A new face has been added to the wall in the Commission's lobby. On September 23, 1999, Governor Paul E. Patton announced his appointment of Arvel J. "Jerry" McMahan of Crestwood to serve a four-year term as Commissioner. Mr. McMahan, who will be filling the seat of Mr. Jim Huff of Northern Kentucky, began his tenure on October 1, 1999. This is Mr. McMahan's first appointment to the Commission.
Mr. McMahan is the principal broker of Coldwell Banker McMahan Company. This company has a total of 8 offices located throughout Louisville and Lexington, and 196 licensees are affiliated under that brokerage.
Mr. McMahan says that he is "looking forward to working with the other Commissioners and the staff." He considers his new post "a challenge and a privilege."
Mr. McMahan, who is a graduate of Oldham County High School and Tennessee Tech University, was originally licensed as a sales associate in 1968 and obtained his broker's license in 1975. He has been an active member of the Louisville Board of Realtors and the Kentucky Association of Realtors since 1975. He has also served on the Louisville Board's Metro Search, Inc. for the past two years.
Mr. McMahan, who currently resides in PeWee Valley with his wife, Carol, is also very active in his community. He serves as a Board member for The Bank of Oldham County and for the Oldham County Chamber of Commerce. He is also a member of the Advisory Council for the Louisville Water Company.
He and his wife have two daughters, Molly and Kristy, and one grandson, Quinn.
It is with heavy hearts that the Commission bids a fond farewell to Commissioner Jim Huff. Mr. Huff has been a faithful and talented leader for this Commission for almost two decades, and the licensees have benefited from his wisdom and experience.
Mr. Huff first started as a Commissioner in 1981 and served in that capacity until 1997. In 1998, Governor Paul E. Patton again appointed Mr. Huff to the Commission to finish out the term of the late Frank A. Clay, Jr.
Mr. Huff is the Chairman of Huff Realty, which has offices in both Northern Kentucky and Ohio. He was instrumental in implementing mandated statewide errors and omissions insurance for licensees and has worked closely with the Association of Real Estate License Law Officials ("ARELLO"). Mr. Huff is the past Director of ARELLO and has also served as the Vice President of the ARELLO Southern District. He also holds real estate licenses in the states of Florida and Indiana.
Mr. Huff has given his considerable talents also to the community at-large. He has served as the Chairman of the Northern Kentucky Chamber of Commerce and the Director of the Peoples Bank of Northern Kentucky. He also sits on the Foundation Board of the Northern Kentucky University and is an Emeritus Member of the Thomas More College Board of Trustees.
The Commission certainly appreciates the time and energy that Mr. Huff has dedicated to the licensees of this state. He will be missed, not just by the Commissioners and the staff, but by all the licensees who benefited from his efforts and ideas.
I know you join me in wishing him much success and happiness in the future.
In September, several members of the Commission and staff attended the KAR Convention in Fort Mitchell, Kentucky. While there, Chair Betty Kaiser gave a great speech, outlining all of the activities at the Commission thus far this year. For those who did not hear the speech, I thought I would point out a few of the highlights to update you on all the goings-on around here.
First, case settlements are on the rise. In the past twelve months, the Commission has held 64 settlement conferences. Of those, 55 cases have settled. By contrast, only 11 cases have gone to a full-blown hearing in 1999. This is a dramatic decrease in hearings from years past. For example, in 1998, 46 cases went to hearing. The Commission is very excited and encouraged by this trend.
In addition, the Commission has recently gone into cyberspace. Each Commission staff member now has his or her own e-mail address. You can access any staff member by sending an e-mail to Firstname.Lastname@ky.gov. This technological advance decreases phone calls, delays and messages.
Licensees can now download all fax-on-demand documents. These documents should provide you with all of the information you could possibly need - and more! We have also recently revamped our website at www.krec.ky.gov. Licensees can now access all continuing education classes and core course providers on-line. Licensees can be assured that they are getting the most updated and accurate list of providers on the website.
