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Kentucky Real Estate Practice Exam #3: 2025
Updated Questions and Answers for KREC
Licensing Success
1. Under Kentucky law, which of the following would not be included in an offer to purchase? A. The purchase price, the amount of the contract deposit and who is to hold the deposit B. Date and time when the offer or counteroffer expires C. The agent who prepared the offer and the commission he/she will be paid D. The closing date and when possession will be given to the buyer ✅ Correct Answer: C Rationale: Commission and agent details are typically outlined in the listing or brokerage agreement—not in the offer to purchase. The offer focuses on contractual terms between buyer and seller. 2. If a person does not renew in the proper timeframe, the person will be fined up to: A. $100. B. $200. C. $500. D. $1,000. ✅ Correct Answer: B Rationale: The Kentucky Real Estate Commission (KREC) imposes a $200 late fee for license renewals not submitted on time. 3. Under Kentucky law, which of the following would not be included in a listing contract? A. The commission and the expiration of the listing B. The listing price and the signatures of all owners C. The expiration of the offer and the buyers names D. Special directions of the owner ✅ Correct Answer: C
Rationale: A listing contract does not include specific buyer names or offer expiration— it is a contract between seller and listing broker.
4. A seller has offered two round-trip tickets within the continental United States to anyone who buys his property. The agent: A. cannot advertise the tickets because it is an inducement. B. cannot advertise the tickets until it is approved by the Board. C. can advertise the tickets with the permission of the KREC. D. can advertise the seller's inducement of the tickets. ✅ Correct Answer: D Rationale: Inducements offered by the seller can be advertised by the agent. The inducement must come from the seller, not the agent or firm. 5. Which of the following statements would trigger an agent having the buyer sign an Agency Disclosure Statement? A. "I would like to set an appointment to see the house at 229 Main Street." B. "How many bedrooms does the house at 119 Main Street have?" C. "You're one of three agents that I'm interviewing, why should I work with you and your company?" D. "I'm ready to write an offer on the property." ✅ Correct Answer: D Rationale: Agency disclosure is required when a client is ready to take action that would create an agency relationship—such as writing an offer. 6. A seller has told his listing agent that if he sells the property within the first two weeks, the seller will give the agent a $2,000 bonus. Under which of the following circumstances could the agent be paid the bonus? A. If the agent owns the real estate company. B. If he receives the bonus from his broker. C. If the KREC gives the agent consent to receive the bonus. D. If the agent has a broker's license, not a sales associate license. ✅ Correct Answer: B Rationale: All compensation to a licensee must go through their principal broker, including bonuses.
C. After the conclusion of all appeals D. Within 20 days of filing the appeal ✅ Correct Answer: C Rationale: Penalties are not enforced until the appeals process is concluded, ensuring due process.
11. Tom, a licensed agent, is selling his personal home. After the buyer has an attorney write the offer, which he accepts, Tom must: A. Disclose his status as an agent in the offer to purchase B. Disclose, in writing, his interest in the property to the buyer C. Sell his property through his broker’s company D. Make no disclosures ✅ Correct Answer: B Rationale: Licensed agents must disclose their licensed status and personal interest in any property they are buying or selling. 12. At a hearing, an agent was found to be in violation of license law. The KREC may impose a penalty of: A. a $1,500 fine B. imprisonment for 6 months C. revocation of a license for 7 years D. suspension of a license for 10 years ✅ Correct Answer: D Rationale: The KREC has the authority to suspend a license for up to 10 years based on the severity of the violation. Which of the following would NOT be an example of confidential information? A. "The lowest price I will take for the property is $100,000."B. "We're pre-approved for $100,000."C. "The sellers are transferring and that's why they are selling." D. "The property is for sale because there is a special assessment for sewers." - - correct ans- - The property is for sale because there is a special assessment for sewers An agent has just been hired as a property manager. The person that will pay the agent is
A. outlined in the management agreement. B. her broker. C. the owner. D. the tenants. - - correct ans- - her broker What are the maximum fines that an agent could pay for calling someone on the Do- Not-Call list? A. $1,000 - Kentucky Law; $1,000 Federal Law B. $1,000 - Kentucky Law; $10, Federal Law C. $5,000 - Kentucky Law; $11,000 Federal Law D. $5,000 - Kentucky Law; $16,000 Federal Law - - correct ans- - $5,000 - Kentucky Law; $16,000 Federal Law The KREC issued a person her sales license on 10/20/2020. The person must complete her 48 hours of post license education by what date? A. 10/20/2021 B. 10/20/2022 C. 12/31/2020 D. 12/31/2021 - - correct ans- - 10/20/ An agent collected a $1,000 good faith deposit which was deposited into the broker's escrow account. The broker A. must place the money in a non-interest bearing trust account. B. must place the money in an interest bearing trust account. C. must give the money to the seller upon performance. D. may withdraw the money upon performance, court order, written agreement or through the release process. - - correct ans- - may withdraw the money upon performance, court order, written agreement or through the release process The Consumer's Guide to Agency Relationships must be given to the buyer under all of the following circumstances EXCEPT A. Before receiving confidential information from a prospective party relative to a mutually-contemplated real estate transaction. B. Before entering a representation agreement OR submitting an offer to, or on behalf of, a prospective party. C. The conclusion of the second contact between the licensee and a prospective party. D. A buyer looking at a property at an open house. - - correct ans- - A buyer looking at a property at an open house Which of the following statements is FALSE regarding the Kentucky Real Estate Commission? A. All commissioners are appointed by the Governor. B. There are seven commissioners. C. No more than four commissioners can belong to the same political party. D. All
