the recovery fund shall be at issue in an administrative hearing, the complainant shall become a party.

(2) The Commission shall not represent the complainant in the administrative hearing.

(3) The complainant shall carry the burden of proof on the issue of damages.

Section 9. Incorporation by Reference.

(1) The following material is incorporated by reference:

(a) "Sworn Statement of Complaint", KREC Form 300, 7/19;

(b) "Sworn Answer to Complaint", KREC Form 301, 7/19;

(c) "Sworn Supplement to Complaint", KREC Form 302, 7/19; and

(d) "Complaint Review Process Chart", 6/19.

(2) This material may be inspected, copied, or obtained, subject to applicable copyright law,

at the Kentucky Real Estate Commission, 656 Chamberlin Ave., Suite B, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m.

201 KAR 11:210. Licensing, education, and testing requirements.

RELATES TO: KRS 2.013, 324.010, 324.020, 324.040, 324.045(1), (2), (3), 324.046, 324.085, 324.090, 324.141, 324.160, 324.281, 324.287, 324.310, 324.330, 324.990, 28 C.F.R. 16.30-16.33

STATUTORY AUTHORITY: KRS 324.045, 324.141, 324.281(5), 324.282

NECESSITY, FUNCTION, AND CONFORMITY: KRS 324.281(5) and 324.282 require the Real Estate Commission, with the approval of the executive director of the Kentucky Real Estate Authority, to promulgate administrative regulations necessary to carry out and enforce the provisions of KRS Chapter 324. KRS 324.040(2) requires applicants for licensure as a broker or sales associate to apply in writing on forms prepared or furnished by the Real Estate Commission. KRS 324.045(4) authorizes the commission to promulgate an administrative regula- tion to require a national criminal history check prior to licensure. KRS 324.141(1) requires the commission to promulgate administrative regulations to establish reciprocal licensing procedures that allow out-of-state actively-licensed sales associates and brokers to apply for a Kentucky license that is the same as, or equivalent to, their out-of-state license. KRS 324.090(1) requires the real estate commission to establish an expiration and renewal date for licenses. KRS 324.310(1) requires the delivery of a sales associate's license to the commission when an association with a principal broker is terminated, and KRS 324.310(2) authorizes a licensee to place his or her license into inactive status with the commission. KRS 324.330(1) requires notice to be given to the real estate commission when a licensee’s location, firm name, surname, or affiliation changes. KRS 324.085(1) requires an actively-licensed agent, except an agent licensed prior to June 19, 1976 and a licensee satisfying the educational requirement in KRS 324.085(2), to successfully complete twelve (12) hours of mandatory continuing education for the biennial license period as a condition of licensure renewal, requires six (6) of the twelve (12) hours to be completed in the first year of the biennial license period, and requires that six (6) of the twelve (12) hours pertain to the study of real estate law. KRS 324.085(2) requires a licensee who is issued an initial sales associate license after January 1, 2016, to complete forty-eight (48) classroom or online hours of commission-approved post-license education. This administrative regulation establishes requirements for applying for initial licensure, license renewal, and reciprocal licensing; the commission’s criminal background check policies for all applicants; the procedures for a licensee to report changes to his or her contact information to the commission; the penalty for failure to comply with KRS 324.330; the procedure for the delivery of a sales associate's license to the commission when affiliation with a principal broker is terminated; the requirements relating to pre-license education; continuing education, and post- license education and the disciplinary consequences for failing to comply with the requirements.

Section 1. Initial Sales Associate License.

(1) Prior to applying for an initial sales associate license, a prospective applicant shall complete six (6) academic credit hours, or its equivalent, of pre-licensing education with either:

(a) An approved pre-license education provider; or

(b) An accredited institution as defined by KRS 324.010(8).

(2) An applicant for initial sales associate licensure shall submit:

(a) A national criminal history check in accordance with KRS 324.045(5) and this administrative regulation;

(b) A completed application submitted on Score Report/License Application obtained from

the commission’s testing provider after passing the required examination, which shall contain a recent photo of the applicant;

(c) Proof of high school graduation, or its equivalent;

(d) Proof of completion of six (6) academic credit hours, or its equivalent in qualifying pre-license education;

(e) Proof of Errors and Omissions insurance coverage compliant with KRS 324.395 and 201 KAR 11:220, if the license will be immediately active;

(f) The nonrefundable sixty (60) dollar original license fee and sixty (60) dollar recovery fund fee required by KRS 324.287(2) and (8); and

(g) A completed and signed Consent to Jurisdiction and Service of Process, KREC Form 205, if the applicant resides outside of the Commonwealth of Kentucky.

