KYRealtorFall2019

Kentucky ®

FALL 2019

A publication of Kentucky REALTORS®

Recomendations submitted for new KREC administrative regulations A real estate client lost forever Citizenship and real estate

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CONTENTS Volume 12, Number 2, FALL 2019

A publication of Kentucky REALTORS®

IN THIS ISSUE

President | Rip Phillips Greater Louisville Association eXp Realty, Louisville

President-elect | Lester Sanders Greater Louisville Association Semonin REALTORS®, Louisville

KREC to finalize proposed changes to administrative regulations

Treasurer | Charles Hinckley Heart of Kentucky Association Network Realty, Elizabethtown Treasurer-elect | Robin Roseberry Northern Kentucky Association The Breland Group, Louisville CEO | Steve Stevens, CCE sstevens@kyrealtors.com Kentucky REALTORS® members should always send address changes to their local board/association first. Subscription rates: $10 per year (included in dues) for members, $25 per year for non-members.

All articles represent the opinions of the authors and do not necessarily represent the opinions of Kentucky REALTORS® and should not be construed as a recommendation for any course of action regarding financial, legal or accounting matters by Kentucky REALTORS® and its authors.

Reproduction prohibited without permission.

Copyright© 2019. Kentucky REALTORS®, Inc. All rights reserved.

Address letters and inquiries to: Kentucky REALTORS® 2708 Old Rosebud Road, Suite 200 Lexington, KY 40509 TF 800.264.2185 T 859.263.7377 F 859.263.7565 www.kyrealtors.com email: kyrealtors@kyrealtors.com

8 REALTORS® work closely with 10 Use a password manager or you will get hacked

12 A real estate client lost forever 20 Citizenship & real estate 21 What's your brand?

22 Rate of savings vs. rate of return 24 The top cyber security threats

to real estatecompanies

26 5 mistakes Kentucky homeowners make in their yards & how to avoid them

29 Electronic signatures in Kentucky

REGULAR FEATURES 4 REALTOR® News 5 14 18 27 28

President’s Message Legislative Update Education Housing Stats CEO Message

Follow KYR on Social Media KYR has posted its social media links on the home page of its website so members and consumers can follow all the things going on with the Association. Keep up with KYR on a real time basis – legislative updates, industry news, business tips and much more – visit www.kyrealtors.com.

FALL 2019 | Kentucky REALTORS® | 3

REALTOR® NEWS LeadershipKYR Class of 2020 Applications are being accepted from KYR members who want to join the ranks of some of the most successful REALTORS® from around the state. The program leads participants through several retreats and provides skill development in leadership along with team-building exercises, goal setting, personal profile analysis, network building and improving communication skills. At graduation, members receive a designation for the program, which is the only state specific real estate designation in Kentucky. Check the website at www.kyrealtors.com/lkyr for more information, testimonials, objectives and videos about the program.

Kentucky REALTORS® participating in Salvation Army Ring Day Friday, December 6

KYR is joining the Salvation Army for a Ring Day on December 6.

What started with two state REALTOR® Associations in 2010 has since grown into a nationwide effort coordinated between 30+ states across the US, making it one of the largest volunteer efforts in Salvation Army history. The event gives REALTORS® an opportunity to support a cause that is dear to them - housing. Kettle donations also fund additional Salvation Army programs such as food, rehabilitation and youth activities. And, best of all, the dollars raised at each kettle stay in the local community. To learn more about the Ring Day or to register to participate, visit kyrealtors.com/cs.

Affinity Partners As a benefit of membership with Kentucky REALTORS®, members are eligible to receive discounts and added value on business-related products and services from a number of leading industry partners. To learn more about each of companies listed, visit kyrealtors.com/discounts.

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PRESIDENT'S MESSAGE

Impossible is Nothing

H

aving experienced the first half of 2019, I can’t help but wonder if I was setting the tone, or merely describing what had already taken place. In the 15 years or so that I have been involved in KYR, it has always been an organization full of respect with a great group of volunteers, and a sense of duty for the greater good. However, this year, I think we have hit a new high. We have come together within our organization to explore our options, decided our direction in advance, and we followed through with one voice. I don’t think we have ever been more united and effective as we are now. For that, you deserve the credit.

to recognize. No matter where we went, we also made an effort to promote REALTORS® in those areas. Some were in print, some on television, but all were in raising the Realtor awareness.

RIP PHILLIPS

2019 PRESIDENT OF KENTUCKY REALTORS®

One subject I have been hearing over and over on the Roadshow visits is the need for REALTORS® to have a health insurance solution. You may have heard about Tennessee or Las Vegas REALTORS® having a plan in place. KYR has also been involved in finding a resource. We polled our members.

We provided that information to a few of the top providers. Then 13 State Attorney’s General (including KY) filed suit before the United States Court of Appeals for the District of Columbia Circuit. They are urging the court to uphold a lower court’s decision that struck down a change to the U.S. Department of Labor’s Association Health Plan (AHP) Rule. If the original ruling is not upheld, it would reverse the availability of AHP’s across the nation. As a result, this has caused health insurance providers to stop issuing such plans. As your President I, along with 200 other REALTORS® associations, have signed onto an Amicus Brief filed by NAR which offered several reasons why AHPs are needed by independent contractors to address the affordability and access of health care insurance. Hopefully, we will be able to hear more from our gubernatorial candidates on this issue at the KYR Convention.

One of the most valuable skills we bring to “Impossible is just a big our clients as REALTORS® is our expertise in word thrown around negotiations. Rarely do we ever get our first by small men who find offer accepted as a whole, but we do negotiate it easier to live in the for the best possible outcome. This year we had world they’ve been to concede on increasing continuing education given than to explore for licensees, but I believe we had some huge the power they have to wins. Our professional liability limitation has been change it. Impossible is brought in line with other professions, down from 5 years to 1 year. People involved in the same not a fact. It’s an opinion. transaction, but are in different locations may Impossible is not a now use electronic notaries. Those struggling with declaration. It’s a dare. student loan debt no longer need to fear they Impossible is potential. may lose their real estate license. Keeping track of Impossible is temporary. our friends making policy is now easier than ever Impossible is nothing.” before. We now have a legislative scorecard that will be quite useful in conversations with these ­— Muhammad Ali Our education arm, KRI, is also growing strong. individuals, especially during fundraising. We had Thanks in part to the passage of post licensing more people than ever show up to Frankfort to talk education, our class enrollments are through the with their legislators. We did that with one common voice. roof. Not only are they in demand, but the Broker Summit and the Just a few years ago, the KREC underwent a reformation. As members of KYR went to meet with the new leadership, our relationship seemed like it might be severed. Several changes in personnel, little communication was available. Fast forward to now, and the relationship is as strong as it has ever been. REALTORS® have been involved, nearly hand in hand, with the current regulation updates. We have been advised, and informed, throughout the process. Our concerns and viewpoints have been sought out, carefully considered, and have made a difference in the final outcome. The Commissioners, and Executive Director Corder are REALTORS® also.

They, along with the staff, have put countless hours into the care and management of our licensees. Next time you see one of them, please thank them for their commitment.

The KYR Roadshow has returned for another year. (By the way, if we haven’t been to your board yet, let us know when you would like us). Steve Stevens, Richard Wilson, Paul Del Rio, and I have traveled over 2,200 miles back and forth across Kentucky and met more than 600 of our members who might not have otherwise made it to one of our events. KYR exists for its members. Through these visits, we heard concerns as well as celebrations. All of this is information KYR needs

Legal Summit both sold out! KRI continues to offer a quality product for our members and state licensees.

Since our Strategic Plan is almost at the end of its stated timeframe, I would be remiss if I didn’t visit that subject. I am ecstatic to report that nearly every item on the plan is either complete or on track.

What else is going on? We have record membership numbers, RPAC donations continue to break records, our financial position is strong, our reserves better than ever, another balanced budget is on the horizon, and we are continuing the longest ever expansion period in the U.S. Interest rates continue to hover at all-time lows. It’s a good time to be a REALTOR®. Every morning, I wake up thankful for another day, for my family, and for you choosing me as your President. I am honored. However, make no mistake, the success KYR enjoys is because of you.

In closing, one more quote…

"It’s the repetition of affirmations that leads to belief. And once that belief becomes a deep conviction, things begin to happen." ­— Muhammad Ali FALL 2019 | Kentucky REALTORS® | 5

FINALLY say yes to success.

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Get the support you need from your brokerage.

And the career you deserve. Give your local Weichert office a call today or visit jobs.Weichert.com

Each Weichert ® franchised office is independently owned and operated. ©2018 Weichert Real Estate Affiliates, Inc. Weichert is a federally registered trademark owned by Weichert Co. All other trademarks are the property of their respective owners.

2019 REALTORS CONFERENCE & EXPO SAN FRANCISCO

®

CONFERENCE NOV 8-11 EXPO NOV 8-10 At the 2019 REALTORS® Conference & Expo, the endless possibilities for your career path will be totally out of sight.

Let’s start with the over 100 education sessions covering the latest trends in the real estate market and a whole lot more. Then there’s all that far out industry tech from over 400 exhibitors you’ll get to experience hands-on.

And if networking is your bag, you’ll be rubbing elbows with over 20,000 of the industry’s most successful real estate professionals.

You definitely are going to want to make this scene in 2019!

LEARN MORE www.Conference.realtor REGISTER TODAY www.Register.realtor SPRING 2019 | Kentucky REALTORS® | 7

REALTORS® Work Closely with KREC to Finalize Proposed Changes to Administrative Regulations

E

arlier this year the Kentucky Real Estate Commission unveiled proposed changes to certain administrative regulations relating to advertising and signage that have been unchanged for many years. Among the changes were “clarifications” and new definitions for a variety of terms.

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This summer the Kentucky REALTORS® Government Affairs Committee (GAC) met to discuss the proposed changes and come up with recommendations to make as the process continued.

Kentucky REALTORS®’ President Rip Phillips subsequently attended public hearings being held to discuss the changes on July 10th and August 23rd of this year.

