Free KY Real Estate Sales Associate Exam Flashcards

Real property is land plus interests and improvements attached to it. Personal property is movable property. An item can become a fixture—and therefore real property—when its attachment, adaptation, and intent show it is meant to remain with the realty.

An easement is a nonpossessory right to use another's land for a stated purpose, such as access. An encroachment is an unauthorized physical intrusion across a boundary, such as a fence or structure extending onto neighboring land.

Tenants in common each hold an undivided ownership interest and have the right to possess the whole property. Their shares may be unequal, and there is no automatic right of survivorship unless another arrangement provides it.

Police power is the government's authority to regulate private property for public health, safety, welfare, and morals. Zoning, building codes, and land-use ordinances are common exercises of police power.

Private restrictions, such as covenants, conditions, and restrictions (CC&Rs), arise from private agreements or deeds rather than government zoning. They can be stricter than zoning, but cannot authorize a use that zoning prohibits.

The sales comparison approach estimates value by comparing the subject property with recent, similar sales and adjusting for meaningful differences. It is commonly useful when reliable comparable sales are available.

A CMA is a broker's pricing analysis using market data; it is not a formal appraisal. Licensees should not represent a CMA as an appraisal when an appraisal is legally required or expected.

The promissory note is the borrower's written promise to repay. The mortgage or security instrument creates a lien securing that debt with real property. The note evidences the obligation; the mortgage secures it.

LTV compares the loan amount with the property's value or applicable purchase-price basis. A $240,000 loan on a $300,000 value has an 80% LTV. Higher LTV generally means less borrower equity and more lender risk.

RESPA prohibits giving or accepting a thing of value for referrals involving federally related mortgage loans, except for permitted payments such as compensation for actual services. A referral fee disguised as a service payment remains a risk.

A valid contract generally requires capable parties, mutual assent (offer and acceptance), lawful purpose, and consideration. If a required element is missing, enforceability may be affected.

The Statute of Frauds generally requires contracts for the sale of real property to be in writing and signed by the party to be charged. It is a rule of enforceability, not a substitute for the other contract elements.

A counteroffer rejects the original offer and proposes new terms. The original offeror may accept, reject, or counter again; the original offer is no longer open unless it is renewed.

A contingency makes performance dependent on a stated event, such as financing approval or a satisfactory inspection. Read its deadline, notice requirements, and remedy because missing them can change the parties' rights.

A void agreement has no legal effect. A voidable contract may be avoided by a protected party, such as a party lacking capacity. An unenforceable contract may be valid in substance but cannot be enforced because of a legal defense, such as a writing requirement.

A bilateral contract exchanges promises—for example, a buyer promises to pay and a seller promises to convey. A unilateral contract accepts performance rather than a return promise, such as a reward offered for completing a task.

An agent owes the client fiduciary duties, commonly including loyalty, obedience to lawful instructions, confidentiality, reasonable care, accounting, and disclosure of material information. Those duties are stronger than the duties owed to a customer.

A client has an agency relationship with the broker and receives fiduciary representation. A customer is not represented by the broker but is still owed honesty, fair dealing, and disclosure of known material facts as required by law.

A transaction broker or facilitator assists a transaction without representing either party as an agent. The broker must accurately explain the role and avoid creating an undisclosed agency relationship.

A licensee's personal or financial interest that could affect professional judgment is a conflict risk. Disclose conflicts as required and obtain the required consent before proceeding; undisclosed self-interest can breach agency duties.

A material fact is information that a reasonable buyer or seller would consider important in deciding whether or on what terms to transact. Materiality turns on significance, not whether the information is convenient to disclose.

For most pre-1978 residential housing, federal law requires sellers and lessors to provide the lead-hazard information pamphlet, disclose known lead-based paint or hazards, and provide required records and reports before a purchaser or lessee is obligated.

A property-management agreement should define the manager's authority, compensation, duties, owner obligations, term, and handling of money. Written scope helps distinguish authorized management from unauthorized decisions.

A general warranty deed contains broad title covenants from the grantor, including protection against title defects arising before and during the grantor's ownership. It offers more grantor assurance than a special warranty deed.

Recording a deed in the appropriate public records gives notice of the claimed interest and helps establish priority under the jurisdiction's recording law. Recording does not itself cure a defective deed or title problem.

The federal Fair Housing Act prohibits housing discrimination based on race, color, religion, sex, national origin, disability, and familial status. Licensees must avoid discriminatory practices and advertising.

