fall2004 - Kentuckye-archives.ky.gov/pubs/Real_estate/KRECnewsfall04.pdf · 2005. 7. 27. · Title: fall2004.qxp Author: krec-ssaffran Created Date: 12/4/2004 1:37:45 PM

K e n t u c k y R e a l E s t a t e

N E W SA Publication of the Kentucky Real Estate Commission

CONTENTS

Letter from Governor ErnieFletcher

When a Buyer Breaches aContract

Comments from Chair

Broker Supervision

Arkansas Reciprocal withKentucky

Disciplinary Actions

Leaving One Broker to goto Another

Continuing EducationReminder

Continuing EducationSuspensions

Annual Statement

Private E & O Reminder

Half Century Awards

On October 18, 2004, GovernorErnie Fletcher appointed Lois AnnDisponett as Commissioner of theKentucky Real Estate Commission.

Lois Ann was born and raised inAnderson County, Kentucky. Shefirst obtained her sales associatelicense on August 1, 1976, becomingthe first female Realtor® inAnderson County. On January 3,1978, she obtained her broker’slicense.

A few months later, she opened herown office and became the principalbroker of Lois Ann Disponett RealEstate Company. This also madeher the first female to own her ownreal estate company in AndersonCounty. Her office is located inLawrenceburg, Kentucky, and shehas five sales associates.

Lois Ann graduated in 1975 from

Anderson County High School andobtained her Associate Degree inReal Estate from the LexingtonTechnical Institute in 1977. LoisAnn obtained the designations ofCRS, Certified Residential Specialistand GRI, Graduate Realtor®Institute. She is currently in theprocess of obtaining her CRB,Certified Residential Broker, desig-nation.

In June of 2002, Lois Ann, alongwith four other individuals, formedand opened Century Bank inLawrenceburg (which is the onlyfinancial institution in AndersonCounty).

Lois Ann is a member of FirstBaptist Church in Lawrenceburg,where she has been an activeSunday School teacher for over 27years. She also serves as 6th DistrictChair of the Republican Party, is amember of WROCK, WomenRepublicans of Central Kentucky, isa KEMI board member, and is a 15year member of the Lexington-Bluegrass Association of Realtors®.She is currently serving on the sitebased council at Turner ElementarySchool in Lawrenceburg.

Governor Ernie Fletcher Appoints Lois Ann Disponett as Commissioner

Printed with State FundsIssue No. 198, Fall 2004Continued on Page 3

Kentucky RealEstate Commission10200 Linn Station RoadLouisville, KY 40223Phone: 502-425-4273Toll Free: 1-888-373-3300Fax: 502-426-2717Web Site: www.krec.ky.gov

Commissioners

Sue Teegarden, ChairAlexandria

Arvel J. McMahan PeWee Valley

Ron SmithLouisville

Bob RobertsRichmond

Lois Ann DisponettLawrenceburg

Commission Staff

Norman Brown Executive Director

Education and Licensing

Linda PoliskieEducation Director

Sarah WestSarah ChandlerMichelle Gary

Legal

Lee B. HarrisGeneral Counsel

Mary StevensonDianna RogersDenise Wade

Administrative

Shelly SaffranDirector of Administration

Kim Brewer Louis Carter Melissa Kime

2

Comments fromthe Chairby: Sue Teegarden,

Chair

want to begin by saying thankyou to former Chair BobRoberts for a fantastic year of

leadership. Under Bob’s direction,the Commission accomplishedmany great tasks in 2004. I amnow looking forward to 2005 andthe honor of serving as your Chair.

Recently, the Commission wasmade aware of an increase incrimes across the country againstreal estate licensees. TheCommission and the KentuckyAssociation of Realtors® sharedconcerns over the licensees of thisstate and joined forces to develop aSafety Brochure. All activelicensees should have received abrochure in the middle ofNovember. Please take the time toreview this brochure. It has valu-able information regarding thesafety of real estate licensees.

Many of us take the “it will nothappen to me” approach - andhopefully you are right. However,there are many risks associatedwith the duties that we perform asreal estate licensees, and theCommission and the KentuckyAssociation of Realtors® aremindful of these risks. Thisbrochure gives examples of crimesthat have happened across thecountry and preventive measuresthat licensees can take to avoiddangerous situations or to preventan unfortunate incident. TheCommission thanks the KentuckyAssociation of Realtors® for their

participation in the development,cost and mailing of thesebrochures.