After examining the definitions and advertising requirements found in 201 KAR 11:011, 201 KAR 11:105, and 201 KAR 11:461, the GAC made the following recommendations for changes to the newly proposed regulations in these sections: • Definition of “Single Agency” – KYR recommended that the Commission leave the definition of “Agency” as is and remove the definition of “Single Agency”. The KYR GAC feels the term “Single Agency” would be confusing and would, therefore, cause members to noncompliant with this part of the regulation.

• Definition of “Family Relationship” - KYR recommended to the Commission the removal of the phrase “regardless of distance of relationship” in the definition of “Family Relationship” due to this potentially becoming an issue in small communities and areas of Kentucky. The Kentucky REALTORS® proposed the new definition of “Family Relationship” to read as follows: “any known familial relationship between a licensee and party”.

• Regulation Related to Advertising - KYR recommended the addition of the phrase “or written” to Section 3(4). The new Section 3(4) would now read as follows: Advertisements that include an audiovisual presentation shall include an audible or written announcement of the content required by Section 2(2) of this administrative regulation at the beginning of the advertisement. KYR’s GAC feels this is needed due to the fact that audiovisual presentations are often short in nature. If the person making the audiovisual presentation were required to say everything in Section2(2) instead of displaying it on the screen, the video would last much longer. For this reason, KYR would like to see the words “or written” added to Section 3(4).

• Regulation Related to Advertising - In Section 8 of the newly proposed advertising regulation, the language states that “the Commission shall begin enforcement of Section 3 sixty (60) days after the effective date of this administrative regulation.” KYR recommends a six (6) month effective date.

Our proposal would read as follows: “Section 8. Effective Dates. The Commission shall begin enforcement of Section 3 six (6) months after the effective date of this administrative regulation”. Our members felt sixty (60) days was not an adequate amount of time to become compliant with the newly proposed Advertising regulation.

Other newly filed administrative regulations changes under 201 KAR 11.220, 11.210, 11.190, 11.170, and 11.002 that address mandatory E & O insurance, licensing & renewal for brokers and agents, procedures for filing complaints and requirements for education providers were also examined. The following recommendations were made to these sections as well: Regarding the new Licensing, Education, and Testing Requirements Regulation – 201 KAR 11:210: 1. In Section 2. Broker’s License, KYR proposed additional language to subsection (1) to read as follows: “Complete not less than twenty-one (21) academic credit hours or three hundred thirty-six (336) classroom hours of education to acquire a broker’s license, including a minimum of:”. The reason for this change is to make it clear to the licensee how many classroom hours would be required to become a licensed broker in Kentucky.

2. In Section 10. Inactive Status, KYR proposed additional language to subsection (4) to read as follows: “(c) If the licensee has been inactive for more than two (2) consecutive

education cycles, the licensee shall complete PLE before becoming active. We believe this would help licensees who have not been active in an ever-changing industry better serve consumers in Kentucky.

3. KYR asked for additional language in this regulation that would require a person coming out of inactive status to submit a criminal history check.

Regarding the new forms, KYR proposed the following recommendations that could make it easier for licensees and consumers.

1. Agency Consent Agreement Form – Form 401, KYR would like to see the addition of a checkmark box, at the bottom of the form, next to the signatures, that would help distinguish between a buyer, seller, lessor, or lessee. Without this checkmark box, it could cause confusion.

2. Seller’s Disclosure of Property Form – Form 402, KYR proposed the addition of two lines at the bottom of page 5 where the buyer can add their name, signature and date.

3. Course Evaluation Form – Form 106, KYR proposed the addition of a line where a licensee can input their name and license number. This could be used as a “sign out” method.

4. A Guide to Agency Relationships Form – Form 400, the Kentucky REALTORS® would like to see the Commission retain the original language regarding when the Guide to Agency Relationships form is presented to a prospective client. In the past, the guidance from the KREC was that the form was to be used at the first “substantial” contact. This was perceived to be before listing the property OR before writing an offer on a property OR the first sit down meeting with a client(s). We believed it would be unrealistic for a licensee to carry around this Guide everywhere he or she might come into face to face contact with a potential client and have that person sign that document after just a brief interaction. KYR proposed the following language to Form 400: “Prior to the exchange of confidential information that could be interpreted as an agency relationship, you will be asked to consent in writing to a specific Agency Relationship for a contemplated transaction.”

The KREC anticipates that these regulations will be finalized later this year and that they will go into effect sometime in early 2020. We are committed to working with the KREC to help educate our membership on what these changes are (when finalized) and how it will affect the day-to-day operations of a REALTORS® business.

KYR believes that the continued growth of the relationship between the Kentucky Real Estate Commission and Kentucky REALTORS® serves to strengthen an industry vital to the Kentucky economy. We appreciate the Commission members’ willingness to serve their profession and the citizens of Kentucky.

FALL 2019 | Kentucky REALTORS® | 9

USE A PASSWORD MANAGER OR YOU WILL GET HACKED

D

By Robert Siciliano

o you ever use the same password over and over again for different accounts? If so, you are not alone. However, this is quite dangerous. It’s best to use a different, unique password for each account, and to make it easier, you should use a password manager.

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According to surveys, people understand that they should use unique passwords, and more than half of people get stressed out due to passwords. Furthermore, about 2/3rds of people said that they had forgotten a password or that a password issue had cause problems at work.

However, a password manager can easily solve the issues associated with passwords.

A password manager is a type of software that can store login info for any and all websites that you use. Then, when you go to those websites, the password manager logs you in. These are safe, too. The information is stored on a secure database, which is controlled by a master password.

Using a Password Manager Most people have more than one online account, and again, it’s so important to have a different password for each account.

However, it’s very difficult to remember every password for every account. So, it’s not surprising that people use the same one for all of their accounts. But, if using a password manager, you can make it a lot easier.

• When using a password manager, you can create a password that is safe and secure, and all of your passwords are protected by your master password.

• This master password allows you to access all websites you have accounts on by using that master password.

• When you use a password manager, and you update a password on a site, that password automatically is updated on all the computers that use your password manager.

Password Managers Can Ease Your Stress When you first start using a password manager, it’s likely that you’ll notice you have fewer worries about your internet accounts. There are other things you will notice, too, including the following: • When you first visit a website, you won’t put your password in. Instead, you can open the password manager, and then there, you can put your master password.

• The password manager you use fills in your username and password, which then allows you to log into the website with no worries.

Things to Keep in Mind Before You Use a Password Manager Password managers available on the internet from many reputable security companies. However, before you pay for them, there are some things that you should keep in mind: • All of the major internet browsers have a password manager. However, they just can’t compete with the independent software that is out there. For instance, a browser-based password manager can store your info on your personal computer, but it may not be encrypted. So, a hacker can might that information anyway.

• Internet browser-based password managers do not generate custom passwords. They also might not sync from platform to platform.

• Software based password managers work across most browsers such as Chrome, Internet Explorer, Edge, Firefox and Safari.

Password Managers are Easy to Use If you are thinking about using a password manager, the first step is to create your master password.

• The master password has to be extremely strong, but easy to remember. This is the password you will use to access all of your accounts.

• You should go to all of your accounts and change your passwords using the password manager as an assistant.

This ensures that they are as strong as possible, too.

• The strongest passwords contain a combination of numbers, uppercase and lowercase letters, and symbols.

Password managers often create passwords using this formula.

Managing your accounts online is really important, especially when you are dealing with passwords. Yes, it’s easy to use the same password for every account, but this also makes it easy for hackers to access those accounts.

Don’t Reuse Your Passwords You might think it would be easy to reuse your passwords, but this could be dangerous:

• If your password is leaked, hackers can get access to all of your sensitive information like passwords, names, and email addresses, which means they have enough information to access other sites.

• When a website is hacked, and all of your passwords and usernames are discovered, the scammer can then plug in those passwords and usernames into all of your accounts to see what works. These could even give them access to your bank account or websites like PayPal.

Ensuring Your Passwords are Secure and Strong There are a number of ways to ensure your passwords are secure and strong. Here are some more ways to create the best passwords: • Make your passwords a minimum of eight characters long.

• Mix up letters, numbers, and symbols in the password, making sure they don’t spell out any words.

• Have a different password for every account that you have. This is extra important for accounts containing financial information, like bank accounts.

• Consider changing your password often. This ensures your safety and security.

If you have a weak password, you are much more susceptible to hacks and scams.

So, protect your online existence, and start utilizing these tips.

Robert Siciliano personal security and identity theft expert and speaker is the author of 99 Things You Wish You Knew Before Your Identity Was Stolen.

Robert Siciliano CSP, is CEO of Safr.Me, and the architect of the CSI Protection certification; a Cyber Social and Identity Protection security awareness training program. He will be the closing Keynote speaker at the 2019 KYR Convention & Expo in Lexington from September 24-26, 2019. He can be reached at Robert@Safr.Me FALL 2019 | Kentucky REALTORS® | 11

Overheard in the SkyClub:

A REAL ESTATE CLIENT LOST FOREVER

I

What happens when you wear your pin -- and get to hear about others’ (not great) experiences

love the conversations that are started just by virtue of being spotted wearing the Realtor pin or the Re/Max pin. If there’s anything folks like to talk about more than cats or kids, it’s their real estate dealings.

And it’s no surprise that there are rarely conversations started about how awesome that experience was. It’s usually a chance for this person to vent about what could have been different.

Today’s conversation was fascinating.

The gentleman chatted me up after spotting my pin, the obligatory “what do you do?” question asked anyway. I always answer that question with, “I’m an advocate for consumers in dealing with their property rights.”

(A little different than your response? I’m loud and proud about my advocacy work in real estate — and by grannies, consumers need to know what we are out here doing that is #MoreThanHouses.)

He just bought his house in December, nine hours away from his previous home.

He is a single dad, moving to get a better quality of life for his 13-year-old son. Simply seeking a place where he could let his child make buddies in the neighborhood and leave the house while safely spreading those wings.

He had searched high and low online for this next house. (Using what apps and websites? Zillow because it’s intuitive and easy, realtor.com for better inventory — but using them in parallel. Realtors, y’all need to use these sites yourselves once in a while instead of always gnashing your teeth about them, so you’ll better understand your clients.)

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Anyhoo. He found the one. He inquired about the house. And all he wanted was the Realtor to unlock the door.