Steering is directing or discouraging buyers or renters toward or away from areas because of protected characteristics. Discuss objective property features and the client's stated criteria, not stereotypes about people or neighborhoods.

A reasonable accommodation is a rule, policy, practice, or service change that may be needed for a person with a disability to have equal opportunity to use and enjoy housing, unless it would create an undue burden or fundamental alteration.

Competitors may not agree to fix commissions, divide markets, or boycott competitors. Each brokerage must independently set its prices and business decisions; cooperation through a trade group does not make collusion lawful.

Commission = sale price × commission rate. On a $300,000 sale with a 6% commission, the total commission is $18,000. Any later split is calculated from the agreement, not assumed from the total rate.

A proration allocates an expense or income between parties based on the period each bears responsibility. Identify the daily amount, the closing-date convention, and who is charged or credited before calculating.

KREC regulates, examines, and licenses Kentucky real estate sales associates and brokers. PSI administers the licensing examination under contract with KREC, while KREC handles licensure questions and decisions.

The Kentucky State outline includes KREC's authority to investigate, hold hearings and appeals, take emergency suspension action, and impose sanctions. A complaint process can therefore affect a license, not merely provide informal guidance.

Kentucky calls its entry-level licensee a Sales Associate. Under KRS 324.010, a sales associate is affiliated with a Kentucky-licensed principal broker and performs brokerage under that principal broker's supervision.

A sales-associate candidate completes either six academic credit hours in real estate from an accredited college or university, or 96 classroom hours from a Kentucky-approved private real estate school. This is an alternative pathway, not a requirement to complete both.

The PSI bulletin says candidates must apply for Kentucky licensure within 60 days after passing the examination. Keep the score report and required licensing documents ready rather than treating the passing result as the license itself.

A broker license is not the next name for a sales-associate license. Broker applicants have added education requirements and ordinarily need 24 months of sales-associate real-estate work averaging at least 20 hours per week before applying.

A principal broker is the single broker responsible for the brokerage company's operation. The sales associate's supervised status does not transfer that operational responsibility to the sales associate.

Client and transaction money is not brokerage operating money. Kentucky's state outline specifically tests handling of monies, escrow accounts, records, and improper conduct; commingling or misusing trust funds creates serious compliance risk.

Under 201 KAR 11:105, a licensee may not advertise real estate for sale or lease without the owner's written consent. Advertising a property listed by another principal broker also requires that listing principal broker's written consent.

Kentucky's advertising regulation requires the principal broker, or designee, to establish written standards for review and approval of company and affiliated-licensee advertising. A sales associate should follow the brokerage's compliant review process.

Kentucky law generally requires a license to perform acts of real estate brokerage for compensation. Do not confuse permissible clerical support with performing activities that require a real estate license.

The Kentucky State outline includes handling documents and records as tested brokerage subjects. Treat transaction records as a broker-supervised compliance responsibility: preserve required documentation and do not alter or withhold it to conceal a problem.

Improper, fraudulent, or dishonest conduct can trigger KREC discipline. The safe exam principle is to identify the licensee's duty, disclose or protect what the law requires, and promptly refer matters beyond authority to the supervising broker or proper professional.

Kentucky's State outline tests the Statute of Frauds, listing contracts, purchase contracts, offers, finance provisions, and licensee duties. A material change to an agreement should be documented and accepted by the parties rather than handled informally.

The Kentucky State outline expressly includes submission of offers. A licensee should promptly transmit offers and counteroffers as required by the brokerage relationship and applicable law; a personal preference about an offer is not a reason to suppress it.

Kentucky's rules address designated agency. In a transaction involving one brokerage, designated agency can assign different affiliated licensees to the parties under the principal broker's framework; disclose the relationship and obtain the required consent.

Dual agency creates a conflict because one brokerage relationship involves both sides of a transaction. Kentucky brokerage relationships and required disclosures are state-tested; do not assume dual representation is authorized without the informed consent and procedures required by Kentucky law and the brokerage.

Kentucky's State outline includes seller disclosure of property condition and other disclosure issues. The licensee's role is not to conceal a known material problem; provide the required disclosure process and avoid representing unknown facts as certain.

The Kentucky State portion includes written property-management agreements, procedures, and handling of security deposits. Management funds require careful, authorized handling and records; a manager cannot treat a tenant's deposit as personal or operating money.