A. When scheduling the appointment B. Only after seeing the property a second time C. No disclosure is required D. On the offer to purchase - - correct ans- - On the offer to purchase Agent Carrie has just applied for her broker's license. If approved, she will give permission to the KREC to audit her escrow account A. when she opens her business and every calendar year thereafter. B. upon licensure as a broker and each renewal. C. every March 1st.D. during the month of December of each year - - correct ans- - upon licensure as a broker and each renewal The listing expired on October 13. On October 14, the seller called the agent and said she would extend the listing agreement when she returned to the city on October 16. The seller asked to agent to continue to advertise and show the property. The agent A. can do nothing, she does not have a written listing. B. can do nothing until the broker approves. C. may advertise an open house on October 15.D. may leave the "for sale" sign in the front yard. - - correct ans- - can do nothing, she does not have a written listing Which of the following statements is not true? A. It is legal to have an oral listing for less than one year in Kentucky. B. A real estate broker is responsible for the preparation of the settlement statement if it is not prepared by lender or the attorney. C. A principal broker can be paid a referral fee to another principal broker with an active licensee. D. Exclusive listings may automatically renew for up to ninety days. - - correct ans- - Exclusive listings may automatically renew for up to ninety days A seller stated in the listing contract that her property was not to be shown while she was on vacation from May 15 to May 31. On May 18, another agent called to make an appointment to show the property. The agent A. can show the property with the permission of her broker. B. can show the property as long as the seller doesn't find out. C. can show the property on June 1. D. can show the property on May 18. - - correct ans- - can show the property on June 1 No aggrieved party shall be entitled to recover compensation from the real estate education, research, and recovery fund unless the action against the licensee is
commenced within what timeframe from actual knowledge of the cause of action or from the time when circumstances should reasonably have put the aggrieved party on notice of the cause of action? A. One year B. Two years C. Three years D. Five years - - correct ans- - One year Which of the following statements is false regarding errors and omissions insurance? A. The limit of liability shall be no less than $100,000 for any one claim nor less than $1,000,000 annual aggregate limit of liability. B. Licensees have the option of purchasing his/her own policy if it meets the approval of the KREC. C. All real estate licensees must carry errors and omissions insurance. D. If a company will not provide coverage to all licensees, then agents would not be required to have errors and omissions insurance. - - correct ans- - All real estate licensees must carry errors and omissions insurance A tenant has moved from her/his apartment and all rent is paid in full. The tenant's security deposit may be returned if A. there was an initial and final damage list and there was no damage to the apartment. B. the security deposit was placed in the landlord's business account. C. the tenant asked for the return of the deposit within thirty days. D. there were initial and final damage lists signed by the owner and the tenant and there was no damage. - - correct ans- - there were initial and final damage lists signed by the owner and the tenant and there was no damage Which of the following is false regarding designated agency? A. A designated agent would be representing the buyer and seller in the transaction. B. If designated agents represent different clients in a transaction, an employee could only assist one of the designated agents. C. Confidential files must be maintained by the designated agent and the broker. D. All documents containing confidential information relating to a client must be kept in an individual file - - correct ans- - A designated agent would be representing the buyer and seller in the transaction. Which of the following statements is not true regarding the complaint process? A. If the complaint does not contain prima facie evidence the complainant will have ten days to revise the complaint. B. If the complaint does contain prima facie evidence the agent will receive a copy of it at his/her last known business address. C. If the complaint