Not hard — right? Remember, until the future client understands what you do exactly, you’re really not much more than a key service.

When he inquired about it, he thought he was contacting the listing agent but he had inadvertently gotten connected to someone who buys leads online. (Hey portals — yes, you! — the consumer wants the listing agent first. Not the random agent who forked over a credit card.)

You may ask, “Why did he want the listing agent? Doesn’t this schmuck know that he needs a buyer’s agent?”

Welp, he didn’t need you because you hadn’t yet shown any value.

This consumer is smart. Savvy. Has done real estate before. He’s in a field full of code and program designers, and he is an implementer who creates solutions for service. He negotiates multi-milliondollar deals.

A house is, to him, smaller than his job and not as complicated.

So when he got hooked up with an agent who was not the listing agent, and they didn’t disclose to him how they got ahold of him, and then…you knew it was coming…. forced him to sign paperwork while he was just trying to get into a house (before any relationship had been established)…the stage was set for a story that’s a little less than the perfect romance.

The agent? Didn’t return emails quickly.

Didn’t want to talk on the phone. Didn’t work with the amount of care and diligence needed to get the house he wanted.

He missed out on the house because the agent got in the way.

(Now, before you start a fight with me, consider the fact that — whether or not this agent was working hard — this is what her client thought. So just don’t start up with me.)

He found another the house, which was new construction. What value did the buyer’s agent provide at this stage? Perhaps be his eyes and ears in this new state? Get builder info for him?

Nope. Nada. Zilch. Got on the contract and then didn’t show back up until closing.

I asked if he had gotten a home inspection. He did. His lender recommended someone because the agent was MIA. His follow-up comment was that in his field of work, when you are setting up an account with a client — it’s a relationship.

You know you’re going to have issues and problems — but you tell them upfront what might happen, and then when something does happen, you work through it.

You never hide. You always do the work.

You build a relationship that shows value before anyone ever has to ask or question it.

My follow-up question was, “Would you ever use this agent or office or brand again?”

You already know the answer. The agent’s lack of care and attention has cost this brokerage a future client — and all of the wonderful people he meets in every SkyClub from here on out.

I know that my team and I will be discussing how we can best communicate to prospective clients how we got ahold of them and what we can provide in the way of value that goes above and beyond what we are already doing.

We need to improve every single day.

This consumer — and every consumer — deserves nothing less.

Leigh Brown is a full-time residential Realtor, speaker, and coach. She will be the closing Keynote speaker at the 2019 KYR Convention & Expo in Lexington from September 24-26, 2019.

Find her on all channels at @leighbrown.

MORE THAN AN APP

An app runs on code.

A REALTOR® stands by one. In our Code of Ethics, we promise to put people first. And there’s no download button for that.

REALTORS® are members of the National Association of REALTORS®

LEGISLATIVE UPDATE Congress, quit kicking the NFIP down the road!

In order for the National Flood Insurance Program (NFIP) to not lapse in coverage, Congress must periodically reauthorize the NFIP’s statutory authority. On June 6, 2019, the President signed legislation that Congress passed that would extend the NFIP’s authorization to September 30, 2019.

Congress must now reauthorize the NFIP by no later than 11:59pm on September 30, 2019. If Congress fails to reauthorize the program, FEMA would still have authority to ensure payment of valid claims with available funds. However, FEMA would have to stop selling and renewing polices for millions of properties in communities throughout the United States. Nationwide, the National Association of REALTORS® estimates that a lapse might impact approximately 40,000 home sale closings PER MONTH and half a million property sales each year.

By taking steps to ensure the NFIP gets reauthorized, Congress is attempting to reduce the complexity of the program and strengthen it's financial framework. This program should continue helping individuals and communities take the critical step to securing flood insurance. REALTORS® support H.R. 3167 and urge Congress to find a way forward on a long-term NFIP reauthorization.

Every property in the state has some flood risk; wherever it rains, it can flood, yet not all at-risk are insured. Just look at the numbers below to see what I mean.

1,984,235

Total housing units, 2017

107,737

Housing units in the state within a 500-year floodplain, 2015

20,111

Number of NFIP policies in force as of April 30, 209

1%

Percent of housing units with a NFIP policy

98% of U.S. counties have experienced at least one major flood disaster declaration.7 Without flood insurance, property owners must turn to the federal government for rebuilding assistance. The total cost to taxpayers of uninsured property damage is $3.4 billion each year.

Flood insurance is the best way for homeowners, renters, business, and communities to financially protect themselves from losses caused by floods.

Housing Affordability, what can be done to combat this issue?

On Wednesday, August 14th, the Federal Housing Administration (FHA) released the updated FHA Condo Rules.

Specifically, the new rules will do the following: Extend FHA certifications on condo developments from two years to three and thus, reduce the compliance burden on condo boards; Allow for single-unit mortgage approvals – often known as spot approvals which will enable FHA insurance of individual condo units even if the property does not have FHA approval; and secure additional flexibility in the ratio of investors to owner-occupants allowed for FHA financing in a condo building.

The full guidance will go into effect in mid-October, 60 days from publication. NAR’s existing home sales report for June showed condo and co-op sales at a seasonally adjusted annual rate of 580,000 units, a decline of 3.3% from May and 6.5% from June 2018. With more than 8.7 million condo units nationwide, only 17,792 FHA condo loans have been originated in the past year. Having these new rules is expected to pick up the condo market nationally.

Thank you to the KYR Major Investors (through August 30): Platinum R – $10,000

Mike Inman

Golden R – $5,000

Crystal R – $2,500

Al Blevins Tony Clark David Earls Charles Hinkley Guy Montgomery Charlie Murphy

Greg Buchanan

Sterling RR – $1,000

30644

The number to text the word REALTOR to 30644 to sign up for the REALTOR® Party Mobile Alerts. By signing up, REALTORS® have a way to stay connected directly from their cell phone or tablet. Get information on finding your polling locations, election and primary voting day reminders and participate in Calls for Action.

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Ben Allen Nancy Allison Dennis Anderson Greg Back Joshua Barrett Michael Becker Thomas Black James Bramblett Daniel Carmack Linda Gibson Cecil Steve Cline Angi Cline Catherine Corbett Anne Hart Cornett Barbara A Curtis Sallie Davidson Angel Denton Brad DeVries

Lois Ann Disponett Brenda Gayle Gooslin John Groft Jeff Shane Harrison Joseph Hayden Stephen Heartsill Daryl Hibbs Kimberly Holtegel Rhonda Karageorge Justin Landon Brenda Loyal Scott Lyons Amanda Marcum James McKee Deborah Morgan Becky Murphy Kelley Nisbet

Mike Parker Dave Parks Judie Parks Janet Lynn Perkins Nancy Robertson Jason Scolf James Simpson Tim Smith Steve Stevens Jen Swendiman Carl Tackett Libbi Taylor James Tinsley Rusty Underwood Matt Weaver Danny R Willis Janie Wilson

Interview with Director Harold Corder, Kentucky Real Estate Authority Question #1: How long have you been in the real estate industry?

Question #5: As you know, with the passage of HB436 this past session, two new commissioners will be added to the KREC. Are you excited about adding two additional commissioners to the KREC? Harold Corder

Question #2: When was the last time the regulations were updated?

Some administrative regulations were updated in the early 2000s, and the passage of legislation in 2015 enacted additional regulations.

However, a comprehensive review revealed that before the most recent revisions, many of the original regulations remained unaltered since 1975.

Question #3: Why did the KREC decide this was the year to redo the regulations?

Governor Bevin’s Red Tape Reduction Initiative prompted the Commission, together with the sister agencies that comprise the Kentucky Real Estate Authority, to conduct a comprehensive review to amend or repeal ineffective and outdated regulations. The addition of the four boards of the KREA to the Public Protection Cabinet in 2017 has enabled the communal staff of the agencies to collaborate and to suggest business-friendly reform. The regulation review began in August of 2018 shortly after the establishment of the KREA. The effort has reduced the original 39 long and at times, internally inconsistent regulations to eight simple, clear and concise requirements that provide reasonable regulation without burdening or stifling the hardworking businessmen and women of the Commonwealth.

Question #4: As it relates to the newly proposed regs, what are you most excited about?

Yes, we are excited! We welcome the addition of two new commissioners and embrace the invaluable perspective and experience they will bring to the KREC. Adding commissioners to KREC equips the agency to share responsibility, to maintain a quorum and to create departmental distinction.

Question #6: Anything further you want to add?

In my lifetime, I have yet to see a stronger and more resilient market than the one we now enjoy. While it is tempting to rejoin the private sector, which would afford me additional opportunities, serving as the Executive Director of the Kentucky Real Estate Authority remains an honor I care about deeply. Serving the Commonwealth in this capacity stirs an intense passion within me to elevate the standards of professionalism within Kentucky’s real estate industry. I have more than a few goals for the future including building bridges of communication and cooperation between all four licensing boards within the KREA. As we seek to protect the consumer and our industry, I hope to clean up our statues and regulations to ensure requirements are easy to understand and apply.

Words cannot express my gratitude for the warm welcome and great cooperation I have received from the majority of the licensed professionals within the Kentucky Real Estate Authority. It is an absolute joy to work with such a wonderful and talented staff as well as the numerous professional and dedicated commissioners and board members across the Authority.

Why I invest in RPAC As many of you know RPAC has been part of our business model for the last 50 years. Investment in RPAC opens the door for REALTORS® to access Legislators who can have a profound impact on homeownership and private property rights.

These rights are what REALTORS® are about. There is no other organization, other than the National Association of Realtors and our great local associations, and RPAC that lobbies for homeownership and private property rights. That is why our investment in RPAC is so very important. The following are just a few examples of what RPAC has done: saved the Mortgage Interest Deduction, kept the 30-year Becky Murphy fixed mortgages, and helped with the National Flood Insurance Program.

Many of you were not REALTORS® about 15 years ago when banks made an effort to enter the Real Estate Business, but they did try. And the efforts of NAR through RPAC kept them from entering our profession.

Most recently FHA finalized new condominium loan policies which should yield thousands of new homeownership policies.

This is why I believe in RPAC and am a Major Investor.