Many of you have called theCommission asking for additionalcopies of the Safety Brochure fornew licensees. The Commissionwill be mailing all new licensees acopy of the brochure. However, ifyou want to include it in an orien-tation package, please feel free tomake copies. You can also find aPDF version of the brochure onthe Commission’s website atwww.krec.ky.gov under the“General Information” Section.

If you turn to page six of thisnewsletter, you will find a personalletter from Governor ErnieFletcher. This letter is addressed toall of the real estate licensees inthe Commonwealth. He applaudsthe work that licensees do forKentucky and the part you play inthe economic stability and growthof this great state.

Finally, 700 brokers were randomlychosen to help the Commissionwith a test run of our on-linerenewal program. We are in thefinal stages of this project, and ifeverything goes well with the test,we will be up and running for the2005/2006 renewal.

Again, I am honored to be yourChair for the next year. Keep upthe good work and, as always, con-tact the Commission if you everhave any questions or comments.

I

3

From theDirector’s Deskby: Norman E. Brown,

Executive Director

It is hard to believe that 2004 isabout to come to an end. I alwaysenjoy looking back to see all of thethings that have been accomplishedat the Commission in the last year.This year, the list seemed to go onand on.

Under the direction of theCommissioners, we have accom-plished many projects, tasks andactivities in 2004. First off, wehave been working really hard tohave on-line renewal in place forthe 2005/2006 license year. Thishas been a harder task than we firstimagined, but we are all crossingour fingers.

Next, we continue to travel aroundthe state and visit local boards andoffices. Upon their invitation, wehave been to the NorthernKentucky Association ofRealtors®, Madison County Boardof Realtors®, Paducah Board ofRealtors®, Greater LouisvilleAssociation of Realtors®, AshlandBoard of Realtors®, OwensboroBoard of Realtors®, My OldKentucky Home Board ofRealtors®, Lexington BluegrassAssociation of Realtors®, and theHeart of Kentucky Board ofRealtors®. In addition to that, fif-teen legal presentations have beenmade at independent real estateoffices.

The Commission also participatedin the Kentucky State Fair, theREEA Road Show and the REEAand KREEA conferences, all of theKentucky Association of Realtor®meetings and all of the Association

of Real Estate License LawOfficials meetings.

The Commission held the sixthannual Fifty Year AwardReception, the annual EducatorConference, two homebuyer semi-nars, six investigator meetings,twelve Commission meetings andthe Core Course and BrokerageManagement Course instructortraining.

We also reprinted the law manual,passed a new statutory package,monitored real estate classes,revised the Core Course, participat-ed on the Inducement Law TaskForce, published and mailed theSafety Brochures jointly with KAR,maintained the website, and pub-lished and mailed three newsletters.

General Counsel Lee Harris alsofinished completing the revised ver-sion of Kentucky Real EstateProfessionals and the Law, a text-book which will be hitting the mail-boxes of all brokers in the nextcouple of weeks. I’m sure many ofyou talked to her this year, sinceshe fielded over 4,500 phone callsfrom licensees, attorneys and Boardrepresentatives.

All of this is in addition to our dayto day work of issuing licenses,investigating unlicensed brokerage,reviewing applicants, renewinglicenses, maintaining continuingeducation records and processinglegal complaints.

I am very proud of all that we haveaccomplished this year, and I lookforward to 2005. Happy Holidays.

Along with her real estate business,Lois Ann has been involved in thedevelopment of both residentialand commercial property in theAnderson County area for the last24 years. She has been married toher husband, Todd Hyatt, who isalso a Realtor®, for 18 years andthey have one daughter, AnnaMarie Hyatt, who is ten years old.Lois Ann is very supportive of herfamily and is an active "Soccer andSoftball" Mom.

Lois Ann brings a lot of knowl-edge and experience with her toher new role as Commissioner.She is excited about her newresponsibility and the Commissionwelcomes her on board.

Governor Ernie FletcherAppoints Lois AnnDisponett as CommissionerContinued from Page 1

In September 2004, the KentuckyAssociation of Realtors® adoptedthe ANSI (American NationalStandards Institute) measurementas a standard for Realtors® whenmeasuring residential property.Since training is an issue, thisprocess is scheduled to take placeover the next three years.Although the Commission doesnot mandate the use of ANSIStandards, we encourage alllicensees to be trained on properprocedure when measuring squarefootage.