A. receive compensation only from the agent's principal broker. B. orally tell a buyer who is purchasing a property owned by the agent that the agent is the owner of the property. C. when managing property render an accounting of funds according to the management agreement. D. report to the KREC any conviction of a misdemeanor involving sexual misconduct. - - correct ans- - orally tell a buyer who is purchasing a property owned by the agent that the agent is the owner of the property Broker Black has 200 agents operating out of his single office so he has decided to open two branch offices. In order to open the branch offices Broker Black knows that he must notify the Kentucky Real Estate Commission A. within 10 days of opening the offices. B. within 30 days of opening the offices. C. before he opens the offices. D. within six months from the day the offices are opened. - - correct ans- - within 10 days of opening the offices Which of the following would be CORRECT regarding a sales associate who wants to obtain a broker's license? A. The associate must have been licensed in Kentucky for 2 years. B. Have an associate degree in real estate. C. Secure an affidavit from his/her broker that they have worked in the business for 2 years, averaging 20 hours per week. D. Be at least 20 years of age - - correct ans- - Secure an affidavit from his/her broker that they have worked in the business for 2 years, averaging 20 hours per week. Bob and Jane both work for Quarter Realty. Jane has listed a property and Bob is working with a buyer who decides to purchase the property Jane has listed. At what point in the transaction would the broker be acting as a dual agent? A. When the seller has listed more than one property with the same licensee. B. When a buyer client writes an offer on a property his broker has listed. C. When Bob and Jane agree to be dual agents. D. When a buyer client purchases two or more properties from a broker. - - correct ans- - When a buyer client writes an offer on a property his broker has listed. Which of the following is false regarding property management agreements? A. The lease must contain the name and address of the bank, and the account number where the security deposit will be held. B. An agent must send a monthly accounting to the owner. C. The agreement must contain an automatic renewal clause. D. Within sixty
days of the termination of the management agreement, an agent shall send the owner a final accounting. - - correct ans- - The agreement must contain an automatic renewal clause. Effective January 1, 2020 all licensees must renew their license A. every quarter. B. annually. C. biennially. D. every monthly. - - correct ans- - biennially The following clause was written in an offer: "This offer is submitted as a back-up offer, which means the property is subject to a previously-accepted offer which has priority over this offer." This clause would be used when the agent is A. in a multiple offer situation. B. writing a land contract. C. writing a back-up offer. D. writing a cash offer. - - correct ans- - writing a back up offer Which of the following actions is NOT required to reactivate a real estate license that is being held by the KREC? A. Submit an acceptable criminal record check B. Complete all continuing education requirements C. Pay the applicable reactivation fees D. Pass the Kentucky section of the real estate exam. - - correct ans- - Pass the Kentucky section of the real estate exam. Which of the following would not be a required disclosure under the guaranteed sales plan? A. The qualifications of the real estate that would be guaranteed. B. The fee that would be charged for participation. C. The name of the appraiser who would be determining the purchase price of the property. D. If the owner must purchase other real estate listed by the licensee. - - correct ans- - The name of the appraiser who would be determine in the purchase price of the property When the KREC is holding a license, the person must A. meet continuing education requirements for each year that the license is held by the KREC. B. obtain extended reporting period coverage insurance for one year when it is placed with the KREC. C. login to the online services portal monthly to confirm that the KREC is still holding the license. D. pay for errors and omissions insurance for each year that the license is held by the KREC. - - correct ans- - Obtain extended reporting period coverage insurance for one year when it is placed with the KREC
Bert, a Kentucky licensee, moved from Boone County to Caldwell County. What must he do? - - correct ans- - Notify KREC of his address change. You're a Kentucky licensee representing a buyer who's making an offer on a two- bedroom condo. You ask the seller's agent for a copy of the ______. - - correct ans- - Condominium Seller's Certificate. The Condominium Seller's Certificate discloses information about a condominium association's declaration, bylaws, budget, and regulations. It's requested by the seller, completed by the condo association, and provided to the prospective buyer. The ______ is responsible for advising a seller about proper completion of the Seller's Disclosure of Property Conditions form in Kentucky. - - correct ans- - Listing agent Top of the Hill Realty in Kentucky decides it's time to clean out the files. What's the most likely first step? - - correct ans- - Review the firm's and KREC's record retention and disposal rules. To meet the requirements of the statute of frauds in Kentucky, an agreement must - - correct ans- - clearly identify the subject matter of the contract, present the essential terms and conditions of the contract, and identify the contracting parties. Non-resident broker Jenny doesn't maintain a place of business in Kentucky, even though she practices real estate in Lexington. Which of the following is true of this situation? - - correct ans- - A non-resident licensed broker, like Jenny, isn't required to maintain a place of business in Kentucky if she maintains a business place in her state of original licensure. Non-resident licensed brokers aren't required to maintain a place of business in Kentucky if they maintain a business place in their state of original licensure or their state doesn't require Kentucky licensees holding licenses in that state to maintain an office in that state. Dean's brokerage firm in Dry Ridge adopted an electronic transaction management system. Which of the following statements is true about brokerage policies related to the system? - - correct ans- - System permissions are on a need-to-know basis and passwords are required.