1,383,010

I have held an auctioneer and real estate license for 16 years. However, I obtained an early start in the industry when I purchased a small farm at the age of 16. Owning my first piece of real estate sparked interest, which quickly grew into a passion for the fascinating business of buying and selling real estate.

The proposed revisions provide desirable simplicity that enables the real estate industry to spend less time navigating regulations and more time doing what they do best, and that excites me. The review effort revealed unnecessarily complex regulations, and the proposed changes offer a simple, practical and user-friendly road map for licensees. The changes clarify the process for obtaining and maintaining licensure, complying with standards of conduct and continuing education, submitting complaints and receiving discipline.

The suggested revisions also add to the professionalism of the industry. The simplicity and clarity of the regulations communicate that the industry is both respectable and professional.

Number of REALTORS® Nationwide: 1,383,010 as of July 2019

FALL 2019 | Kentucky REALTORS® | 15

LEGISLATIVE UPDATE Fannie and Freddie With Fannie Mae and Freddie Mac (the Government Sponsored Enterprises or GSEs) being such a critical component to financing home purchases, NAR joined in on meetings with the Administration to help get the GSEs out of conservatorship. GSEs guarantee mortgage availability for responsible, creditworthy Americans no matter where they live or what their regions’ economic conditions are. Since 2008, the GSEs have been operating under conservatorship as Congress considers structural reforms.

NAR would like to maintain a strong housing finance system that prioritizes access to financing for hundreds of millions of Americans to help fund their dreams as they debate the future of the GSEs. Key Facts about GSEs: • Middle class Americans in both rural and urban communities benefit from the stability that GSEs provide to mortgage financing. Without entities like the GSEs, consumer access to mortgages would be significantly limited.

• Without the GSEs, mortgage rates would rise as much as 5% during a financial downturn, putting the American Dream of homeownership out of reach for countless aspiring homebuyers.

• And, perhaps most importantly, without the GSE’s government guarantee, the 30-year fixed rate mortgage would disappear.

Released earlier this year, NAR’s Vision for Housing Finance Reform proposes a new, shareholder-owned utility model that highlights competition and remedies the failures of the pre-crisis system. Under NAR’s plan, Fannie and Freddie would operate with well-monitored participation by private investors, which protects taxpayers, consumers and the U.S. economy.

Infrastructure needs must be met!

Enhanced transportation and infrastructure systems are crucial for America’s housing market and overall economy.

REALTORS® understand the infrastructure needs of our nation’s communities and the value to thriving communities better than anyone. A robust, long-term federal infrastructure modernization program, combined with greater investment by state, local and private stakeholders, can create the partnership needed to ensure our infrastructure network is designated for the 21st century.

NAR would like to see Congress focus on two areas that can have an immediate impact to improve our nation’s infrastructure: • Restore and modernize federal infrastructure funding.

NAR supports efforts to ensure enough revenue to maintain the solvency of the Federal Highway Trust Fund, including evaluating an increase in the federal gas tax, while fostering energy and transportation-related innovations in the private sector.

• Streamline Permitting to increase efficiency and maximize infrastructure funds. NAR supports efforts to streamline permitting for infrastructure projects to decrease costs and bring infrastructure-related projects to the market more quickly.

16 | kyrealtors.com

Update on Association Health Plans from NAR On April 26, the Department of Labor appealed the DC District Court decision overturning the Association Health Plan (AHP) rule. NAR filed the amicus brief supporting DOL that was joined by five local Realtor AHPs and supported by more than 200 Realtor associations.

Currently, parties are waiting on the DC Circuit Court of Appeals to assign judges and schedule oral arguments. Because the case has been expedited, NAR expects to hear more over the next week or so.

Regarding the prospects for victory, outside counsel is confident the law is on our side but cautions that “a majority of the DC Circuit Court judges are left-leaning judges…” and so we are preparing for the unlikely event of an adverse appeals ruling.

To that end, NAR has been meeting with members of the Administration (including Bob Golberg recent meeting with Acting Labor Secretary Pizzella) to discuss options such as a Supreme Court appeal and “section 1332 waivers” of the Affordable Care Act. Section 1332 allows states to waive ACA requirements for innovative state programs that achieve the same goals but require more flexibility.

A few weeks ago, North Carolina became the 10th state to codify DOL’s rule into state law (more below). The Department of Health and Human Services has approved section 1332 waivers for eight other state programs and so NAR is exploring whether these waivers can be granted for state AHP laws.

Below is a more detailed update from NAR’s legal consultant.

The Pending Litigation • NAR still does not know when oral arguments will be scheduled, nor which judges will be sitting on the Circuit Court’s panel and hearing the case. The judges who will hear the case will have an impact on our success/failure. Why? Because it is well-accepted that a majority of the DC Circuit Court judges are left-leaning judges and if politics creep into their decision-making, that will NOT be good for us.

• When will the (1) judges be known who will hear the case and (2) when oral arguments will be scheduled? Similar to Congress, the DC Circuit Court will come back into session on Sept. 3rd. Because the case is expedited, NAR should know the answer to the above 2 questions by the end of the week (Sept. 6th).

1332 Waivers • If the final AHP regulations are invalidated by the Circuit Court, I believe that the most effective way – legally speaking – to resurrect the policy of allowing fully-insured AHPs to cover employers in different industries, as well as self-employed individuals with no employees, is through the submission of a 1332 Waiver by a State to HHS. The process that needs to be undertaken to get a favorable 1332 Waiver is long and cumbersome. But I believe there is a pathway (no pun intended) for HHS to approve an AHP 1332 Waiver.

• HHS has been engaged on the issue of an AHP 1332 Waiver.

• NAR is meeting with the National Economic Council (NEC) and wants to activate the White House on this issue. After all, Pathway #2 AHPs are the White House’s policy, and a policy that they should not let fail in the event the Circuit Court gives us an adverse ruling. If the White House Counsel can be involved, and pressure placed on HHS to accept AHP 1332 Waivers, the Waiver can also be used to confirm that fully insured Pathway #1 AHPs can operate in the State.

• Meetings are also being scheduled with the DOL about saving self-insured Pathway #2 AHPs. The DOL cannot save fully insured Pathway #2 AHPs, only HHS can (because HHS has jurisdiction over fully insured health plans). The DOL can save self-insured Pathway #2 AHPs (because the DOL has jurisdiction over self-insured health plans). In the case of self-insured Pathway #2 AHPs, the DOL is limited by a State’s ability to regulate self-insured Pathway #2 AHPs any way they want. NAR will also be talking with the DOL about strengthening Pathway #1 self-insured AHPs. • The push for 1332 Waivers is based on the assumption that the case is lost at the Circuit Court. Because it takes so long for the Federal Departments to act, NAR believes that pushing on this now is timely and is necessary, especially if we get an adverse ruling.

First-Time vs.

Repeat Buyers:

North Carolina

First-time buyers:

• The North Carolina (NC) General Assembly recently passed an AHP bill with bi-partisan support. There was question as to whether the Governor would veto the bill. However, the Governor allowed the AHP bill to go into law without a signature.

• To date – 10 States have an actual law that allows AHPs to cover employers in different industries as well as selfemployed individuals with no employees (these States include: AZ, AR, FL, HI, IA, KS, KY, NC, OK, and SD). Argued in NAR’s Amicus Brief, this is in addition to 19 other States that have issued guidance or taken some sort of action allowing these Pathway #2 AHPs to operate in their State.

• The NC General Assembly and NC Department of Insurance (DOI) were willing to push for their AHP bill even in the face of the legal uncertainty due to the pending litigation.

North Carolina’s legislation ensured that both fully insured AND self-insured AHPs could be formed, and to also make sure that self-employed individuals with no employees were included.

• Language directed the NC DOI to explore the prospect of submitting a 1332 Waiver if the DC Circuit Court strikes down the final AHP regulations. Staff and the NC DOI agreed – at least for fully-insured AHPs – the only way a State can avoid conflict with the “look-through” rule is through a 1332 Waiver. This is the first time a State specifically identified the need for a 1332 Waiver. Other States are working behind the scenes on their 1332 Waiver.

33%

Median age

32 55

first-time buyers repeat buyers

Median household income first-time buyers repeat buyers

$75,000 $100,000 FALL 2019 | Kentucky REALTORS® | 17

EDUCATION

New & Upcoming New Online Education

Online Post-Licensing Packages (Required 48 Hours) Principles of Home Inspection: Systems & Standards (80 Broker Hours)

SPECIAL EVENTS KYR Annual Convention

CRS: Top of Mind Techniques To Boost Your Brand — September 23rd

Multiple CE/PLE Approved Courses — September 24th-26th

COMING SOON Broker Management (48 Broker Hours) Essentials of Finance (48 Broker Hours)

CURRENT OFFERINGS Online Pre-licensing Program (Newly Revamped Course) Post-licensing Courses

Available with GRI 100-600 Available in classroom and online courses/packages

Continuing Education & Ethics

Available in Classroom and Online

Kentucky CORE

Available in Classroom

The Graduate Realtor Institute Designation (GRI)

Available in Classroom & Bootcamp Series (class and webcam option)

NAR Designation Courses

Available in Classroom and Online

Special Events (Broker Summit, Legal Summit and KYR Annual Convention)

Check out our calendar on the KRI website to find what classes are available

18 | kyrealtors.com

CE/CORE & GRI Courses Still Available This Fall: GRI 600: Business Systems & Technology (Louisville)

9/18/2019

8:00 am–5:00 pm EST

Heidi Fore

GRI 100: Ethics & Law (Bowling Green)

9/19/2019

8:00 am–5:00 pm CST

Jason Vaughn

CRS: Top of Mind Techniques to Boost Your Brand

9/23/2019

8:30 am–5:00 pm EST

Kim Cameron

2019 Annual Convention Courses

9/24/2019

8:30 am–5:00 pm EST

Various

GRI 500: Contracts (Lexington)

10/14/2019

8:00 am–5:00 pm EST

Harry Borders

GRI 400: Finance (Bowling Green)

10/17/2019

8:00 am–5:00 pm CST

Jeff Ratanapool

GRI 200: Risk Reduction (Elizabethtown)

10/23/2019

8:30 am–5:00 pm EST

Jennifer Fields

GRI 600: Business Systems & Technology (Owensboro)

10/30/2019

8:00 am–5:00 pm CST

Heidi Fore

GRI 500: Contracts (Murray)

11/12/2019

8:00 am–5:00 pm CST

Jennifer Fields

ANSI Measurement- Residential Square Footage Guide (Hopkinsville)

11/14/2019

9:00 am–12:00 pm CST

Larry Disney

Real Estate Mortgage Fraud and Questionable Practices (Hopkinsville) 11/14/2019

1:00 pm–4:00 pm CST

Larry Disney

GRI 400: Finance (Louisville)

8:00 am–5:00 pm EST

Jeff Ratanapool

Code of Ethics Requirement As of January 1, 2017, the Code of Ethics training requirements changed to a two year cycle. A new two-year cycle began January 1, 2019. The deadline for this cycle is December 31, 2020.