On October 18, the Commission honored all of the licensees who have held a license in this state for 50 years or more. The Commission sponsored a breakfast for these honorees and everyone received a plaque commemorating their lifelong achievements in the real estate industry.(Highlights appear below.).
The Commission has also approved several grants which will help educate licensees and the consumer public about real estate issues. U of L is developing a videotape which will explain in detail each function of the Commission. Furthermore, the Commission is developing a program which will train high school students about the values and benefits of home ownership. In the program, high school teachers will be trained to teach these students about mortgages, contracts and the like.
ALL active licensees (except those who have been actively and continuously licensed since June 19, 1976) MUST complete six (6) hours of continuing education with two (2) hours in a Commission-approved legal topic on or before December 31, 1999. Licensees who have not completed the required hours will be subject to a penalty, filling out a delinquency plan or losing their license.
AVOID penalties and paperwork and complete your hours today. Classes will be limited the longer you wait.
For a list of education providers, call our Fax-On-Demand system at 1-888-KRECFAX and punch in document #600. Licensees with web access can log-on to our website at www.krec.ky.gov for a complete list.
REMINDER - Even if it is not your year to take the Core Course, you are still required to complete six (6) hours of continuing education.
The Commission receives numerous legal calls on a daily basis from licensees and consumers alike. The Commission's legal staff is more than happy to answer any questions regarding the licensing law and its applicability to a particular situation. The legal staff can address questions related to escrow account deposits, agency disclosure laws, Commission-required forms, regulations found in 201 KAR Chapter 11 or statutes found in KRS Chapter 324, etc. However, many of the calls to the Commission's counsel are related to issues which the Commission's legal staff cannot properly address. It is not that the attorneys do not know the answers to the questions posed, it is simply that the legal staff cannot answer questions that should be posed to a private attorney.
The following is a list of the types of questions which the Commission's legal counsel cannot answer:
- Contractual interpretation. Judges, juries or arbitrators are the only people capable of interpreting the language of a contract. The Commission's attorney cannot interpret contractual terms.
- Commission payment disputes between separate offices or between a broker and an associate in the same firm. The Commission often receives calls regarding a dispute over commission payments. These disputes may either be handled in-house between the broker and the associate or by the local Boards or KAR. For those licensees who are not realtors, the disputes may be handled through the court system in your county.
- Rental or lease agreements between a landlord and a tenant. The Commission only deals with licensing laws and does not handle landlord-tenant law. The only exception to this rule would be the instance when a licensee is managing property for a fee for someone else. Then, the Commission can answer questions regarding that licensee's duties under the property management regulations.
- Closing documents or settlement statements. The Commission does not deal with closings at all. Questions regarding closings should be directed to the principal broker, the mortgage company or the attorney preparing the closing documents or the licensee's or firm's private attorney.
- Deeds, titles, taxes or surveys. Questions about the filing of deeds, the payment of taxes, the validity of surveys and the like should be directed to the county clerk or the agencies which regulate the particular type of activity at issue.
- Arbitrations. Consumers and/or licensees desiring to schedule an arbitration should contact either:
- the licensee who handled the transaction;
- the local Board who drafted the contract or the KAR; or
- the American Arbitration Association ("AAA").
- Appraisals or Auctioneers. In Kentucky, there is a Board of Auctioneers and a Real Estate Appraisers Board. If anyone has a question regarding the laws or practices of an appraiser or an auctioneer, those questions should be directed to one of those Boards.
- Builders. Builders are not regulated in this Commonwealth by any particular state agency. Many builders are members of a Home Builders Association. However, unless a builder is also a real estate licensee, the Commission cannot regulate their practices and cannot answer questions regarding their activities.
Lee Harris is very willing to answer questions over the phone. However, due to the sheer number of calls, it is sometimes best to e-mail, fax or mail your question in order to receive a fast response and to prevent any confusion in the future.
Michelle "Shelly" Cameron came to the Commission as a Legal Secretary in January of 1991. In October of 1992, she was promoted to Executive Secretary. Shelly then became the Director of Administration in November of 1997.