To whom may a closing company in Frankfort disburse commission checks? - - correct ans- - Directly to the sales associates. With permission from the respective brokers, commission checks may be distributed directly to the sales associate and to both brokerage firms. The Kentucky Real Estate Commission is empowered under_ to _ by _ - - correct ans- - under Chapter 324 of the Kentucky Revised Statutes to protect the public's interest by regulating, testing, and licensing Kentucky real estate professionals. If the licensee can't pay or refuses to pay an aggrieved party after being found guilty of fraud in Kentucky, who pays the aggrieved party? - - correct ans- - KREC If a licensee fails to renew her license, when will the Kentucky Real Estate Commission cancel it? - - correct ans- - April 1. Licensees who fail to renew their licenses should expect KREC to cancel their license by April 1. KREC also charges a late renewal fine of $200 if the licensee does eventually renew. Marla forgot to renew her Kentucky real estate license and has been charged with engaging in unlicensed brokerage. Which of the following is true? - - correct ans- - Marla may not face penalties if she reactivates her license. KREC may exempt a previous licensee from penalty if the licensee takes appropriate steps to reactivate the license. What's the purpose of the Agency Disclosure Statement used in Kentucky residential transactions? - - correct ans- - To confirm the role of the agent and obtain consent from the client Rickie is a real estate licensee in Horse Cave. She makes regular calls to customers and past clients to market her services. If someone she calls asks to be put on her internal "do not call" list, what is Rickie required to do? - - correct ans- - Immediately place the customer's number on her internal do not call list, and avoid making unsolicited calls from that point forward A Kentucky real estate license is required ______. - - correct ans- - When performing real estate activities for others, for compensation of any kind.
In Kentucky, which residential sales contract provision specifies the date on which the sales transaction will be finalized and ownership of the property will be transferred to the buyer? - - correct ans- - Closing Which agency regulates the rules and requirements Kentucky licensees must follow to keep her license? - - correct ans- - Kentucky Real Estate Commission The Kentucky Real Estate Commission is empowered to ______ when investigating alleged license law violations. - - correct ans- - Inspect all pertinent documents at a brokerage office What is every Kentucky broker required to have - - correct ans- - an escrow account In Kentucky, under which of these is the seller obligated to pay the listing agent a commission if the agent is working under an exclusive agency agreement? - - correct ans- - If any agent secures the buyer. Exclusive agency reserves for the seller the right to secure the buyer without paying a commission. However, if any agent secures the buyer, the listing agent is owed a commission. Kentucky's Seller's Disclosure of Property Conditions form asks sellers about the property's location within a special flood hazard area (SFHA). What's the significance of the SFHA in a transaction? - - correct ans- - The buyer's lender may require flood hazard insurance if the property is in an SFHA. Nathan assisted with the purchase of a commercial building in Paducah that will be used as a community center. He doesn't hold a real estate license, yet his actions didn't violate any license laws. What must be true about Nathan's situation? - - correct ans- - Nathan is a public official whose salaried duties include real estate transactions. Monthly statements - - correct ans- - In what section of the Kentucky Property Management Agreement is the day that the property manager will provide reports to the owner each month identified?
Besides the assistant, who's responsible for a personal assistant's actions in Kentucky?
