GOVERNOR BEVIN CREATES KENTUCKY REAL ESTATE AUTHORITY

TO CONSOLIDATE MULTIPLE REAL ESTATE BOARDS

By Andrew C. Weeks1 & Michael F. Lawrence2
December 6, 2016
I.

INTRODUCTION

On December 1, 2016 Governor Matt Bevin issued Executive Order No. 2016-859. The
Executive Order will have a lasting effect on Kentuckys real estate industry by reorganizing four
administrative bodies and creating the Kentucky Real Estate Authority. The changes are set to
take effect on January 31, 2017; however, pursuant to the order, the transition phase has already
begun. The eighteen-page Executive Order might seem daunting, but this article will provide a
clear analysis of the changes in structure and process that the Executive Order has initiated, as
well as an analysis of the impact that the Executive Order will have on Kentuckys real estate
professionals. This article organizes the changes into three sections: (I) Structure, (II) Adjudicative
Process, and (III) Regulatory Process.
II.

STRUCTURE

Currently, there are four administrative bodies that govern the real estate professions in
Kentucky: The Kentucky Real Estate Commission (KREC); the Kentucky Real Estate Appraisers
Board (KREAB); the Kentucky Board of Auctioneers (KBA); and the Kentucky Board of Home
Inspectors (KBHI). The four boards make decisions regarding licensing issues, education, and
penalties, administer KRS 13B administrative hearings and appeals, and promulgate regulations
via the notice and comment process of KRS 13A. Under the new structure, all four boards will be
restructured underneath a newly formed administrative body, the Kentucky Real Estate
Authority. The four boards will now be known as the Board of Realtors, Board of Appraisers,
Board of Auctioneers, and Board of Home Inspectors. The boards will no longer handle appeals,
administrative hearings, or promulgate regulations. Under the new structure, all four boards will
make decisions regarding license denials, suspensions, revocations and penalties, as well as
providing recommendations regarding regulations to the Kentucky Real Estate Authority.
It should be noted that Realtor is a registered trademark of the National Association of
Realtors and is not an appropriate designation of a real estate agent. Technically, Kentucky may
be exposing itself to some liability as a result of the newly coined Board of Realtors. The
National Association of Realtors has yet to comment on the new name of the reorganized board.
The changes to the four boards mean more than just a change in job duties. All four
boards have been restructured so each only has three board members (across all four boards this
1

Andrew C. Weeks is an associate attorney with Lawrence & Lawrence, PLLC in Louisville, Kentucky. He graduated
magna cum laude from the University of Louisville Brandeis School of Law in May, 2016. He is licensed to practice
law in Kentucky. He can be contacted for questions at ACWeeks@RealLawKy.com.
2
Michael F. Lawrence is the senior partner at Lawrence & Lawrence, PLLC in Louisville, Kentucky. He has over 25
years of experience representing Kentuckys real estate professionals. He is licensed to practice law in all Kentucky
state courts, the Western District of Kentucky, the Eastern District of Kentucky, and the Sixth Circuit United States
Court of Appeals. He can be contacted for questions at MFLawrence@RealLawKy.com.

serves as a reduction from 24 to 12 board members). None of the boards will have their own staff
anymore. Staffing for all four boards will now be served by the Kentucky Real Estate Authority.
The Kentucky Real Estate Authority was formed pursuant to KRS 12.050. The newly formed
Kentucky Real Estate Authority will serve the following purposes: (1) To act as a clearinghouse
for administrative regulations and make recommendations to the Department of Professional
Licensing; (2) To act as a forum for innovation in the real estate industry; (3) To provide staffing
for the four administrative bodies below it; and (4) To give final approval for all license denials,
suspensions, revocations, and penalties. Notably, the Kentucky Real Estate Authority (hereinafter
the Authority) will not promulgate new regulations and will not handle appeals or
administrative hearings. The Authority will act as a clearinghouse of regulations by filtering the
recommendations of the four boards below it and making a final recommendation to the
Department of Professional Licensing.
Finally, the Office of Occupations and Professions has been reorganized as the
Department of Professional Licensing. The Department of Professional Licensing will serve as the
new umbrella agency that oversees appeals and administrative hearings regarding the decisions
of the Kentucky Real Estate Authority and the four boards below it. Additionally, the Department
of Professional Licensing will be the agency tasked with promulgating regulations by following
KRS 13As notice and comment process.

III.

ADJUDICATIVE PROCESS

The Executive Order will change the way licensing issues and penalties regarding real
estate professionals will be managed. Currently, a Board will make a decision regarding a license
denial, suspension, revocation, or penalty and all subsequent administrative appeals and
hearings are handled internally by the individual board (often with the appointment of a hearing
officer by the board if an administrative hearing is necessary). After the administrative appeal
process has been exhausted by the professional being disciplined, the professional has the right
to file an appeal of the boards decision directly to the appropriate Kentucky Circuit Court.
Under the new structure, first, the Board will first make a decision regarding the license
or penalty. The Kentucky State Real Estate Authority must subsequently give final approval of the
decision. After the Authority approves the decision, the professional will then be able to appeal
the decision directly to the Department of Professional Licensing. The Department of Professional
Licensing will hold an administrative hearing on the appeal pursuant to KRS 13B (the
Commissioner of the Department of Professional Licensing may appoint a hearing officer). After
the KRS 13B hearing the professional will have 30 days to file an appeal with the Franklin Circuit
Court. The requirement that all appeals are now to be filed with the Franklin Circuit Court is a
major change by itself. Currently appeals for the four lower boards may be filed with multiple
Kentucky Circuit Courts. For example, currently, appeals of a KREC Final Order are supposed to
be filed in the county where the real estate professionals principal place of business is located.
The change in venue may reduce the number of appeals simply because of the distance involved.

IV.

REGULATORY PROCESS

Prior to the Executive Order, each individual board was tasked with administering the
notice and comment process from KRS 13A and promulgating a proposed regulation into reality.
Under the new structure the four lower boards (the Boards of Realtors, Appraisers, Auctioneers,
and Home Inspectors) will merely make recommendations regarding proposed regulations to the
Kentucky Real Estate Authority. The Kentucky Real Estate Authority will then make a final
recommendation to the Department of Professional Licensing. The Department of Professional
Licensing makes the final decision regarding proposed regulations and changes and then begins
the long notice and comment process by posting the proposal for comment on the Administrative
Register of Kentucky. The process has not only added steps and filters for administrative
regulations, but it has transferred the final authority to promulgate proposed regulations to the
Department of Professional Licensing which effectively reduces the influence of the market
participants (real estate industry professionals serving as board members of the four lower
boards and the Kentucky Real Estate Authority).

V.

CONCLUSION

While we can all be optimistic that the changes will achieve the stated goals of providing
a forum for innovation in the real estate industry, the future impact may be quite different. The
reality is that the changes reduce the number of real estate professionals engaged in the process
and adds layers of bureaucracy to the rule making process, thus slowing any progress. It remains
to be seen how the details of the transition, new policies, and inevitable new regulations will
affect real estate professionals, the rulemaking process, and disciplinary issues.