As Director of Administration, Shelly's responsibilities include managing payroll and personnel, overseeing the errors and omissions program and editing this newsletter. Shelly also serves as the Commission's ombudsman. Shelly has been busy this year attending training for the state's new on-line accounting system, called MARS. Shelly also works with Don Bodley to compile and provide information for the Commission's website. Shelly says: "I really enjoy working at the Commission. We have an excellent staff and the Commissioners are very dedicated to serving the licensees in this state."
Shelly lives with her husband, Vince, and their daughter, Victoria. Shelly and Vince are expecting another baby in November.
In her free time, Shelly enjoys going to yard sales and auctions, entertaining guests and fishing.
The Commission's website has an exciting new look and many more features thanks to Dr. Don Bodley, Ph.D. and Emeritus Professor of Real Estate Studies in the College of Business at Eastern Kentucky University (EKU).
Dr. Bodley took over as the Commission's webmaster in August of this year. In this time, changes and updates to the site are processed within hours and licensees can be sure that they are getting the most current information available. He has designed the site to be more user-friendly and informative.
One new feature is the errors and omissions pro-rated premium chart. This chart allows licensees to know pro-rated E & O rates for the entire year for every city and county in Kentucky. It is easy to use and can be accessed day or night.
He has also included all of the Fax-on-Demand documents. These documents contain pertinent information that will answer virtually any question a licensee might have. Many documents contain forms that can be downloaded and then mailed directly to the Commission.
Dr. Bodley presented his first monthly report to the Commissioners at their meeting on September 23. He provided the Commission with some very interesting data. As of the meeting date, the site had received over 8,000 hits.
Dr. Bodley was the founding Professor and Chairholder of the Real Estate School at EKU. He is also a former Director of the Kentucky Real Estate Educators Association. He was honored by REEA as Member of the Year in 1996 and founded and maintains their website. He developed the Bachelor of Business Administration Real Estate major degree program at EKU and has also been honored by EKU with an outstanding educator award for the College of Business.
Thanks to Dr. Bodley for an outstanding job! Please log on at www.krec.ky.gov to see all the new features!
The Commission frequently receives inquiries regarding the terms used in the Agency Disclosure Form (the "Form"). As you know, on both sides of the Form, there are questions regarding a licensee's relationships with his or her client or customer. The Form asks the licensee to disclose whether he or she holds a personal, family or business relationship with clients or customers.
A family relationship is probably the easiest to discern. Is the client or customer a brother, child, spouse or in-law of the licensee? It is perhaps best to disclose if there is any familial relationship between the two individuals, even if that relationship is distant or remote. It becomes too difficult to assess on a case-by-case basis whether someone's familial relationship to the licensee is too distant to be mentioned on the Form. As a general rule, mark "family" whenever the client or customer is related to you in any way.
A so-called personal relationship is not as easy to define as a family relationship. A personal relationship connotes a friend or other less formal acquaintance. In other words, the licensee holds a personal relationship with someone he or she knows or has known outside of this particular real estate transaction. For example, a licensee could potentially have a personal relationship with their neighbor, their hairdresser or their child's teacher.
A business relationship has two distinct facets. First, the licensee has a business relationship with anyone with whom he or she has previously worked in a real estate transaction. All former clients and customers have a business relationship with the licensee representing them. Second, the licensee has a business relationship with all persons with whom the licensee owns an outside business, such as a partnership, a corporation, an LLC or a PLLC. For example, if the client and the licensee own rental property under a corporation, they have a business relationship. Likewise, if the licensee and the client own an ice cream parlor, they have a business relationship. These relationships must be disclosed on the Form.