Want To Become A KRI Trustee? Applications Available Online www.kyrealtorinstitute.com > kri Want to be apart of something special? Apply to become a KRI Trustee today. Applications are available on our website, with a due date of September 6th.

KRI Scholarships Recipients! www.kyrealtorinstitute.com > Scholarships The KRI Trustees award scholarships on an annual basis as a way to meet its mission – to enhance real estate professionalism and knowledge by providing quality educational services and programs for the real estate industry and the public. KRI makes scholarships

12/9/2019

available to members who want to obtain the GRI designation, as well as provide scholarships to Kentucky residents who wish to pursue a career in real estate. Scholarship winners for 2018 were:

GRI & Pre-Licensing Scholarship Winners Pre-Licensing Winners

Lori Ringold, Guston, KY Sasha Geary, Louisville, KY Cecilia Sumpter, Lexington, KY Sonali Patel, Lexington, KY Timothy Filson, Lexington, KY

GRI Winners

Marilyn Brown, Elizabethtown, KY Jeanna Wright, Lexington, KY Regina Parker, Rineyville, KY

Course Calendar & Registration http://www.kyrealtorinstitute.com/calendar FALL 2019 | Kentucky REALTORS® | 19

CITIZENSHIP & REAL ESTATE

B

eing an undocumented immigrant in America can prevent you from doing many things, but owning real estate is not one of them. You may know a fellow American who owns a vacation home in another country. Maybe you aspire to one day own beachfront property on an exotic island. Citizens of foreign countries can own property in the US just the same, regardless of their American citizenship.

As a real estate agent, there is little difference between working with US residents and non-residents. Foreign investors and immigrants often seek to own valuable US property or obtain the American dream of owning a home. In fact, it is estimated that over 3.4 million foreigners own homes in the US. Whether you are serving a client of a different nationality, or your client wishes to buy a home from a nonnational seller, the process remains largely the same.

SELLING: Foreign persons who are selling or transferring their US property may find themselves subject to the Foreign Investment in Real Property Tax Act of 1980, or FIRPTA. This act allows the IRS to tax nonresidents on the disposition of US property when the sale meets certain criteria. The buyer of the property, or the transferee, must withhold a 15% tax on the total amount realized by the foreign person under the act. The amount realized is the sum of the principal balance to be paid, the fair market value of the property to be transferred and the amount of any liability assumed by the transferee. If the transferee fails to withhold the tax, he or she may be liable for additional taxes owed to the IRS. There are exceptions for properties intended to be used as a residence where the amount realized is less than $300,000.00, or when the transferor is a corporation. A detailed explanation of FIRPTA withholdings and when they apply can be found at www.IRS.org.

Foreign buyers may also be subject to additional tax withholdings in their country of residence when buying or selling US property. Tax laws vary from country to country, so non-national buyers would be wise to consult a local tax expert in their home country before buying or selling property in the US. 20 | kyrealtors.com

BUYING: Most non-residents in the market for US property choose to make their purchase in cash due to the inherent difficulty in obtaining a mortgage loan.

Lenders normally require social security numbers, credit history reports and other documentation that non-nationals simply do not have. Additionally, immigrants of the US without lawful citizenship may be automatically ineligible for many common loans, such as FHA-backed loans, that are popular among younger homebuyers with less capital. This includes DACA recipients, undocumented immigrants that arrived in the US as children who are now ready to buy their own home.

However, you may come across a nonnational buyer using an Individual Taxpayer Identification Number (“ITIN”) loan, an option that is available to those without social security numbers that enables them to obtain a loan and still pay US property taxes under an assigned ITIN number. ITIN loans might also come with higher interest rates, more cash down required and additional security from the borrower. A certified public accountant can assist in registering for an ITIN number on behalf of your non-national client.

In addition to an ITIN loan, there are a variety of other ways a non-resident can obtain financing. Some non-resident buyers make property purchases through an American LLC, or by partnering with an American-based investor. This allows nonresidents to buy as if they were American citizens and avoid high interest rates. Nonresidents might also secure financing from private lenders through the Department of Housing and Urban Development. If your buyer boasts a large portfolio over a million dollars, an international bank may finance a portion of a non-resident’s purchase, though international banks often require a hefty down payment in excess of $300,000.00 in such cases.

Though non-traditional, all of the above options are perfectly viable ways for citizens of foreign countries to facilitate their purchase of real property in the US. In most cases, nonresidents should be prepared to put more cash down and pay higher interest rates as with the ITIN loan. This is because foreign buyers may be more difficult to serve with legal process and their assets may be impossible to reach, increasing the risk for lenders.

Agents should keep in mind that non-

national buyers are protected by the Fair Housing Act, which is vigorously enforced by the Department of Housing and Urban Development. Sellers of real property may not discriminate against buyers in any way, including altering the terms of the sale or refusing to sell to a potential buyer based on their race, color or national origin. While the Fair Housing Act does not apply to the sale of single-family homes that are for sale by owner, the moment a real estate broker or agent gets involved its terms must be carefully observed. Mortgage lenders and most landlords are also bound by housing discrimination laws. A list of prohibited discriminatory conduct can be found on the Department of Housing and Urban Development’s website at www.hud.gov.

The National Association of REALTORS shows 23% of REALTORS working with international clients. There even exist certified international property specialists (“CIPS”) that specialize in buying and selling international real estate. At some point you may find yourself dealing with a foreign buyer or seller of real property. In some cases, the buyer or seller will depend solely on a US based power of attorney to complete his or her real estate transaction and you may never have to engage with the foreign buyer or seller at all. Generally speaking, there are no restrictions in the US on buying or selling property based on a buyer or seller’s citizenship. So long as you pay close attention to potentially applicable discrimination laws and taxation requirements, there should be no additional obstacles to working with non-residents in the sale of real estate.

Jason Vaughn is a lawyer with Vaughn & Smith, PLLC in Louisville and serves as legal counsel to KYR. The attorneys at Vaughn & Smith, PLLC constantly monitor the real estate industry as a whole, as well as any and all changes in the law that may affect it. They have intimate knowledge of commercial and residential real estate transactions and can utilize this base knowledge when representing their client's interests. This discussion should not be viewed as legal advice. Please consult your attorney.

WHAT'S YOUR

Are you relevant in today's market?

We often hear talk of being relevant, and staying current and top of mind in the eyes of the consumer. Today's REALTOR® wears more hats and is expected to be more responsive and in more places than ever. The level of expertise and service that is needed to stay relevant is paramount.

Does your brand reflect who you are and how you serve your clients?

So, what's in a brand? How do others see you and what does your brand say about you? When did you last update your headshot, revise your bio or Google yourself to see how others see you?

Jeff Bezos, the founder of Amazon, said this about brands: "Your brand is what others say about you when you're not in the room."

When you take the time to evaluate your brand and how others see you, you'll find a consistency in your image and an increase in your business.

All you need is a plan and the direction to get started.

Identify your mission statement and your core values This begins with identifying the service you offer and the target audience you want to attract and retain. How does your brand make others feel? When someone encounters your brand, do they know you instantly? One CRS Designee, Sandra Nickel, has built her business as "The Hat Lady." That's her unmistakable brand and one that is instantly recognizable to the consumer and REALTORS® alike.

Your mission statement tells the consumer who you are, what you do and how you're going to do it. It's that simple! It should be short and resonate with your target audience. For example, the Council's mission is "to train and empower ethical, efficient and successful real estate professionals."

Your core values are the fundamental beliefs and the guiding principles that dictate your behavior.

They help you determine if you're on the right path to fulfilling your goals by creat­ing an unwavering guide for your business.

Kim Cameron is one of the newest RRC Certified Instructors as well as a selling broker with a successful team in St. Louis. She has been licensed since 2003 and has a passion for educating her clients and REALTORS®.

You can find her at kimcameron.com.

BRAND YOURSELF WITH THIS CHECKLIST Headshot — Keep your headshot current, fresh and looking like you.

Biography — Your personal brochure, listing presentation and online footprint need to be updated annually, so pick a time each year to keep this information current. Awards received, clients served and so much more can happen in a year. database. Leverage your business and build from there.

Digital Footprint — Review your

online presence for consistency in how you are viewed across social media platforms and your website[s].

Sphere — Define and organize your database. Leverage your sphere of influence to build your business by nurturing relationships with those who you already know and trust.

Plan — How will you stay in touch on a monthly, quarterly or annual basis? Start with the key relationships you have in your business and build from there.

Be certain the message you share with your sphere is relevant and reflects the brand you want remembered. No matter how many years you have been in the business, a plan with a system to follow is the not-so-secret path to longevity as a REALTOR®.

FALL 2019 | Kentucky REALTORS® | 21

Fact or Fiction: In order to achieve a high reward on your money, you have to accept high levels of risk.

FICTION. The truth is, achieving a high overall reward on your money is possible while taking minimal risks.

For years, common investing wisdom has promoted the idea that high risks lead to high returns, but in reality, many people experienced low rewards for taking high risk.

Taking too much risk with your money can be a recipe for financial disaster. It is often assumed that high risk investments will automatically generate high returns, leading you to believe that you will have much more money in your future as a result. When you plan on having a large return you might end up actually saving a much lower percentage of your income than you should be.