(3) An applicant may submit a paper or electronic application.

(4) Within ten (10) days of being issued a license number and Occupations and Professions Identification Number, OP ID, the licensee shall:

(a) Create an Online Services Portal account;

(b) Verify the licensee’s current residential address and telephone number; and (c) Provide one (1) valid electronic mail address.

Section 2. Broker’s License.

(1) Prior to applying for a broker’s license, a prospective applicant shall:

(a) Complete not less than twenty-one (21) academic credit hours, consistent with KRS 324.046 (1)(a), of education to acquire a broker’s license, including a minimum of:

1. Nine (9) academic credit hours of real estate courses, which shall not include an applicant’s sales associate prelicense education;

2. Three (3) academic credit hours of Broker Management; and

3. Nine (9) academic credit hours of broker elective courses, approved by the commission. (b) A licensee shall not get duplicate course credit toward a broker’s license; (c) A licensee shall get course credit toward his or her broker’s license by completing National Association of Realtors, NAR designation courses. Credit for the designation course shall be awarded consistent with accreditation at the time the course is completed.

(d) An applicant for a broker’s license may submit a request for an education review by submitting a completed Broker Education Review Form, KREC Form 207.

(2) An applicant for a broker's license shall submit:

(a) Proof of the requisite sales associate experience as provided in KRS 324.046(1)(b) or its equivalent as provided in KRS 324.046(3) or (4);

(b) A completed application submitted on Score Report/License Application obtained from the commission’s testing provider after passing the required examination;

(c) Proof of completion of the broker curriculum education real estate courses required by KRS 324.046(1)(a), KRS 324.046(3), and 201 KAR 11:170, Section 7;

(d) Proof of Errors and Omissions insurance coverage compliant with KRS 324.395 and 201 KAR 11:220, if the license will be immediately active, or proof of extended reporting period coverage as required by KRS 324.395 if the license will be placed into inactive status;

(e) An original copy of the applicant’s national criminal history check obtained consistent with KRS 324.045(5) and this administrative regulation;

(f) A completed and signed Consent to Jurisdiction and Service of Process, KREC Form 205, if the applicant resides outside of the Commonwealth of Kentucky; and

(g) The nonrefundable sixty (60) dollar original license fee required by KRS 324.287(2). (3) An applicant may submit a paper or electronic application.

(4) The provisions of the section shall not be implemented until April 1, 2020.

Section 3. Reciprocal Licensing.

(1) An individual actively licensed as a real estate professional outside of Kentucky may apply for an equivalent Kentucky license.

(2) To obtain a sales associate license by reciprocal licensing, an individual shall:

(a) File with the commission a national criminal history check in accordance with KRS 324.045(5) and this administrative regulation;

(b) File with the commission a certification of licensure issued within the preceding ninety (90) days by the regulatory authority of the state for which the individual seeks reciprocity;

(c) Submit proof of completion of six (6) academic credit hours or their equivalent in real estate courses from an accredited institution or approved real estate school pursuant to KRS 324.046 and KRS 324.141(1)(a)3.;

(d) Pass the Kentucky law portion of the licensing examination for a sales associate's license;

(e) Submit a completed and signed Consent to Jurisdiction and Service of Process, KREC Form 205, if the applicant resides outside of Kentucky; and

(f) The nonrefundable sixty (60) dollar original license fee and sixty (60) dollar recovery fund fee required by KRS 324.287(2) and (8).

(3) To obtain a broker license by reciprocal licensing an individual shall:

(a) File with the commission a national criminal history check in accordance with KRS 324.045(5) and this administrative regulation;

(b) File with the commission a certification of licensure issued within the preceding ninety (90) days by the regulatory authority of the state for which the individual seeks reciprocity;

(c) Submit proof of completion of twenty one (21) academic credit hours or their equivalent in real estate courses from an accredited institution or approved real estate school pursuant to KRS 324.046 and KRS 324.141(1)(a)3.;

(d) Pass the Kentucky law portion of the licensing examination for a broker’s license;

(e) Submit a completed and signed Consent to Jurisdiction and Service of Process, KREC Form 205, if the applicant resides outside of Kentucky; and

(f) The nonrefundable sixty (60) dollar original license fee and sixty (60) dollar recovery fund fee required by KRS 324.287(2) and (8).