The licensee should mark "none of the above" whenever he or she is representing someone whom he or she has just met during the particular transaction at issue. If the licensee happens to be at the office and a person whom the licensee has never met walks in the front door and asks to see a particular home, then the licensee should mark "none of the above" on the Form.Marking one particular relationship on the form does not preclude the licensee from marking other relationships as well. It is not necessary to pick the "best" or "most important" relationship. To the contrary, it is imperative to mark every type of relationship the licensee holds with the client or customer. This importance is best demonstrated perhaps when a licensee acts as a dual agent in a transaction. Under those circumstances, it is certainly beneficial for the buyer and the seller to be able to review just how close the licensee is to the other party. A buyer may not worry too much about being in a dual agency relationship with someone who has a personal relationship with the seller but may not want to be in a dual agency relationship with the seller's sister and/or business partner!
If you are ever presented with a situation in which you are unsure or unclear about which relationship to mark on the Form, please feel free to call the Commission's counsel to inquire. The Form tries to contemplate every type of relationship or situation which may arise, but there are always instances when the limited language of the Form will not suffice and it is necessary to ask for a legal opinion.
Annual Statement of Income and Expenses
Fiscal Year Ending June 30, 1999
| Income FY 98-99 | |||
| Exam Recovery Fees | $ 38,580 | College Grants/Scholarships | 260,168 |
| Reciprocal Revovery | 7,530 | Investigative Services | 95,999 |
| Renewal Recovery | 619,255 | Expert Witnesses | 517 |
| Core Course | 71,690 | Court Reporter | 574 |
| Fines | 9,534 | Carpool | 788 |
| Education Fines | 44,500 | Equipment under $ 5,000 | 4,667 |
| Investment Income | 67,988 | Cassettes/Books | 6,870 |
| Restitution from Complaints | 11,098 | Room Rental | 7,869 |
| Prior Year Grant Refunds | 56,223 | Postage/Parcel Delivery | 8,036 |
| Postage, Meter & Bulk | 44,033 | ||
| TOTAL INCOME | $ 926,638 | Seminar Refreshments | 6,937 |
| Printing, Vendor | 25,226 | ||
| EXPENDITURES FY 98-99 | In State Travel | 2,802 | |
| Out of State Travel | 1,511 | ||
| Legal Services | $ 56,940 | Travel, Non-State Employees | 1,239 |
| Contract Speakers | 21,308 | Subpoenas | 1,544 |
| Ky Real Estate Education Foundation | 80,924 | Judgments | 47,179 |
| Subscriptions | 2,001 | ||
| TOTAL EXPENDITURES | $ 677,132 |
JAMES BEAVERS (Louisville) Case No. 96-0193 Violation: The Commission adopted the Hearing Officer's Recommendations finding the Respondent James Beavers in violation of KRS 324.160(1)(c), (e), (r) and (q) for making any false promises of a character likely to influence, persuade or induce; for acting for more than one party to a transaction without the knowledge of all parties for whom the licensee acts; for improper, fraudulent or dishonest dealing and for improper handling of others' money in violation of KRS 324.111.
Disposition: Beavers' license is revoked for a period of not less than five (5) years.
WILLIAM SHAW (Lexington) Case Nos. 96-0148, 97-0192 and 98-0031Violation: The Commission adopted the Hearing Officer's Recommendations in this case. The Commission ordered that Shaw's license shall not be restored from cancellation and shall be suspended for a period of one year for failing to comply with the settlement agreement he entered into with the Commission and the Final Order issued in the case on December 17, 1999. In that settlement agreement, Shaw stipulated to a violation of KRS 324.111 for improper handling of others' money and KRS 324.160(1)(o) for failing to timely respond to a request for information due to a formal or informal complaint by the Commission.
Disposition: Shaw shall not be allowed to reinstate his license until he has complied with the terms of the December 17, 1999 Order issued by the Commission. This compliance includes: payment of two fines in the amount of $500.00 each; completion of thirty (30) hours of continuing education before June 19, 1999 in addition to the six (6) hours already required under Kentucky law; and providing written notice from another principal broker that that broker has agreed to hold Shaw's license. If his license is reinstated under the above terms, he shall then keep his license with another principal broker for a period of ten (10) years of active practice as a licensee. Any violation of this Order will result in the suspension of Shaw's license for a period of at least two (2) years.