High risk investing is called high risk for a reason. The risk taking could result in earning far less than you expected, or even worse, you could actually lose large amounts of money.

By the time you realize the returns did not pan out as expected, you may have lost decades worth of time and find yourself on the doorsteps of retirement with a fraction of what you expected to have in savings.

22 | kyrealtors.com

High risk doesn’t always equal high reward It is common to hear a misconception that traditional financial planning offers; in order to achieve a specific financial goal, high risk products are the way to go. Many people build their financial futures based upon the hope that they’ll be in the right place at the right time with their retirement nest egg.

There are many factors that affect your future such as rising taxes, life events and perhaps a stock market that stays flat. All of these things cannot be monetized or computed with a mathematical equation to get an exact number as to how much you should have in retirement.

Financial planning need and goal calculations suggest you don’t have to save as much, as long as you’re investing your money. However, a high return is not guaranteed, even if the stock market is performing well.

It’s not just taking the high risk with your money but it’s also how much that risk is actually costing you.

For example, let’s say you invest your money in a moderately aggressive stock fund averaging a 7.5% growth. You should keep in mind that you have to pay taxes on that growth, so right away you’re actually accumulating 5% growth instead of the 7.5%. Over time, this return can still leave you with a significant amount of money for retirement. BUT, you can’t save all of that money.

There are other cost factors that should be considered to find out what your real profit is. Factors such as taxes, fees, debt (mortgages, cars, student loans) and lifestyle expenses all have to be considered when determining your actual return.

Decisions with your money need to be much more certain in nature and the only thing you can control is how much you save.

So what can you do to get ahead and stay ahead?

Focus more on your rate of savings than on your rate of return. The better you are at putting money away, the less dependent you may be on needing high returns and taking on high levels of risk.

Become a saver before becoming an investor.

Today, it is all too common for people to invest in market based investments before using guaranteed assets. This approach may not only encourage high levels of risk and volatility, but might also leave you without enough liquid and accessible money to respond to changing life events.

There is no way to predict what may happen tomorrow and you could suddenly be faced with events such as an unexpected job loss, a medical emergency, providing parent care or an opportunity to start a business. All of these events require available funds that can readily and easily be accessed without hassles or penalties.

Before taking high risks with your hard earned money, or setting aside funds in illiquid accounts, focus on the following: • Become a world class saver by setting aside15-20% of your gross income.

• Accumulate one year of annual householdincome in accounts you can easily accessif necessary.

If you feel like you are fighting an uphill battle as you build your net worth, and you feel like you aren’t making any progress, ask yourself these questions…

• Protect your balance sheet and cash flowsagainst life events that could wipe out yourability to save and wipe out the moneyyou’ve already saved.

How much money did I save and/or invest last year as a percentage of my total income?

• Become more efficient by lowering taxesand other expenses that can erode yoursavings and investment returns.

What is the right amount of money to save and invest each year?

If you find yourself saving around 5% of your income, there may be a temptation to turn to higher risk investments to help close the gap between where you are headed and where you should be for retirement.

Rather than hoping for an attractive high rate of return on your money, and accepting the high risks that come with it, focus on these steps to lead you toward a more positive road to building wealth. Always remember, your rate of savings is more important than your rate of return.

By setting a goal to save at least 15-20% of your gross annual income, you can be in more control over your financial future. Since rates of return are so unpredictable, saving the right amount each year may actually allow you to lower the amount of risk you take. You work hard for your money and it shouldn’t all be put at risk in hopes of a high payout.

Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. The Living Balance Sheet® and The Living Balance Sheet® Logo are registered service marks of The Guardian Life Insurance Company of America (Guardian), New York, NY. © Copyright 2005-2018 Guardian

Content for this article was provided by Lifetime Financial Growth, LLC, the providers of KYR’s member affinity program, WealthSteps.

To learn more, visit the Discount Programs page at kyrealtors.com.

FALL 2019 | Kentucky REALTORS® | 23

THE TOP

CYBER SECURITY THREATS to Real Estate Companies one are the days when hackers would only target retailers. These days, the bad guys an target businesses in any industry, especially those that aren’t quite up on cyber security.

The real estate industry is one such group, and according to a recent survey, about half of businesses in the real estate industry are not prepared to handle a cyberattack. Federal law requires some industries, like hospitals and banks, to have some type of security in place for things like that, but the real estate industry is quite vulnerable.

Here are some of the threats you should look out for if you’re in the real estate industry: 24 | kyrealtors.com

Business Email Compromise (BEC) A BEC, or business email compromise, is a type of cyberattack that tricks a business into wiring money to a criminal’s bank account. The hackers do this by spoofing email addresses and sending fake messages that seem like they are from a trusted business professional, such as the CEO or a company attorney. The FBI has found that multi-billions in business losses can be attributed to BEC. That’s scary enough, but the FBI also says that real estate companies are specially targeted in these attacks and every participant in the real estate transaction is a possible victim.

Mortgage Closing Wire Scam Prior to closing on the sale of a home, the buyer receives an email from their real estate agent, title attorney or other trusted service professional with specific details of

the time, date and location of the closing.

In this same email, there are detailed and urgent instructions on how to wire money for the down payment but to a criminal’s bank account. Within moments of the wire transfer, the money is withdrawn, and the cash disappears.

A report by the FBI's Internet Crime Complaint Center totals the number of victims of the mortgage closing wire scam ballooned to 10,000 victims, an 1,110 percent increase in the years 2015 to 2017 with financial losses totaling over $56 million, which is a 2,200 percent increase.

Ransomware Another threat to real estate companies is ransomware. This is the type of malware that makes the data on your device or network unavailable until you pay a ransom. This is very profitable for hackers, of course, and it is becoming more and more popular. All it takes is one member of your team clicking on a link in an email, and all of your data could be locked.

Cloud Computing Providers If you are part of the real estate industry, your business is also at risk of becoming a victim thanks to cloud computing, which is more economical these days. A cyber thief doesn’t have to hack into a company to get its data; all they need to do instead is target the company’s cloud provider.

Robert Siciliano CSP, is CEO of Safr.Me, and the architect of the CSI Protection certification; a Cyber Social and Identity Protection security awareness training program. He will be the closing Keynote speaker at the 2019 KYR Convention & Expo in Lexington from September 24-26, 2019. He can be reached at Robert@Safr.Me

Ransomware doesn’t just target computers though. It can target any device that is connected to the internet including smart locks, smart thermostats and even smart lights, which are gaining a lot of popularity in American homes. When digital devices get infected with ransomware, they will fail to work.

Generic Malware Though most people hear about ransomware these days, there are other types of malware out there that hackers use, too. For instance, you have probably heard of Trojans a.k.a. Spyware or Malware, which is very much still around.

These can be used by cybercriminals to spy on their victims and get a person’s banking information or even wipe out their accounts. Malware can also be used to steal personal information and even employee information, such as client data, credit card numbers and Social Security numbers. Again, real estate companies are not exempt from this type of attack and are now even bigger targets.

It might seem that by using a cloud company you are lowering the risk of your business becoming a target, but the truth is, the risk still lies with your company, how secure your own devices are and how effective passwords are managed.

In most contracts with cloud computing companies, the customer, which would be your business, is not well-protected in the case of a cyberattack.

Protecting Your Real Estate Company from Becoming a Victim of a Cyberattack Now that you know your real estate company is a potential target of cybercriminals, you might be wondering what you can do to mitigate this risk. Here are some tips: • Create New Policies – One of the things you can do is to develop new policies in your agency. For example, in the case of BEC scams, if you have a policy that you never wire money to someone based only on information given via email, you won’t have to worry about becoming victimized in this type of scam. Instead, you should talk to the person sending the email in person or via a phone call just to confirm. Make sure, however, that you don’t call a number from the suspicious email, as this could put you right in touch with the scammer.

• Train Your Staff – Another thing that you should consider is better staff training. Most hacking attempts come via email, so by training your staff not to blindly open attachments or click on any links in emails, you could certainly save your staff from these scams. Our CSI Protection (Cyber Social Identity Protection) certification/ designation course is an option, and

offers ideas and methods to promote proactive strategies to ensure incidentfree results. Learn how to develop client-centered procedures customized for safety and security.

• Train Your Clients – Mortgage closing wire fraud scams can be manageable if not preventable. Inform your clients that in the process of buying or selling a home, there will be many emails to and from your real estate agent and other service professionals including your attorney, mortgage broker, insurance companies and home inspector. Tell them: Call Your Agent: Under no circumstances and at no time in this process should the client or service professional engage in a money wire transfer unless the client specifically speaks to the real estate agent in person or over the phone to confirm the legitimacy of the money wire transaction. Email Disclosure: Clients should always look for language in the real estate agent’s email communications stating the above or a similar facsimile.

• Back Up Your Systems – It is also very important that you always back up everything. This way, if your system does get hacked, you won’t have to pay a ransom, and you will be able to quickly restore everything that you need.

• Better Your Cloud Computing Contracts – Since you know that cloud providers don’t really like to take on the responsibility in the case of a cyberattack, you might want to start negotiating with the company in question about what you can do about that. This might include getting better security or adding some type of notification requirements.

• Consider Cyber-Liability Insurance – You also have the ability to get cyber-liability insurance. This could really help you to cut the risk to your real estate business. There are all types of policies out there so make sure to do your research, or better yet, speak to a pro about what you might need.

FALL 2019 | Kentucky REALTORS® | 25

5 mistakes Kentucky homeowners make in their yards & how to avoid them

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yard is something many of your buyers value in their new home.

A survey from the Outdoor Power Equipment Institute (OPEI) showed that 86% of Americans say it’s important to have a living landscape.

The same survey revealed that people in the South enjoying working in the yard more than anyone else in the country. After all, Kentucky homeowners know the family yard a place to make memories with family and friends, to let kids and the family dog play safely, and to customize to individual needs and desires.

2. Choosing the wrong plants. The climate in

Living landscapes also help the environment, important in the Bluegrass State where scientists say the heat index is on the rise due to climate change. Living landscapes reduce the heat island effect, capture and filter rainwater, reduce run-off, cool the air, sequester carbon, produce oxygen, and capture dust and particulate matter. There are also health and well-being benefits associated with spending time in green space. Stress, memory and heart health (to name a few) are all improved by getting out and enjoying our living landscapes.