TThe Khe KentucentuckkyyAssociaAssociation oftion ofRRealtorealtors® adopts® adoptANSIANSI StandarStandardsds

Commissioner’s

Corner

Bob Roberts

4

On October 1, 2004, Kentucky andArkansas entered into a ReciprocalAgreement, making Arkansas the eigh-teenth state to have a reciprocal agree-ment with Kentucky.

If you are considering areciprocal license in anoth-er state, there are a fewthings to keep in mind.First, you must be anactive licensee inKentucky. Escrowed,expired or cancelledlicensees are not eligible.

Also, the state for whichyou are applying will require a Letter ofCertification from Kentucky. This can beobtained from the Kentucky Real EstateCommission by sending a request alongwith a $10.00 check or money order tothe attention of Melissa Kime at theCommission.

Depending on which state you are seek-ing licensure in, you may also be requiredto take that state’s law portion of theexam and possibly submit to a criminalbackground check.

Because each state has dif-ferent laws and require-ments, licensees shouldcontact each state directly.The ReciprocalInformation on theCommission’s website isgeared for individualswishing to become licensedin Kentucky. However,each state is listed along

with addresses and telephone numbers.Simply log on to our website atwww.krec.ky.gov for a complete list ofreciprocal states. Then you would needto contact that state’s Commission direct-ly for an application, a list of fees andother requirements.

Arkansas Reciprocal with Kentucky

Sue Teegarden

Ron Smith

Lois Ann Disponett

Arvel J. McMahan

1. What is your licensee status?Active 88.5% Escrow 11.5%

2. How are you licensed? Sales Associate 56.3% Broker 19.5% Principal Broker 24.1%

3. Do you find our website user friendly and helpful? Yes 93.1% No 6.9%

4. When you call the Commission, is your call answered promptly and with courtesy? Yes 93.1% No 6.9%

5. Do you feel as though the staff ofthe Commission is knowledgeable and helpful? Yes 94.3% No 5.7%

6. Do you read the Commission's newsletter? Yes 95.4% No 4.6%

7. Have you ever had a complaint filed against you at the Commission? Yes 12.6% No 87.4%(If yes, do you feel you were treated fairly?) Yes 96.6% No 3.4%

8. Are you in favor of amending the inducement prohibition to allow licensees to give more than just pens and magnets to customers and clients? Yes 51.7% No 48.3%

THE COMMISSION THANKSTHOSE LICENSEES WHO TOOKTHE TIME TO PARTICIPATE IN

OUR SURVEY

Commission Website Survey ResultsBelow are the results of a website survey that was conducted during themonths of August and September 2004 on the Commission’s website. TheCommission was pleased with the results, and we continue to strive to meetthe needs of real estate licensees as well as consumers.

AAAA rrrr kkkkaaaa nnnn ssss aaaa ssss

5

The Commission has been working on a packageof regulation changes, which will be presented tothe General Assembly. The following is a synopsisof some of the main proposed amendments:

1. Changes to the inducement law;2. Rules for acting as a loan originator and

real estate licensee;3. Rules for handling all types of listings;4. A formalized settlement process;5. Training for all real estate instructors;6. Revisions to print advertising for buyers’

agents; and7. Amendments to the advertising require-

ments.

There will be a public hearing and comment periodso that all licensees may review the proposedchanges and make suggestions to the Commissionand the legislature. Please check our website(www.krec.ky.gov) for details and dates.

PrProposed Laoposed Law Changw Changeses

The Kentucky Real Estate Commissionwould like to thank former CommissionerBetty J. Kaiser for her years of service as aCommissioner. Ms. Kaiser served as aCommissioner from October 1, 1997 toOctober 15, 2004. She served as Chair of theCommission in 1999 and 2003 and workedvery hard on the development of the CoreCourse. She participated on numerous com-mittees for the Association of License LawOfficials, as well as being active in theKentucky Association of Realtors® andGreater Louisville Association of Realtors®.She was a dedicated and committedCommissioner and her accomplishmentswere many. Thank you again, Betty.