(4) For purposes of subsections (2)(c) and (3)(c) of this Section, "or their equivalent" shall mean any education requirements approved by the commission pursuant to a reciprocity agreement entered into between the jurisdiction from which the applicant is seeking reciprocity and the commission.

(5) An applicant may submit a paper or electronic application.

(6) Within ten (10) days of being issued a license number and OP ID, the licensee shall:

(a) Create an Online Services Portal account;

(b) Verify the licensee’s current residential address and telephone number; and

(c)1. Provide one (1) electronic mail address;

2. The licensee may provide additional, unique electronic mail addresses.

Section 4. Real Estate Examination.

(1) A successful passing score on required portions of the real estate examination mandated by KRS 324.045(2) shall be valid for sixty (60) days.

(2) An applicant who fails to pass any required portion of the examination mandated by KRS 324.045(2) three (3) times shall wait at least thirty (30) calendar days from the date of the applicant's third failed examination prior to retaking the examination, or the score shall be void.

Section 5. Foreign Language Diplomas or Transcripts.

(1) If an applicant submits documentation of qualifying education in a language other than English, the diploma or transcript shall:

(a) Be accurately translated by a foreign language document translation service; and

(b) Include a certification stating that the translation is true, accurate, and complete.

(2) The applicant shall provide a letter to the commission indicating that the curriculum of the proffered education is equivalent to a high school diploma or GED. The comparison shall be made by an education credential service provider with membership in the National Associa- tion of Credential Evaluation Services.

(3) If the applicant is unable to comply with the requirements of this section, the applicant shall submit proof of the receipt of a GED granted by an agency or institution within the United States.

Section 6. National Criminal History Check.

(1) Prior to taking a licensure examination, an applicant shall request a copy of the applicant's national criminal history check, which shall only be valid for ninety (90) days from the date of the record report.

(2)(a) The applicant may request a copy of his or her national criminal history check from the Federal Bureau of Investigation pursuant to the provisions of 28 C.F.R. 16.30 to 16.33 or through the Kentucky State Police for submission to the Federal Bureau of Investigation consistent with KRS 324.045(5).

(b) An applicant may submit the Criminal History Affidavit, KREC Form 209, with his or her application for licensure if:

1. The applicant is unable to obtain his or her national criminal history check from the Federal Bureau of Investigation because the applicant’s fingerprints are rejected;

2. The applicant submits proof that he or she was fingerprinted at a recognized state or local law enforcement agency;

3. The applicant submits a Kentucky Administrative Office of the Courts (AOC) Fast Check Criminal Records Report, or a similar informal background report from the jurisdiction where the applicant resides; and

4. The applicant submits proof of an alternate request for a Federal Bureau of Investigation records check by name or social security number.

(c) An issued license shall be subject to discipline if, while an applicant, the licensee:

1. Having submitted a Criminal History Affidavit, KREC Form 209, with his or her application for licensure, fails to submit the national criminal history check within ten (10) days of receiving the report; or

2. Failed to report any new criminal charges or convictions that occurred after the national criminal history check report date.

(3)(a) The commission shall investigate a national criminal history check which reveals a felony conviction within the previous ten (10) years, or a misdemeanor conviction within the previous five (5) years, and may investigate any charges or convictions revealed by the national criminal history check or any other evidence of dishonesty, untruthfulness, or bad reputation of the applicant.

(b) In the determination of the chair of the commission, the commission may delegate the investigative process to the Applicant Review Committee, a subcommittee of the commission, to be comprised of no more than two (2) commissioners;

(c) The Applicant Review Committee shall operate consistent with KRS Chapter 335B.

(4) Following the completion of the investigation, the commission shall review the investigation report and shall:

(a) Order the applicant to appear before the commission for a hearing before the real estate commission or the real estate commission's authorized representative to determine whether the applicant meets the standards of KRS 324.045; or

(b) Allow the applicant to proceed with his or her licensure application without a hearing.