4. Watering incorrectly. Plants will grow stronger

But it’s easy for new buyers to make mistakes in their family yard.

Here’s a list of the most common pitfalls, as well as advice on how to avoid them, that you can share with your recent buyers.

helps create a lower-maintenance, drought-tolerant lawn. Preferred length varies by grass type, but the general rule of thumb is to cut only the top third of the grass blades off at any given time. Taller grass blades shade the soil and keep it cooler, helping control weeds. Taller grass is also softer to walk on – important for little feet and paws.

size for the new lawn. If the lot at the new property is more wooded, a chainsaw and/or hedge trimmer that the buyer doesn’t already have yet may be required. Or perhaps the client moved from an apartment to a single-family home for the first time and needs all new equipment. Taking an equipment inventory is a critical first step.

26 | kyrealtors.com

3. Not considering lifestyle needs. New buyers also need to consider their lifestyle when selecting and placing their living landscapes. Those who travel frequently will want to choose low-maintenance plants, flowers and shrubs. Homeowners with a family and/or pets need a large area of sturdy turfgrass for running and playing. Pro tip: plants can be used strategically to designate “activity zones” in the yard – separating a children’s play area from the dining space, for example. and work harder – creating deeper, healthier roots – if they have to seek out water. Watering deeply, but less frequently, allows moisture to reach the roots of the grass and trees. Also, watering early in the morning reduces excess evaporation. To take the guesswork out of watering, consider installing soil moisture sensors and drip irrigation systems.

5. Cutting the grass too short. Proper mowing

Learn More

1. Not having the right equipment for the space. Make sure your lawn mower is the right

Kentucky lends itself to a gorgeous living landscape, but you must consider the microclimate so your living landscapes thrive. Check the USDA’s Plant Hardiness Zone Map to determine which plants will do best in your new location.

To learn more about the value of living landscapes, go to SaveLivingLandscapes.com. For more about outdoor power equipment, go to OPEI.org.

HOUSING STATS

Home Sales Up 7%, Biggest July on Record Median Home Price Holds at Near-Record Level Rising prices do not yet seem to be hampering home sales as the figure rebounded from a slight dip in June. 5,471 homes were sold last month compared to 5,078 homes in July of 2018, a 7% increase. Year-to-date figures are also trending higher. So far in 2019, 30,863 homes have sold. This is up nearly 2% over 2018’s July YTD figure of 30,344 and just 87 homes (.25%) below that of July 2017’s number. 2017 was the highest year on record in Kentucky with 2018 ending a close second.

Nationwide, existing-home sales rose 2.5% from June to a seasonally adjusted annual rate of 5.42 million in July. Overall sales are up 0.6% from a year ago (5.39 million in July 2018).

“Falling mortgage rates are improving housing affordability and nudging buyers into the market,” said Lawrence Yun, NAR’s chief economist. However, he added that the supply of affordable housing is severely low.

The median home price in Kentucky last month was up 8.5% over July of 2018 at $146,325. This is the third straight month of year-over-year increases and the largest jump of 2019. “The shortage of lowerpriced homes have markedly pushed up home

prices. Clearly, the inventory of moderately-priced homes is inadequate, and more home building is needed,” said Yun. “Some new apartments could be converted into condominiums thereby helping with the supply, especially in light of new federal rules permitting a wider use of Federal Housing Administration (FHA) mortgages to buy condo properties.”

July’s days-on-market (DOM) figure stands at 97 days. The only other month when homes sold faster was last July when the statewide DOM figure reached the all-time low of 96. Contributing to this low number is the Northern Kentucky Association REALTORS® market. That area saw its lowest DOM month in July when homes went under contract, on average, in just 28 days.

Rip Phillips, President of Kentucky REALTORS®, says that the strong economy is causing the demand for housing to persist.

“More Kentuckians than ever are wanting to buy homes right now”, he said. “Low inventory has been an ever-present theme this year and is becoming problematic for homebuyers looking at the $150k - $250k price range. The homes that meet that need are selling fast.”

The inventory number for the state sits at under 4 months for the fifth consecutive month. July’s figure of 3.21 is down 19% over the July 2018 figure of 3.82 months. Most economists believe a balanced housing market offers a 6-month inventory level.

To view housing statistics for the state, as reported to Kentucky REALTORS®, visit housingstats.kyrealtors.com.

JULY HOUSING MARKET COMPARISON Board/Association

Sold 2018

Sold 2019

Sold %

Median Price 2018 Median Price 2019

Median Price %

Ashland Area Board

81

111

37%

124000

118000

-5%

Central Kentucky Association

67

48

-28%

130000

137000

5%

Eastern Kentucky Association

58

86

48%

88250

71000

-20%

Greater Louisville Association

1697

1755

3%

196000

210000

7%

Greater Owensboro Association

144

154

7%

131000

142500

9%

Heart of Kentucky Association

217

246

13%

153900

185000

20%

Henderson-Audubon Board

34

33

-3%

123950

147900

19%

Hopkinsville-Christian Board

45

44

-2%

123000

145950

19%

Kentucky-Barkley Lakes Board

43

53

23%

127900

128000

0%

Lexington Bluegrass Association

1294

1405

9%

175000

180000

3%

Madisonville-Hopkins Board

46

44

-4%

117450

119450

2%

Mayfield-Graves Board

28

35

25%

69450

140000

102%

Murray Calloway County Board

36

44

22%

136350

139000

2%

Northern Kentucky Association

691

737

7%

170000

184950

9%

Old Kentucky Home Board

53

67

26%

153900

165900

8%

Paducah Board

88

115

31%

131950

130000

-1%

Pennyrile Board

26

18

-31%

95000

130750

38%

REALTOR® Association of SKY

272

312

15%

174200

177500

2%

Somerset-Lake Cumberland Board

111

115

4%

127500

131100

3%

South Central Kentucky Association

42

49

17%

149750

142500

-5%

Totals

5073

5471

8%

$134,927.50

$146,325.00

8%

FALL 2019 | Kentucky REALTORS® | 27

CEO'S MESSAGE

Made Possible

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few staff members and I have had lots of windshield time this year with our 2019 President Rip Phillips while traveling to more than a dozen local associations in literally all corners of our beautiful state. As we logged many miles, it has been great to share thoughts and have discussions on some of the biggest issues of our industry and association. What is best about these trips, however, is the welcoming reception we received from so many of you once we arrive at our destination and the interactions we have had with so many members that help us learn more about your businesses, your issues, and what keeps you up at night.

What About the Economy?

Speaking of keeping REALTORS® up at night, economic updates and forecasts have become chief among the topics members seem to want to hear from us and they have often thanked us for delivering them on a consistent basis when we speak to them.

REALTORS®, seemingly more than any other group, are often very sensitive to changes they see or hear about that might affect the economy. This comes from their long memories of past recessions and their concerns that an economic downturn might be just around the corner. I understand this concern and watch economic data closely, so I take in lots of information. What I can tell you is that consumer confidence is still considered very high across the U.S. and Kentucky is also prospering like the rest of the country.

We know that a strong economy has typically been measured as having an unemployment rate of 5% or below. We currently stand at approximately 3.7% and it has remained strong for the past few years now. With that said, it’s no secret that although we are still doing very well, things have slowed just a bit. Commercial REALTORS® report slower leasing activity and weaker industrial and office markets over the last couple of months. This seems odd given that the balance sheets of investors are reported to be flush with cash. The reason given by NAR economist Lawrence Yun is that these individuals have been worried about a possible trade war and have simply been averse to risk even though GDP growth is projected to be 2.2% in 2020. Yun has said, flatly, that “there will be absolutely no recession if the U.S. secures a trade agreement.”

Issues and Actions….

Kentucky REALTORS® has enjoyed very favorable treatment by our General Assembly in 2019, as noted in KYR’s first Legislative Scorecard. In this new publication now available on the advocacy section of the website, we made note of the votes on all our priority legislation. Because of the strong support we received from legislators on these bills, we consider this publication to be a very positive way to acknowledge and expose legislative members for their support of our key issues. But, even when the General Assembly is not in session, KYR is still at work and we have been working

28 | kyrealtors.com

STEVE STEVENS, CCE

CEO – KENTUCKY REALTORS

directly with state agencies on the regulations that affect our industry and even pushing for new initiatives.

License Reciprocity

Recently, we’ve focused attention on a new initiative in achieving license reciprocity with the State of Ohio. When Kentucky chose to go to License Recognition years ago, it created a way for prospective licensees to obtain their license in both states much faster and, in our case, with no additional education required from Kentucky. Licensees would first get their education and license in their neighboring state (Ohio in this case) since, with no additional education needed, they would need only to take the law exam here. If they passed Kentucky’s law exam, they were granted a license. This association has helped to facilitate a dialogue between the real estate governing bodies in both states who are now considering a proposed reciprocal agreement that creates parity in the requirements for education and testing. We want everyone practicing real estate in Kentucky – no matter where they come from – to be fully equipped with the knowledge and expertise needed to do business professionally and protect consumers. As we finish our work with Ohio, we will begin looking at the relationships we have with all our neighbors and work to see we have the same conditions they do.

Strength through Industry Unity

An exciting initiative this year has been to develop a stronger relationship with the group we call “Allied Industry Partners”. This group consists of appraisers, auctioneers, home inspectors, and the home construction industry. REALTORS® interact with most of these professionals on a weekly, if not daily, basis. We’ve convened this group and conducted very productive meetings to discuss ways we might work together. The passage of legislation in the 2019 General Assembly has allowed continuing education offered by industries regulated under the Kentucky Real Estate Authority to be credited in multiple licensures across these industries. Our initial conversations have been focused on moving this forward, as well as how we might join forces on legislative issues, addressing housing affordability, and even become one group to purchase health insurance.

Well Done, REALTORS®!

I want to express my gratitude to our Leadership, many volunteers, and dedicated staff for all you’ve helped us accomplish thus far as you’ll see across the pages of this publication. Whether these folks have been vocal advocates, quiet leaders, or silent partners, all have been dedicated to “Making Possible” a better real estate industry that makes the dream of homeownership possible for so many across Kentucky.