All active licensees (except those who werelicensed in Kentucky prior to June 19, 1976)must complete six (6) hours of continuing edu-cation by December 31, 2004. Keep in mindthat three (3) of the hours must be in law.Active licensees must also complete theKentucky Core Course once every four (4)years. If you took the Core Course this year, itfulfills your six (6) hour continuing educationrequirement and no other education is neededin 2004. If you have not completed therequired continuing education and plan to putyour license into escrow, you must submit asigned written letter requesting to be placed inescrow along with a $10.00 check and it mustbe postmarked on or before December 31,2004. Otherwise, you will be considered asdelinquent and subject to penalties for notcompleting the continuing education in a time-ly manner. For a complete list of providers, logon to our website at www.krec.ky.gov and ref-erence the Education Department.

The following individuals were suspendedfor six months for failing to comply with the2003 continuing education delinquency plan.These individuals signed an agreement toobtain their 2003 continuing education hoursby June 15, 2004 and failed to comply withthe agreement.

Suspended September 1, 2004 through February 28, 2005:

Irvin J. Bacon David R. ErnstKevin Garrett Patsy L. GrantMarilyn M. Hoffman Joni S. JaramilloWalter H. Meadors Aaron S. WafzigHarriet M. Shirkey Tonya L. WhiteGregory T. Whaley Jerri Waugh

Michael S. Yamamoto

Suspended November 1, 2004 through April 30, 2005:

Michelle Thomas

Continuing EducationSuspensions

Continuing Education

R e m i n d e r

6

7

Income FY 2003/2004

Exam Recovery Fee $ 49,230Reciprocal Recovery 2,370Renewal Recovery 612,575Core Course 7,567Fines 17,167Education Fines 51,200Investment Income 52,172Restitution 10,170Unlicensed Practice Refund 39,409Prior Year Grant Refund 59,520Unused Postage 9,313

TOTAL INCOME $ 910,693

Expenditures FY 2003/2004

Personnel $172,664Legal Services 13,541Advertising/Production 1,994Continuing Ed. Services 74,144Investigative Services 142,822Language Translator 135Carpool 1,081Court Reporter 1,136

Speaker Fees 16,000Room Rental 1,380Postage/Parcel Delivery 2,429Postage/Meter & Bulk 52,539Printing State 9,706Printing Vendor 61,097State Fair 4,807Advertising 20,380Cassettes/Books 1,579In-State Travel 13,127Equipment Under $5,000 5,106Judgements 2,175Airfare 3,675Out of Pocket Expenses 85Lodging 6,855Meals 889Mileage 235Registration Fees 6,660Transportation 802Subpoenas/Court Fees 1,654Subscriptions 6,873Seminar Refreshments 4,972College Grants/Scholarships 263,851

TOTAL EXPENDITURES $ 894,393

Executive Director Norman Brown gives MargieHarper, Executive Officer of the Heart of

Kentucky Association of Realtors®, a 2005 KARCalendar at the Commission’s booth at the

Kentucky State Fair. Thousands of consumersvisited the Commission’s booth which displaysthe importance of using a real estate licensee.

Education, Research and Recovery Fund Annual Statement ofIncome and Expenses for Fiscal Year Ending June 30, 2004

It is the principal broker's responsibility to ensure that anupdated "Certification of Coverage" form and an alpha-betized list of insured licensees affiliated with the firm isforwarded to the Commission PRIOR to the expirationdate of the E & O coverage. Please refer to KRS324.395 and 201 KAR 11:220. This form is requiredonly for firms that have their E & O insurance with a pri-vate carrier.

If the Commission does not receive this updated certifi-cation, a letter will be sent to the principal broker with adeadline for compliance. Failure to provide proof ofcoverage by the deadline will result in the cancellationof all licenses for the firm until such time as theCertificate of Coverage is provided to the Commission.

Copies of the insurance form can be found on theKREC website at www.krec.ky.gov or through fax ondemand (888-KREC-FAX), document #500.

Has your Private Errors &Omissions Insurance Expired??

8

The following is an excerpt from theCommission’s textbook entitled KentuckyReal Estate Professionals and the Law.