- correct ans- - The licensee assigned to supervise the assistant and that licensee's principal broker. What is a power that the Kentucky Real Estate Commission has - - correct ans- - KREC has the power to investigate complaints against licensees and irregularities of the law. Within what time frame are Kentucky brokers required to deposit earnest money funds that they've received? - - correct ans- - Three days after contract signing. You're a Kentucky licensee, and your seller client asks you why the Seller's Disclosure of Property Conditions form asks about radon testing. How do you respond? - - correct ans- - Radon is a potential health hazard that can be present in any home, so homeowners are encouraged to test for it to determine if mitigation is necessary. Before anyone signs a contract, licensees must provide prospective clients with - - correct ans- - the Consumer Guide to Agency Relationships prior to entering into a brokerage agreement. By accepting and depositing earnest money funds, a Kentucky broker is agreeing to do what? - - correct ans- - The broker is agreeing to act in good faith to retain and disburse the funds according to Kentucky license law. Which section of the Property Management Agreement identifies the legal owner of the property? - - correct ans- - Parties How many hours of post-licensing education courses must sales associates in Kentucky complete? - - correct ans- - 48 What's the fine for Kentucky licensees who fail to complete CE requirements? - - correct ans- - $
When you're acting as a Kentucky listing agent for a residential property, when are you required to deliver the completed Seller's Disclosure of Property Conditions form to a prospective buyer? - - correct ans- - Within 72 hours after receiving the offer to purchase The Kentucky Real Estate Commission can hold an emergency hearing for what type of alleged violation? - - correct ans- - Escrow violations What are fiduciary duties? - - correct ans- - Fiduciary duty in real estate requires realtors to act in the best interests of their clients. Which of the following benefits does errors and omissions insurance provide Kentucky licensees? - - correct ans- - Provides coverage for licensees who make inadvertent mistakes What happens if someone is intentionally misrepresenting facts in her sworn statement at a KREC hearing. Which of the following is true? - - correct ans- - Anyone to have committed perjury in a sworn statement will be subject to KREC disciplinary proceedings. The commission has the authority to seek a criminal indictment for perjury. What Kentucky brokers are NOT required to maintain a place of business in the state? - - correct ans- - out-of-state residents that maintain their place of business in that state or individuals who were licensed in states where they aren't required to maintain a place of business in that state You're the listing agent for a property that was the site of a murder last year. How does Kentucky's Property Conveyance Law determine what you will disclose about this stigma? - - correct ans- - You're not required to proactively disclose the stigma. What are some things krec can do during investigation - - correct ans- - In addition to reviewing and submitting evidence, KREC may issue subpoenas, interview witnesses, and travel to brokerage offices in order to inspect pertinent documents when investigating a complaint.
Which of the following residential sales contract provisions in Kentucky is used by sellers to disclose information about any material defects in the home? - - correct ans- - Seller's Disclosure of Property Condition Form Which of these terms describes a situation in which a Kentucky principal broker and the broker's appointed licensee represent a client, but no other licensee at the same firm represents that client? - - correct ans- - Designated agency. Designated agency in Kentucky results in the designated agent and that licensee's broker representing the client, but no other affiliated licensee at the brokerage having fiduciary responsibility for that client. Kentucky designated agent Mason is representing the Latimers, who receive an offer for their home. He completes the ______ and presents it to the Latimers for their signature before they review the offer. - - correct ans- - Seller version of the Agency Disclosure Statement. The Agency Disclosure Statement has a buyer version and a seller version. When Mason's clients receive an offer to purchase, he'll complete the seller version of the form and present it to his clients for signature. In Kentucky, what happens if a mortgage contingency is in effect and the buyer cannot meet the terms of the agreement due to the inability to obtain a loan? - - correct ans- - The agreement is terminated. Kentucky licensee Kaylee is working with a buyer client who has a written agency agreement with Kaylee's brokerage firm. Based on Kentucky law, which of the following duties does Kaylee owe her client? - - correct ans- - Promptly submit her client's written offer to the seller. The minimum duty Kentucky licensees owe buyer clients who are paying for their services is to promptly submit all written offers from the buyer to the seller. In Kentucky, misbehavior of licensees is referred to as ______. - - correct ans- - Improper conduct The Kentucky Real Estate Commission may levy fines of up to ______. - - correct ans- - $1,