ELECTRONIC SIGNATURES in Kentucky

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By Jason Vaughn, Esq.

any years ago, there were only a few different ways to sign a document. Most commonly it was done with a pen or quill in hand and involved manually signing one’s name to a piece of paper or parchment. Some used an emboss, or a wax or ink stamp as a signature. Courts long ago developed requirements for legally binding signatures, but none could foresee the use of technology taking the place of the good old-fashioned pen to paper process.

Today, legal transactions can be done virtually between two people on opposite sides of the world. Contracts can be signed over the internet and legally binding promises can be made through an e-mail. In some cases, even when parties are face-toface, they may prefer to sign electronically, such as at a restaurant or retail store by using a tablet or touch screen. The law has had to adjust to these technological changes and societal preferences accordingly.

Congress enacted the Electronic Signatures in Global and National Commerce Act, or E-SIGN, in the year 2000 to address the widespread dilemma of electronic signatures. Prior to that, the 1999 Uniform Transactions Act, or UETA, was used.

Forty-Seven (47) US States adopted the UETA, stipulating that when a law requires either a writing or a signature, an electronic record or an electronic signature will satisfy that requirement if the parties agree to proceed electronically. Electronic signatures are now treated the same as traditional signatures, but what exactly is an electronic signature?

In Kentucky, the definition of “Electronic Signature” under KRS 369.101 mirrors the definition of “Electronic Signature” under the E-SIGN Act as well as most other states’ electronic signature laws. There are a few

elements of an electronic signature. It must (1) Be an electronic sound, symbol or process, (2) Be attached to or logically associated with a record, and (3) Be executed or adopted by a person with the intent to sign the record. As with manual signatures, great emphasis is placed on the ability to establish intent by showing that the person’s actions manifested assent to, or agreement with, a record.

The third element requiring intent to sign the record is perhaps the most important component of an electronic signature. Intent to sign was fairly obvious when one was signing manually. Unless a signor was literally having his arm twisted, it was presumed he intended to sign the document just by doing so. When one is signing electronically, however, intent may be more difficult to establish. A Kentucky case called Sawyer v. Mills held that the intent requirement was not met when the plaintiff attempted to use a voice recording of the defendant to bind him to his statements.

The reason the element of intent could not be met was not because the “signature” was a voice recording, but because the recording had been made secretly without the defendant’s consent. The court said this was not an electronic signature because

signatures cannot be procured without one’s knowledge or intent. The court explained, “There must be intent to attach or logically associate the electronic signature to the agreement, that is, an intent to execute the contract. That was impossible here, because the medium on which the alleged agreement and electronic signature were recorded (the audio tape) was used surreptitiously.” Sawyer v. Mills, 295 S.W.3d 79, 88 (Ky. 2009).

If the defendant in Sawyer v. Mills had adopted or executed the recording with an intent to “sign” the statements he had made, then the recording could have qualified as an electronic signature. In other words, the defendant needed to manifest his consent to being recorded in order to create the presumption that he intended to be bound by his words. The element of intent is key.

Many websites have attempted to make intent clear by creating processes such as click-throughs or check-box actions necessary to move forward with the use of their services, such as indicating “I Agree.” Others, like the popular application DocuSign, employ the use of a signature replication process that involves the manual signing of the screen with your finger or mouse. All are acceptable ways of demonstrating intent. >>> FALL 2019 | Kentucky REALTORS® | 29

ELECTRONIC SIGNATURES Continued from page 29

In another Kentucky case called Bardstown Capital Corporation v. Nationstar Mortgage, the plaintiff, Bardstown Capital, attempted to enter into an agreement with the defendants using DocuSign. When arguing that the defendants were bound to an electronic contract, Bardstown Capital relied on both a confirmation email from DocuSign notifying it that it had electronically signed the document, and an acceptance email notifying it that the document had been received by the other party. However, the defendants had not actually signed the document, electronically or otherwise.

The court held that Bardstown Capital had misinterpreted the emails it had received from DocuSign, and by simply opening the electronic document it could have discerned whether the other party had actually signed or not. In any event, had the DocuSign actually been executed, the agreement would have been valid. Bardstown Capital Corp. v. Nationstar Mortg., LLC, No. 2016-CA000280-MR, 2017 WL 5045609, at *1 (Ky. Ct. App. Nov. 3, 2017).

Traditional signatures also require an intent to execute or adopt the document being signed. Kentucky’s interpretation of electronic signatures is the same in this regard. However, when the signing process is virtual, it becomes more difficult to show intent, as demonstrated by the above discussed cases.

A jury may ultimately conclude that a party’s process either did or did not create an electronic signature, i.e. the presence of intent, after considering all the evidence surrounding the party’s use of the process.

The more clear a website or mobile user’s process is for electric signing, the easier it is for the trier of fact to conclude that intent existed. If intent can be established, the signature will be binding.

PRACTICE TIP: To avoid the possibility of your, (or your client’s) name being construed as an “electronic signature,” you should proactively state at the beginning of any electronic communication that it is not your intent to use an electronic signature. difficult to uphold in court. That is why companies are constantly developing new ways of conducting business online that will eliminate all doubt as to whether an electronic signature is authentic.

Some now require a video recording contemporaneous with the signing of an electronic signature to confirm who is doing the signing. Some prefer not to deal with electronic signatures at all. One thing is certain: the technology will continue to change and so too will the law. In fact, e-signature laws in Kentucky are expected to change again in the year 2020.

While Kentucky may have modeled its definition of “electronic signature” after the UETA’s definition, the Kentucky e-signature statute differs slightly but significantly from the uniform act. KRS 369.103 makes electronic signatures ineffective when applied to certain types of transactions.

Those transactions include the creation of wills and trusts, the creation and transfer of negotiable instruments and the conveyance of real property.

An otherwise valid electronic signature could be challenged due to security concerns that could suggest tampering, or misleading circumstances surrounding the signing that may rebut consent. A jury may have to weigh the production of audit logs, IP addresses and e-mail chains to properly determine whether a valid signature was created.

Senate Bill 114 takes effect January 1, 2020 and amends KRS 369.103 to permit the use of electronic signatures in the conveyance of real property. In addition, SB 114 acknowledges key provisions in the Revised Uniform Law on Notarial Acts (RULONA) and the Uniform Real Property Electronic Recording Act (URPERA), which allow for digital recording and notarization by clerks. KRS Chapter 423 on Notaries Public and Commissioners of Foreign Deeds now recognizes real property recordings by clerks who may be “performing a notarial act through the use of remote presentation.”

It may be more convenient to sign your next document electronically from the comfort of your own home, but electronic signatures could be more

A notary represents that a document has been signed in his or her presence. Under the amendments, “acknowledged before me” or “appears before me” – language that

30 | kyrealtors.com

typically accompanies a notary’s signature – can mean “a different physical location from another person but able to see, hear, and communicate with that person by means of communication technology,” where “communication technology means an electronic device or process that allows a notary public and a remotely located individual to communicate with each other simultaneously by sight and sound.” KRS 423.300.

Prior to this amendment, Kentucky was one of only four states that did not provide for electronic recording. After January 1, 2020, parties to transactions involving real property in Kentucky can finally enjoy the convenience of e-signing and e-recording.

The restrictions still remain, however, on the creation and execution of wills, codicils, and testamentary trusts; some provisions of Chapter 355 (transactions governed by the UCC) and the creation or transfer of any negotiable instrument or an instrument establishing an interest in title to a motor vehicle. One should take note that KRS 371.010 is not included, and so electronic signatures should satisfy the Statute of Fraud’s requirements as long as the transaction does not fall under one of the prohibited areas of the e-signature law.

Jefferson County, Kentucky and Fayette County, Kentucky are expected to be the first counties to adopt e-recording and e-notarizing, according to an article by Richard A. Vance from Stites & Harbison, PLLC earlier this year (Kentucky General Assembly Approves Electronic Recording and Notarization, April 9, 2019). KRS Chapter 423 will include new requirements for clerks and notaries performing these new digital acts. For example, KRS 423.355 mandates the use of a new electronic database to track online notarizations, and KRS 423.380 imposes a journal chronicling process to be maintained by online notary publics. You can read a summary of all the changes at https://apps.legislature.ky.gov/record/19rs/ sb114.html.

Eventually, all counties in the state of Kentucky will join most of the nation in allowing electronic real estate transactions.

This option will simplify land conveyances and transfers, especially for those buying, selling or releasing their interests in real property that may be located in a different state entirely.

this! d n e t t a T O N u o How could y

2019 Kentucky REALTORS

Annual Convention & Expo

Marriott Griffin Gate Resort - Lexington, KY September 24-26, 2019

Madison Hildebrand

Former co-star of “Million Dollar Listings Los Angeles” Opening Keynote

A Winning Tradition Continues!

•

Welcome Reception - The Mansion at Marriot Griffin Gate Resort

•

Approved CE & PLE hours available

•

RPAC Kickoff and Fundraising Event

•

KYR After Party - featuring French Kiss Prod.

•

Installation Dinner honoring KYR's Incoming President Lester Sanders

•

Presentation of REALTOR® of the Year Award

•

Closing Keynote Luncheon with Leigh Brown

•

Trade Show featuring valuable Door Prizes

•

CRS: Top of Mind Techniques to Boost Your Brand course (separate registration)

Register now at kyrealtors.com

The Dynamic Speakers include:

Nobu Hata

Leigh Brown

Robert Siciliano

Kim Cameron

John Dotson

Dr. Lee Davenport

Refining the leadership of tomorrow

GET INVOLVED AND GIVE BACK Recognizing that leadership development is an essential element in the process of improving our Association, Kentucky REALTORS® offers LeadershipKYR. Through this program, KYR identifies emerging REALTOR® leaders in the state, encourages them with motivational activities, and assists in sharpening their leadership skills with the hope they will exert a strong positive influence on the future of the profession.

Join the ranks of some of the most successful REALTORS® from around the state.

LEADERSHIPKYR CLASS OF 2020 Deadline for applying is December 31, 2019 For more details or to download an application, visit kyrealtors.com