As a general rule, the license law pro-visions and regulations promulgatedby the Commission protect the pub-lic against improper conduct by realestate licensees. Very few of theselaws or regulations concern disputesbetween and among brokers oragents. One dispute between brokersthat imposes a threat to a member ofthe public, however, has beenaddressed by the legislature in KRS324.160(4)(p). This statute prohibitsa licensee from “negotiating orattempting to negotiate the sale,exchange, lease or rental of realproperty with an owner or lessorknowing that the owner or lessor hasa written outstanding contract grant-ing exclusive agency in connectionwith the property to another realestate broker.”

Under this law, it is illegal for a realestate agent to negotiate in any man-ner with an owner if the agent knowsthat the owner’s property is subject toan outstanding exclusive agencyagreement with another broker. Realestate agents will not be held liableunder the statute unless they know ofthe exclusive agency agreement.Knowledge by the broker or agentcan be proven by the existence ofsigns on the property or the fact thata listing has been made public byway of a multiple listing service(“MLS”) or broker advertising in thenewspaper, on the Internet, in home-selling publications and the like.Any agent who sees a sign in a yardshould presume that the property issubject to an exclusive agency agree-ment and should contact the listingagent to inquire about the type oflisting agreement that has been exe-cuted on the property. In addition,the MLS listing should instruct all

other agents and brokers as to thetype of agency agreement involved.

This statutory provision serves a dualpurpose, benefiting both the publicand the real estate licensees. A sellercould become liable for more thanone commission if he or she negoti-ates with more than one broker whilethe property is subject to an exclusiveagency agreement. Hopefully, KRS324.120(4)(p) will prevent, or at leastlimit, claims for double commission.In addition, if brokers were allowedto negotiate directly with the sellersduring the term of an exclusiveagency agreement, the function ofand protection afforded by exclusiveagency agreements would be defeat-ed.

There is a discrepancy between thelicense law and the NationalAssociation of Realtors®’ Code ofEthics regarding contacting sellerswho are under exclusive agencyagreements. The Code of Ethicsallows a Realtor® to contact a sellerto find out the expiration date of thecurrent listing, if the listing agent hasbeen asked and refuses to providesuch information. (Please seeNational Association of Realtors®’Code of Ethics and Standard ofPractice, Article 16-4) The licenselaw always trumps the Code ofEthics; therefore, in Kentucky,agents may not use this Code ofEthics provision without violatingthe provisions of KRS 324.160(4)(p).

Real estate licensees are also prevent-ed under 201 KAR 11:110 fromattempting to induce a party to breakan existing contract. Specifically, theregulation states that “no real estatebroker shall induce any party to acontract or sale or lease to breaksuch contract for the purpose of sub-stituting in lieu thereof a new con-tract with another principal.” Any

realestatelicenseewho approachesa seller andattempts to con-vince that sellerthat he or she hasa better prospectfor the propertythan the individualwho has alreadycontracted to buy the property willbe subject to disciplinary actionunder this regulation. This regula-tion also prevents a real estatelicensee from encouraging a seller tobreach his or her existing listingagreement. If a seller is under a list-ing agreement with one agent andcontacts another agent to seek adviceon how to void the current listing,the agent should refuse to offer anysuch advice.

Generally, as stated above, theCommission handles disputesbetween consumers and licensees.When licensees have disputes amongor between each other, there are sev-eral other options available to resolvethose disputes. Those licensees whoare members of a local Associationof Realtors®, for example, may havetheir Realtor®-to-Realtor® disputeshandled by that Association or theKentucky Association of Realtors®(“KAR”). Most Associations havean arbitration panel that hears pro-fessional standards complaints aswell as a panel that hears procuringcause claims in order to resolveethics grievances and commissiondisputes, respectively. Thoselicensees who are not members of alocal Association of Realtors® mayalways resolve their disputes throughcivil remedies, such as court, media-tion or arbitration.

Revised by Lee B. Harris, General Counsel

LEAVING ONE PRINCIPAL BROKERAND GOING TO ANOTHER

9

If you've been in the business for anytime at all, you've probably run intoa situation where everything appearsto be going just right. You get a list-ing, start to market the house andthen you find the perfect buyer. Andthen things suddenly go wrong whenthe buyer, for no good reason,decides he is no longer interested inpurchasing the house. Where do yougo from here?