BURTON J. SPAULDING (Newport) Case No. 94-0238Violation: Burton Spaulding was convicted of a felony in the United States District Court in 1994. This was a violation of KRS 324.160(1)(j). The Commission placed several restrictions on Spaulding's license by Order dated September 12, 1996. One of the restrictions was that the Commission's investigator was to continue to monitor Spaulding while he was on supervised release from the Court. During this supervised release, Spaulding tested positive for cocaine on two occasions and was returned to federal prison. After his release in July 1998, Spaulding asked that the restrictions be lifted by the Commission.
Disposition: A hearing was held, and the Hearing Officer recommended that the restrictions remain in place. In addition, the Commission adopted the Hearing Officer's Recommendations which stated that at the end of this six (6) month period, the Respondent may file a renewed petition which shall include: 1) a current mental health and chemical dependency evaluation; 2) evidence of counseling, as required by the above evaluation; 3) evidence of random urine drug screening conducted at the Respondent's expense for a period of at least six (6) months by a qualified agency on a regular basis; 4) notarized letters of recommendation from at least five (5) individuals who have had direct contact with the Respondent for a period of at least six (6) months; and 5) the Respondent shall provide a copy of the Commission's Final Order, including the Findings of Fact and Conclusions of Law, to anyone employed by him to complete the requirements of the Final Order.
CONNIE BLACKWELL (Lawrenceburg) Case No. 97-0073 Violation: A settlement agreement was entered into in this matter. Respondent Connie Blackwell stipulated to a violation of KRS 324.160(1)(q), specifically KRS 324.360, for failing to provide a Seller's Disclosure of Property Conditions Form to the purchasers of a property she had listed.
Disposition: Blackwell has agreed to take three (3) hours of continuing education in addition to the six (6) hours of continuing education required by law.
LISA PERKINS (Bardstown) Case No. 99-0014Violation: The Commission issued an order of default against Perkins for failing to respond to the Commission's investigation and for failing to update her information with the Commission as required by law.
Disposition: Perkins' license was revoked and she was ordered to pay a fine in the amount of $500.00 if she ever attempts to restore her license after the revocation period has run.
JUDY GIANNASIO (Georgetown) Case No. 99-0012Violation: A settlement agreement was entered into in this matter. Respondent Giannasio agreed to stipulate to an unknowing violation of KRS 324.160(1)(g) for representing or attempting to represent a broker other than her principal broker, without the express knowledge and consent of that broker.
Disposition: Giannasio agrees to complete six (6) hours of continuing education in addition to the six (6) hours already required under Kentucky law.
PEGGY SHARON (Cynthiana) Case No. 98-0051Violation: Peggy Sharon agreed to stipulate to a violation of KRS 324.160(1)(q), specifically 201 KAR 11:121(4).
Disposition: Sharon agrees to accept a formal reprimand from the Commission to be placed in her official file.
GERI COWLES (Elizabethtown) Case No. 97-0170Violation: Geri Cowles admits to a violation of KRS 324.160(1)(r) for improper, fraudulent or dishonest dealing.
Disposition: Cowles agrees to accept a formal reprimand to be placed in her official file.
BRENDA SEARS MILLER (Corbin) Case No. 98-0033Violation: The Commission adopted the Hearing Officer's Recommendations that Miller is in violation of KRS 324.160(1)(o) for failing to timely respond to a request for information as a result of a formal or informal complaint at the Commission and for violations of KRS 324.160(1)(b),(c),(r),(s) and (q), specifically 201 KAR 11:121 (1)(4), KRS 342.111 and KRS 324.330(2).
Disposition: If Miller attempts to reinstate her license, it shall be suspended for a period of one (1) year from the date of reinstatement and she shall pay a fine in the amount of $500.00 within thirty (30) days after reinstatement.