(5) If an authorized representative conducts the hearing, the authorized representative shall recommend to the real estate commission whether the applicant meets the standards of KRS 324.045. The real estate commission may accept the recommendation, reject the recommendation and enter a separate order, or remand to the representative for further proceedings in accordance with KRS Chapter 13B.

(6) Following the hearing, if all other licensing pre-requisites are satisfied, the real estate commission shall either approve or deny the application and notify the applicant of its decision along with a written explanation of the reasons for its decision.

(7) If the real estate commission denies the application, the real estate commission shall indicate in its order, if and when, the applicant will be eligible to submit a subsequent licensure application.

(8) If an applicant, or a licensee without an active license, has engaged in any unlicensed brokerage activity within this Commonwealth, that person shall, prior to the issuance or reactivation of any license by the commission, submit proof that he or she has returned all fees earned or received as a result of the unlicensed brokerage activity, consistent with KRS 324.990(2).

Section 7. Release by Principal Broker.

(1) Upon notification from the principal broker or the affiliate licensee that an affiliate licensee has been released pursuant to KRS 324.310(1), the commission shall notify the affiliate licensee at his or her last electronic mail address or addresses on file at the commission that, within thirty (30) days of the date of the release notification, the licensee shall:

(a) Reaffiliate with another broker by submitting a completed Acceptance and Release Form, KREC Form 200, or by using the licensee’s online services portal; or

(b) Request that his or her license be placed into inactive status by using the licensee’s online services portal or by submitting a completed License Status and Personal Information Update Form, KREC Form 201;

(c) If the affiliate holds a broker license and was formerly a principal broker, he or she shall:

1. Affiliate with another principal broker;

2. Open a new office as principal broker; or

3. Place his or her license into inactive status.

(2) Failure to comply with the notification issued by the commission shall result in the cancellation of the licensee’s license.

(3) A licensee with a cancelled license shall not engage in real estate brokerage activity during the period of cancellation.

Section 8. License Renewal.

(1)(a) Licenses shall be renewed on or before March 31 through the licensee’s Online Services Portal account.

(b) A licensee who is unable to renew his or her license using his or her Online Services Portal may utilize the License Renewal Form, KREC Form 208.

(2) A cancelled license shall not be renewed until the license is reactivated and in good standing.

(3)(a) A license shall be cancelled if not renewed.

(b) A licensee with a cancelled license shall not engage in real estate brokerage pursuant to KRS 324.160(2).

(4) A licensee shall file or verify with the commission at renewal a telephone number, residential address, and an electronic mail address or addresses.

Section 9. Licensing Records.

(1)(a) A licensee shall notify the commission by submitting a completed License Status and Personal Information Update Form, KREC Form 201, or through the online services portal, of a change in the following information:

1. The licensee’s legal name;

2. The licensee’s nickname;

3. Any alternate or assumed name being used by the licensee;

4. The licensee’s residential address;

5. The licensee’s electronic mail address or addresses; or

6. The licensee’s preferred direct or personal phone number.

(b) If the licensee is changing his or her legal name, he or she shall provide legal documentation supporting the changed name.

(c) Processing of the changes contemplated in paragraph (a) of this subsection shall require payment of a nonrefundable ten (10) dollar change request fee required by KRS 324.287.

(d) The licensee shall submit a completed and signed Consent to Jurisdiction and Service of Process, KREC Form 205, if the licensee is moving to a residence outside the Commonwealth of Kentucky.

(2)(a) A licensee shall notify the commission by completing, signing, and filing with the commission the Certification of Insurance Coverage, KREC Form 203, or through the online services portal, of any change in private professional liability insurance coverage or extended reporting period coverage as required by KRS 324.395.

(b) This notice shall be accompanied by a nonrefundable ten (10) dollar change request fee required by KRS 324.287(8).

(3)(a) A principal broker shall notify the commission of any change of his or her primary company location, firm name, alternate or assumed name, doing business as, branch office name, branch office address, designated manager or managers, escrow account or accounts, or email address or addresses by completing, signing, and filing with the commission the Company Information Update Form, KREC Form 202, or through the online services portal.

(b) This notice shall be accompanied by a nonrefundable ten (10) dollar change request fee required by KRS 324.287.

(4)(a) A principal broker shall notify the commission of a change in principal broker at an existing real estate brokerage company by submitting a completed Company Change of Principal Broker Form, KREC Form 204, or through the online services portal.

