On July 15, 2008, four new statutes became effective, which now allow an out-of-state broker or out-of-state licensee to practice real estate in Kentucky as long as they follow certain requirements. These statutes only apply to commercial real estate and an individual practicing residential real estate in Kentucky must still be licensed in this state.

The out-of-state licensee must work under direct supervision of an out-of-state principal broker, and the out-of-state principal broker must enter into a written cooperation agreement with a Kentucky cooperating broker.

The Kentucky cooperating broker must be a licensed principal broker in the state of Kentucky. The agreement must contain all the terms outlined in KRS 324.236(2). (There is a sample form on our website.) The out-of-state licensee or broker must follow certain statutory requirements.
They must work with a Kentucky cooperating broker; they must limit their brokerage activities to those outlined in the cooperation agreement; they must hold escrow funds inside the state; and they must keep the Kentucky cooperating broker informed.

These are just a few of the statutory requirements that must be followed. For the precise language of the new law, please see KRS 324.235-KRS 324.238 on our website. The out-of-state principal broker is also required to file a Notice of Affiliation with the Kentucky cooperating broker. The Notice must contain the out-of-state principal broker’s or licensee’s name, firm name, firm address and telephone number, along with the terms specified in KRS 324.237. The Notice must give irrevocable consent to lawsuits being filed against the out-of-state licensee or broker and consent to service.

The Notice requires a statement that, during the prior five year period, the out-of-state principal broker or out-of-state licensee has not been subject to a disciplinary action or been convicted of a felony. The new commercial laws provide that the Commission may levy sanctions and penalties against an out-of-state broker or out-of-state licensee who violates these new laws. These sanctions may include levying a $1000.00 fine, issuing a formal or informal reprimand, reporting to the licensing authority of any state, revoking the authority to broker commercial real estate in Kentucky, publishing the sanctions imposed, and reporting suspected violations to the Commonwealth Attorney’s office. If you have any questions, please contact the Commission’s Legal Department for clarification.

Reprinted with Permission of Kentucky Real Estate Commission
Author- Kristen L. Reece (Staff Attorney)