Very frequently, both parties simplysign a release, and the seller foreverreleases the buyer from any and allfuture liability. Oftentimes that mightbe the best thing to do because ittakes time, energy and money toenforce a contract against a buyer.But other times it might not be awise choice for your seller and it'simperative she understands what itmeans to sign a release. You should

refer your client to legal counsel toexplain the ramification of signing arelease.

Once a release is signed, neitherparty can enforce the contractagainst the other party, and neitherparty can collect damages whichhave been sustained as a result of thebreach by the other party. If youhave difficulty reselling the houseafter your first buyer backs out, theseller could sustain serious damagesas a result of the buyer's breach ofcontract. If a release is signed, theseller will never be able to recoverthese damages from the buyer. Forexample, if the buyer had agreed tobuy the house for $100,000.00 andbreaches the contract, and the seller

is able to sell the house again foronly $95,000, the seller would losethe $5,000 difference in sales price(in addition to any other incidentaldamages sustained) if she signs arelease to relieve the buyer from lia-bility.

So what do you do after the buyerbreaches the contract? If your selleris confident that the property can beresold quickly, she could decide rea-sonably to release the first buyerfrom the contract in order to movequickly to another contract. But ifyour seller isn't comfortable doingthat (which is often the case if it'snot clear how much the house willsell for the next time or how long itwill take to resell it), you'll want tolook into the option of reselling theproperty without a release.

Now you should be asking, "but howcan you sell the house to a secondbuyer without a release from the firstbuyer?" Contrary to popular opinion,you can sometimes sell the property

When a Buyer Breaches a Contract:To Release or Not to Release?By: Harry Borders,

Borders & Borders, PLC

On October 26, 2004, nine more licensees were honoredby the Commission with the Half-Century Award. TheHalf-Century Award is given to licensees who have helda real estate license for fifty years. The honorees were:Samuel Bennett, A. Cecil, Harold Haering, GilbertLaycock, Robert Owens, Enrique Pantoja, FrankStrickler, Jr., Walter Wagner, Jr. and George Wiley.Present to accept their award were Gilbert Laycock andRobert Owens. In addition to the Commissioners andstaff, also present were Bob Berning and Judy Piazzafrom the Kentucky Association of Realtors®, ElaineHangis of the Lexington-Bluegrass Association ofRealtors®, and Bruce Lynn, Wayne Pugh, FrancesAlmany and Charles Haynes from the Tennessee RealEstate Commission.

The featured guest speaker was Dawne Gee, of Wave 3television in Louisville. Ms. Gee gave a fabulous speechthat was not only humorous but inspirational. Ms. Geereminded everyone to think positively, appreciate whatyou have and to look for the lessons in life.

This is a great event, and the Commission really enjoysmeeting the honorees. A special thanks to honoree

Gilbert Laycock for addressing the attendees with histhoughts and memories about growing up in the greatstate of Kentucky.

This event is just a small token of the Commission’sappreciation for the extraordinary achievement and dedi-cation these licensees have provided to the real estateindustry. Real estate has changed drastically over the lastfifty years, and these individuals are the pioneers of theindustry. Again, congratulations to all of the honorees.

Commission Honors Half-Century Award Recipients

Pictured above, left to right, Gilbert Laycock, CommissionerBob Roberts, Robert Owens and guest speaker Dawne Gee

Continued on Page 11

10

Amy Griffith (Lexington) CaseNo. 04-0070Violation: Ms. Griffith did notrespond to the Commission’ssworn statement of complaint con-cerning her recent DUI convic-tions.Disposition: Since she failed torespond to the Commission’ssworn statement of complaint, theCommission revoked her license.

Clark A. Sebree, Jr.(Crestwood) Case No. 03-0159Violation: Mr. Sebree was foundin violation of KRS 324.160 (4)(j)for being convicted of a felonywhile holding a real estate license.He was also found in violation of201 KAR 11:030, Section 2 forfailing to notify the Commission ofhis change of residence address.Pursuant to KRS 13B.080(6) Mr.Sebree was served at his lastknown address and failed toappear as ordered.Disposition: Mr. Sebree’s licensewas revoked.

J. Scott Hagan (Louisville) CaseNo. 04-0122Violation: Mr. Hagan stipulatedthat he unknowingly violated KRS324.160(4) for allowing an out-of-state unlicensed company to "use"his Kentucky license by enteringinto a "co-broker agreement." Mr.Hagan immediately terminated theagreement prior to any actualimpermissible use of Mr. Hagan'slicense.Disposition: Mr. Hagan agreed topay a $2,000.00 fine.