(b) This notice shall be accompanied by the fee required by KRS 324.287.

(5)(a) An affiliated licensee shall submit a completed Acceptance and Release Form, KREC Form 200, to change his or her affiliation to another principal broker.

(b) This form shall be accompanied by the fee required by KRS 324.287.

(6) A licensee requesting a license history certification shall complete and submit the License Status and Personal Information Update Form, KREC Form 201, accompanied by a nonrefundable ten (10) dollar fee for each certification requested.

(7) A licensee shall be subject to discipline consistent with the commission’s authority in KRS 324.160(1) for a violation of KRS 324.160(4)(t) if the licensee fails to submit notification to the commission of any changes required by this section within ten (10) days of the change.

Section 10. Inactive Status.

(1) An active licensee who wishes to place his or her license into inactive status shall submit Form 201, License Status and Personal Information Update Form, or through the online services portal.

(2) All licensees placing a license into inactive status shall:

(a) Obtain extended reporting period (ERP) coverage insurance for a period of one (1) year as established by KRS 324.395(1); and

(b) Submit a completed Certificate of Insurance Coverage, KREC Form 203, with proof of the required coverage.

(3) The coverage obtained pursuant to subsection (2) of this section shall be consistent with the minimum requirements prescribed by 201 KAR 11:220.

(4) To reactivate a license from inactive status, a licensee shall complete and submit Form 201, License Status and Personal Information Update Form, or through the online services portal, and comply with KRS 324.310 and complete the following education:

(a) If the licensee has not taken the Core course in four (4) years, the licensee shall complete Core; and

(b) If the licensee has been inactive during more than one (1) education cycle, the licensee shall complete core plus six hours of continuing education elective to be selected from a list of courses to be compiled by the commission. This paragraph shall not take effect until January 1, 2021.

(5) If the licensee is exempt from continuing education requirements pursuant to KRS 324.046(5), the licensee shall not be required to complete any continuing education to reactivate a license from inactive status.

Section 11. Mandatory Continuing Education.

(1) An active licensee, licensed by the commission on or after June 19, 1976, shall comply with the requirements of KRS 324.085(1) by attending and successfully completing six (6) hours of continuing education courses sponsored or approved by the commission each year. Three (3) of the hours of continuing education shall be in law, and three (3) of the hours of continuing education may be electives.

(a) An active licensee shall complete the continuing education requirements consistent with KRS 324.085(1) no later than December 31 of the first year in the renewal cycle. An active licensee shall receive continuing education credit for any approved course completed on or before December 31, if the education provider has reported the licensee’s course completion to the commission before 11:59 p.m. on December 31 consistent with 201 KAR 11:170, Section 6(3).

(b) An active licensee who fails to complete his or her continuing education requirement shall have his or her license cancelled and be ineligible to renew if the licensee has not completed the continuing education required by KRS 324.085(1) and this administrative regulation.

(2) An active licensee’s annual mandatory continuing education requirement shall not be satisfied by the completion of a pre-license course.

(3) A candidate shall not submit completion of the same continuing education course more than once for licensure credit in the same calendar year.

(4) A licensee shall not receive credit for more than nine (9) hours of continuing education in a calendar day.

(5) A licensee shall not receive credit for a course if the licensee arrives more than ten (10) minutes after the scheduled start of the course or after the conclusion of any break during the course.

(6) An active licensee shall attend a commission-approved core course once every four (4) years, with the first four (4) year cycle beginning from the year of initial licensure. The core course shall:

(a) Satisfy the licensee's mandatory continuing education requirement for the year in which the course is taken; and

(b) Be a six (6) hour comprehensive review of the requirements of:

1. KRS Chapter 324;

2. 201 KAR Chapter 11;

3. Common and federal law relating to real estate; and

4. The standards of practice for a real estate licensee.

(7) An active licensee who fails to complete Core in a year in which the licensee is required to complete Core, even if the licensee completed other continuing education, shall be subject to the delinquency procedures set forth in Section 13 of this administrative regulation.

Section 12. Exemptions from the Continuing Education Requirement.

(1) A person licensed prior to June 19, 1976 shall not be required to complete continuing education.

(2) A reciprocal licensing broker, who has been licensed for less than three (3) months when education is due, shall not be required to attend a continuing education course during the first education cycle in which he or she is licensed in Kentucky.