WENDELL DRAKEFORD (Cynthiana) Case No. 98-0051Violation: A settlement agreement was entered into in this case. Respondent Drakeford stipulates to a violation of KRS 324.160(3) for failing to adequately supervise his sales associate, Peggy Sharon.
Disposition: Drakeford agrees to complete the Kentucky core course (six (6) hours of continuing education) in addition to the six (6) hours already required under Kentucky law.
DAVID RAWLINGS (Cold Spring) Case No. 92-0024 Violation: Respondent David Rawlings was found in violation of KRS 324.160(1)(b),(c) and (r) for making a substantial misrepresentation, making false promises of a character likely to influence, persuade or induce and for conduct constituting improper, fraudulent or dishonest dealing.
Disposition: Rawlings was placed on 60 days' probation and ordered to pay a fine in the amount of $250.00.
There is still a lot of confusion about the Kentucky Core Course and when licensees are required to complete the course. The Core Course MUST be taken by active licensees who are subject to the continuing education requirements at least once every four years. The Core Course is also the course required for an escrow licensee to reactivate.
The schedule was included in the regulation as a means to implement the program and to equally distribute the number of licensees who will be required to attend in any given year. In 2000, active licensees whose birthdays fall in the months of April, May and June will be required to complete the Core Course as their continuing education for the year. If your birthday is in April , May or June and you attended the Core Course in 1999, then you have fulfilled the Core Course portion of the continuing education regulation, but you would still need to complete six hours of continuing education (two of the six must be an approved legal topic) in 2000 in order to satisfy the yearly requirement for continuing education outlined in the regulation.
As long as the core course is taken at least once in your four-year cycle, then you are in compliance with that part of the regulation. However, you are still required to complete six hours of continuing education each year. The four-year cycle will begin with the first year each licensee completes the course and will be due every four years after that.
Reminder: Active licensees whose birth dates fall in January, February, or March MUST complete the Core Course before December 31, 1999. If required licensees do not complete the course, they WILL be subject to a penalty, filling out a delinquency plan or losing their licenses. Don't wait until the last minute to take your course. Remember that enrollment in the Core Course is limited, so sign up today.
On October 18, 1999, the Commission sponsored a breakfast reception honoring those individuals who have held a real estate license in this Commonwealth for fifty years or more. There were thirteen honorees in attendance as well as one family member accepting on behalf of his father-in-law. There were sixteen other honorees who could not attend in person.
After enjoying a breakfast buffet, Chair Betty Kaiser took the licensees back to the 1940's when they received their licenses -- a time when Harry Truman was President, the Dow Jones average was 179, and the average income was $2,000 - $3,000. The Chair ended her speech by saying, "My, how times have changed."
Each licensee received a plaque commemorating his lifelong achievements in the real estate industry and will receive a picture commemorating the event.
The event was a real treat for the Commission staff members and the Commissioners to get to meet the honorees and to hear their tales of real estate sales years ago. John Russell, an honoree, told those at his table about his very first commission. His father received $100.00, and he received $50.00 on the sale. In addition, the attendees learned that, in order to obtain a real estate license in the 1940's, the applicants simply had to fill out a 3x5 card and send in a check for $3.00 for a sales associate's license and $5.00 for a broker's license. It is not that easy anymore.
The Commission plans on continuing this tradition yearly and honoring licensees who reach the 50 year mark.
Licensees honored were: Merrill W. Powell, Cecil A. Wayman, John M. Russell, Charles R. Tharp, Henry E. Pogue IV, F. E. Whitney, Charles T. Mathis, Jr., Robert M. Swindler, Clay L. Scott, James T. Jones, John Skelton, John T. Harris, Paul J. Wight, Alvin Aldemeyer, Wilma D. Atherton, James L. Atkins, W. W. Brooks, Jr., William J. Cooper, Fred L. Dorris, Finis B. Fentress, C. Henry Habig, Jr., William L. Hay, John M. Krumpleman, George H. Kunzman, Charles Moore, Robert W. Marshall, Harold Rosen, Lawrence B. Schuster, and Marion G. Snyder.