David R. Jernigan (Franklin)Case No. 04-0025Violation: Mr. Jernigan stipulatedto a violation of KRS 324.160(4)(j)for being convicted of a felony

while holding a real estate license.Disposition: Mr. Jernigan'slicense will be placed on probationfor a period of two (2) years andthe Commission will conduct ran-dom audits of files relating to hisreal estate transactions. Mr.Jernigan shall complete twelve (12)hours of continuing education in aCommission-approved law course,and he agrees that he will neverapply for or try to obtain a "bro-ker's" license to engage in realestate brokerage in thisCommonwealth.

Charles T. Allen (Lexington)Case No. 04-0040Violation: Mr. Allen stipulated toa violation of KRS 324.160 (4)(b)for his unintentional misrepresen-tation of a septic system in a realestate transaction involving thesale of his investment property inVersailles, Kentucky.Disposition: Mr. Allen agreed topay the complainants the sum ofone thousand one hundred dollars($1,100.00), which represents one-half of the approximate cost tohave the property served by asewer system. Mr. Allen alsoagreed to complete six (6) hours ofcontinuing education in aCommission-approved law course.

James S. Long (Scottsville) CaseNo. 04-0051Violation: Mr. Long stipulated toa violation of KRS 324.160 (4)(u)for violating KRS 324.117 by unin-tentionally advertising in a false,misleading or deceptive manner.He advertised “$2995 Sellers FlatFee!” next to a “MLS" logo, with-out explaining in the advertisementthat, under certain circumstances,the fee in question would be higherthan $2995, if the seller's property

is placed on the MLS.Disposition: Mr. Long agreed topay a fine in the amount of$250.00 and complete nine (9)hours of continuing education inan approved law course.

Margaret A. Gorbandt(Louisville) Case No. 04-0029Violation: Ms. Gorbandt stipulat-ed to a violation of KRS324.160(4)(u) for violating 201KAR 11:400 by failing to provide aproperly completed AgencyDisclosure Form.Disposition: Ms. Gorbandtagreed to pay a fine in the amountof two hundred fifty dollars($250.00) and to complete three (3)hours of continuing education in aCommission-approved agencycourse.

Danny R. Willis (Frankfort)Case No. 02-0099Violation: - Mr. Willis failed tocomplete the correct continuingeducation hours as mandated inhis Settlement Agreement.Disposition: Mr. Willis was finedtwo hundred fifty dollars($250.00).

Disciplinary Actions

MARK YOURCALENDAR!

RENEWAL DEADLINE

IS MARCH 31, 2005

March31

11

The following is an excerpt from theCommission’s textbook entitledKentucky Real Estate Professionals andthe Law revised by Lee Harris, GeneralCounsel.

Principal brokers are required toprovide adequate supervision overtheir sales associates under KRS324.160(6). Whenever a complaintis received by the Commissionalleging misconduct on the part ofthe sales associate, the principalbroker will also be required torespond to the complaint. Theprincipal broker is not shieldedfrom liability based upon a salesassociate’s status as an “indepen-dent contractor” or the fact thatthe principal broker and the salesassociate may have entered into anindependent contractor agreement.

Although the independent contrac-tor status may affect the agentand/or broker for federal income

tax purposes, it has no effect onthe licensee’s status under the realestate license laws. The licenselaw makes the principal brokerresponsible for the supervision ofall of his or her agents. The factsof each case must be carefully con-sidered, in order to determinewhether a license law violation byan agent was the sole or partialresult of inadequate supervision bya principal broker. If theCommission concludes that theviolation was a result of the prin-cipal broker’s neglect in supervis-ing the agent, the Commissionmay order discipline against thatprincipal broker as well as thesales associate.

The Commission expects principalbrokers to provide supervision,training, and sales meetings. Inaddition, the principal broker or adesignated managing brokershould be available to review docu-ments, including listing contractsand purchase contracts. Whilethey are not required to reviewsuch documents, failure to do so

may result in liability and/or disci-pline against the principal brokeror designated managing broker.