(3) A reciprocal licensing sales associate shall not be required to complete continuing education during the first two (2) full education cycles of licensure in Kentucky. A reciprocal licensing sales associate shall complete the education required by KRS 324.085(2).

(4) A licensee shall not be required to comply with KRS 324.085(1) during the first two (2) full education cycles from the date of issuance of a sales associate license.

(5) A licensee whose license is inactive shall not be required to attend continuing education courses while the license remains inactive, except as provided in this administrative regulation.

Section 13. Continuing Education Compliance and Delinquency.

(1) The commission shall, for good cause shown, extend the time requirements established by KRS 324.085(1) and this administrative regulation. Good cause may include a true hardship, extensive medical issues for the licensee or the licensee's immediate relative, active military duty or service, or other good cause that clearly warrants relief.

(2)(a) The request for extension and any supporting documentation shall be received in writing on or before the last day of the month or year in which the education requirement is due, unless the hardship prevents compliance with subsection (1) of this section.

(b) A license shall not be cancelled while a hardship request is pending.

(c) The commission shall review the hardship request and notify the licensee in writing of the commission’s decision.

(3)(a) If a licensee fails to comply with the mandatory education requirements of this administrative regulation, the executive director or the executive director's representative shall issue a delinquency notice to the licensee.

(b) If the licensee fulfilled the education requirement in the year it was required, proof shall be forwarded to the commission upon request, and the license shall be reactivated.

(4)(a) If the licensee fails to request an extension and fails to forward proof of completion prior to the deadline, the license shall be cancelled automatically.

(b) A license cancelled for nonfulfillment of the continuing education requirements may be reactivated if the licensee enters into a written delinquency plan, pays a $1,000 administrative fine, and either:

1. Places the license into inactive status; or

2. Agrees in the delinquency plan to complete the delinquent continuing education requirements for the previous calendar year on or before April 30.

(5) A licensee who places his or her license into inactive status under the provisions of this section shall not reactivate the license until he or she has:

(a) Completed all delinquent mandatory continuing education requirements; and

(b) Satisfied the requirements of KRS 324.310.

(6) A licensee who fails to place his or her license into inactive status or file the delinquency plan immediately following the year in which continuing education requirements were not fulfilled, shall automatically have the license cancelled and shall not be eligible to renew without completing the delinquent education.

(7) If a licensee fails to complete the requirements of the delinquency plan within twenty (20) days of the agreed completion date, the commission shall issue a notice of violation to the licensee.

(8) Failure to respond to the notice of violation shall result in a default order of suspension for a period of six (6) months.

(9) If the commission suspends the license as a result of a default order or after hearing, if one is requested, the licensee shall not be allowed to activate the license unless, within ninety (90) days following expiration of the suspension, the licensee:

(a) Completes all delinquent mandatory continuing education requirements;

(b) Submits the required documents to reinstate the license; and

(c) Pays all necessary reactivation, renewal, and transfer fees.

(10) If the licensee does not reinstate the license within ninety (90) days following the completion of the suspension period, the license shall be cancelled and the licensee shall be obligated to meet the requirements for initial licensure, including retaking the examination.

(11) A license cancelled under this section shall not be reactivated until the licensee has completed all of his or her mandatory education requirements, complied with all commission orders, and submitted all other applicable licensing requirements.

(12) Failure of the executive director or his or her representative to issue a deficiency notice to the licensee shall not relieve the licensee of his or her mandatory education requirements or the penalties associated with the deficiency.

(13) A license cancelled for continuing education deficiency shall be subject to the provi-sions of KRS 324.160(2).

Section 14. Post-License Education Compliance and Delinquency.

(1) The time requirements established by KRS 324.085(2) and this administrative regulation shall be extended by the commission for good cause shown, such as a true hardship, extensive medical issues for the licensee or the licensee's immediate relative, active military duty or service, or other good cause that clearly warrants relief.

(2) The license of a licensee who fails to complete his or her post-licensing education on or before the licensee’s deadline shall be automatically cancelled the following day.

(3) A license of a licensee cancelled for post-license education deficiency may not be reactivated until all delinquent post-licensing education is complete.

(4) A license cancelled for post-license education deficiency shall be subject to the provisions of KRS 324.160(2).

Section 15. Death or Incapacity of a Principal Broker.

(1) Pursuant to KRS 324.425, an affiliated licensee may complete and close the existing business of a deceased or incapacitated broker for a temporary period, not to exceed six (6) months.

(2) Any affiliate requesting principal broker status pursuant to KRS 324.425 shall submit a completed Notification of Death or Incapacity of a Licensee, KREC Form 206.

Section 16. Incorporation by Reference.

(1) The following material is incorporated by reference:

(a) "Acceptance and Release Form", KREC Form 200, 7/2019;

(b) "License Status and Personal Information Update Form", KREC Form 201, 11/2019;

(c) "Company Information Update Form", KREC Form 202, 11/2019;

(d) "Certification of Insurance Coverage", KREC Form 203, 11/2019;

(e) "Company Change of Principal Broker Form", KREC Form 204, 7/2019;

(f) "Consent to Jurisdiction and Service of Process", KREC Form 205, 7/2019;

(g) "Notification of Death or Incapacity of a Licensee", KREC Form 206, 11/2019;

(h) "Broker Education Review Form", KREC Form 207, 7/2019;

(i) "License Renewal Form", KREC Form 208, 11/2019; and

(j) "Criminal History Affidavit", KREC Form 209, 7/2019.

(2) This material may be inspected, copied, or obtained, subject to applicable copyright law,

at the Kentucky Real Estate Commission, 656 Chamberlin Avenue, Suite B, Frankfort, Ken- tucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m. This material is also available from the commission's Web site: www.krec.ky.gov. (13 Ky.R. 1517; eff. 3-6-1987; Am. 17 Ky.R. 2217; 2692; eff. 3-8-1991; 27 Ky.R. 1515; 2711; eff. 4-9-2001; 34 Ky.R. 836; 1939; eff. 3-7- 2008; 42 Ky.R. 468; 1469; eff. 12-4-2015; 46 Ky.R. 599; 1457; 1824; 2031; eff. 12-16-2019.)

201 KAR 11:220. Errors and omissions insurance requirements.

RELATES TO: KRS 324.010, 324.020, 324.395

STATUTORY AUTHORITY: KRS 324.281(5), 324.282, 324.395(1), (4), (5)

NECESSITY, FUNCTION, AND CONFORMITY: KRS 324.281(5) and 324.282 require the

Real Estate Commission, with the approval of the executive director of the Kentucky Real Estate Authority, to promulgate administrative regulations to carry out and enforce the provisions of KRS Chapter 324. KRS 324.395(1) requires all real estate licensees, except those whose licenses are in inactive status to carry errors and omissions insurance to cover all activities contemplated under KRS Chapter 324. KRS 324.395(5) requires the commission to determine the terms and conditions of mandatory errors and omissions insurance coverage. This administrative regulation sets forth the minimum terms and conditions of insurance coverage required under KRS 324.395.

Section 1. Minimum Coverage Requirements.

A licensee shall carry continuous errors and omissions coverage that, at a minimum includes:

(1) A limit of liability not less than $100,000 for any one (1) claim, excluding the cost of investigation and defense; and

(2) An annual aggregate limit of liability of not less than $1,000,000, excluding the cost of investigation and defense.

Section 2. Firm Coverage.

A principal broker who purchases errors and omissions "firm coverage" insurance shall have at least the following aggregate amounts:

(1) One (1) to forty (40) licensees shall carry a $1,000,000 annual aggregate; or (2) Forty-one (41) or more licensees shall carry a $2,000,000 annual aggregate.

Section 3. Deductibles. All errors and omissions coverage or professional liability insurance policies shall have maximum deductibles, which may be separate deductibles, which shall not exceed:

(1) $2,500 for judgment or settlement; and

(2) $1,000 for the cost of investigation and defense.

Section 4. Exclusions permitted Coverage may exclude claims brought against the insured, regardless of whether the professional service involves an activity for which a license is required by the Commonwealth of Kentucky, consistent with common custom in the market.

Section 5. Licensee certification of compliance.

A licensee who chooses to obtain an insurance policy other than the group insurance policy obtained by the commission pursuant to KRS 324.395(3) shall file with the commission a Certification of Insurance Coverage, KREC Form 203, as incorporated by reference in 201 KAR 11:210, annually upon issuance of the initial private insurance policy or its renewal.