Of course, the principal brokercannot be held accountable forevery wrongdoing by his or hersales associates. In many cases, noamount of supervision could pre-vent an intentional wrongdoing bya sales associate. Accordingly, ifan agent or sales associate engagesin some form of calculated orintentional misconduct, such asfraud or intentional misrepresenta-tion, and the principal broker hasno knowledge of and does not con-done the misconduct, the principalbroker will not be subject to disci-plinary action by the Commission.This principle is incorporated intoKRS 324.160(6), which states: “nounlawful act or violation of anyprovision of this chapter by anyassociate of the principal brokermay be cause for holding the prin-cipal broker primarily liable unlessthe broker has knowledge of suchunlawful violation.”

B R O K E R SUPERVISION

to another buyer without getting a release from the firstbuyer. It is always wise to get an opinion from an attor-ney, or at least your broker, before you move forwardwith another contract without a release on the first con-tract. It's not wise to decide yourself, or to encourageyour seller to decide, that the first buyer is actually inbreach (and has no defenses to the contract). If thebuyer changes his mind and now decides that he in fact isgoing to perform under the contract? You could end upwith two valid contracts and at least one very upset partyon your hands.

When it's unclear whether your seller can move forwardwith another contract without a release on the first con-tract, the first thing to do is to speak with your broker orattorney about the facts of the situation and get an opin-ion as to whether or not the buyer is in default. If yourbroker or attorney agrees that the buyer has no legal rightto terminate the contract, you then need to give your sell-er the choice of signing a release and letting this buyer goforever, or sitting down with a litigation attorney to dis-

cuss other options. Often, litigation attorneys will wantto send a letter to the buyer, giving the buyer a statedamount of time within which to come forward and agreeto purchase the property under the terms of the contractor lose the right to complain when the seller moves on toanother buyer. If the buyer does not agree to perform, hewill then be precluded from later arguing that he had avalid contract.

In most situations, the best choice for your seller mightbe to sign the release, take the buyer's good faith deposit(especially if it is a sufficient amount of money) andmove quickly toward reselling the property. But notalways. And this decision should always be the seller's,not the agent's. You don't want to end up with two validcontracts, but you also don't want to encourage your sell-er prematurely to release the buyer from all liability. Ifthe seller signs the release without understanding that sheis giving up the right to collect damages from the buyer,the next question when she goes to a litigation attorneywill be, "OK, then can I collect from my agent?" If youdo not advise the seller to seek counsel to explain theimportance of signing a release, the answer just may be"yes."

When a Buyer Breaches a ContractContinued from Page 9

PRESORTEDSTANDARD

U.S. POSTAGEPAID

LOUISVILLE, KYPERMIT NO.

TThe Khe Kentucentuckky Ry Real Estaeal EstateteCommission will be cCommission will be closedlosed

on:on:December 24 & 27,December 24 & 27, 20042004

(Christmas)(Christmas)

December 31,December 31, 2004 2004 JJananuaruary 3,y 3, 20052005

(Ne(New w YYear’ear’s)s)

JJananuaruary 17,y 17, 20052005(Mar(Martin Luther Kingtin Luther King,, JrJr.. DaDay)y)

WWorord Scrd Scrambamblele1. OGNINCTIUN CDTEAIUNO_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

2. ANDLIEDE_ _ _ _ _ _ _ _

3. ODT’N_ _ _ ‘_

4. OGRFTE_ _ _ _ _ _

5. CDERMEBE 31, 2004_ _ _ _ _ _ _ _ 31, 2004

Answers:1.Continuing Education 2.Deadline 3.Don’t 4.Forget 5.December 31,2004

Kentucky Real Estate Commission10200 Linn Station Road, Suite 201Louisville, KY 40223 Phone: (502) 425-4273 Fax: (502) 426-2717Toll Free: 1-888-373-3300 Fax-On-Demand: 1-888-KREC-FAXWeb Address: www.krec.ky.gov

Farewell to

Judy PiazzaThe Commission would like to say goodbye

and thank you to Judy Piazza. Judyresigned as the Governmental Affairs

Director for the Kentucky Association ofRealtors® to accept the position of DeputyDirector for the Department of Alcohol andBeverage Control. Over the last five years,

Judy in her role at the KAR assisted theCommission with passing joint legislation.

Her many talents will be missed by theCommissioners, staff and licensees.

NEW WEBSITE ADDRESSwww.krec.ky.gov