Real Estate License Law and Regulations I

Question 1

the Human Rights Commission

Answer 1

ensures that persons are not discriminated against in residential real estate transactions.

Question 2

the Department of Ecology and the Environmental and Land Use Hearings Office

Answer 2

deal with environmental issues.

Question 3

the Attorney General’s Office

Answer 3

enforces the Unfair Business Practices – Consumer Protection Act

Question 4

the Department of Licensing

Answer 4

ensures that persons in the real estate and appraisal businesses are licensed and regulated.

Question 5

the Department of Financial Institutions

Answer 5

regulates mortgage brokers and companies, consumer lending companies, and escrow companies.

Question 6

the Department of Labor and Industries

Answer 6

regulates and licenses contractors.

Question 7

the Revised Code of Washington (RCW)

Answer 7

Laws passed by the Washington Legislature and signed into law by the governor are collected and published as the Revised Code of Washington (RCW). Typically, an appropriate state agency is given authority to create rules necessary to carry out the laws. The rules generally expand upon the statutes, providing greater specificity and detail.
In Washington, these administrative rules are collected and published as the Washington Administrative Code (WAC).

Question 8

[RCW 18.85.011(15), .331]

Answer 8

Chapter 18.85 RCW makes it illegal for a person to act as a real estate broker, managing broker, or real estate firm without a license.
No person can sue to collect compensation as a real estate licensee without proving that he/she was licensed before he/she offered to perform the service or procured a promise of compensation for the service.

Question 9

Firm [RCW 18.85.011(17)]

Answer 9

A real estate firm (or firm) is a sole proprietorship, partnership, limited liability partnership, corporation, limited liability company, or other legally recognized business entity that is licensed as a real estate firm by the Department to conduct real estate brokerage services in Washington.

Question 10

Real Estate Brokerage Services [RCW 18.85.011(13), (16)]

Answer 10

Real estate brokerage services are services offered or rendered in one of these ways:
directly or indirectly to another, or on behalf of another, for compensation or the promise or expectation of compensation
by a licensee on the licensee’s own behalf

Question 11

A real estate broker

Answer 11

is a natural person who, on behalf of a firm, performs real estate brokerage services under the supervision of a designated broker or managing broker. He/She can be licensed to only one firm at any one time and cannot supervise any other licensees.

Question 12

A managing broker

Answer 12

is a natural person who, on behalf of a firm, performs real estate brokerage services under the supervision of the designated broker and who may supervise other brokers or managing brokers licensed to the firm.
Any broker who supervises or exercises a right of control over other brokers in the performance of real estate brokerage services must be licensed as a managing broker.
A managing broker can be licensed to only one firm at any time.

Question 13

Designated Broker [RCW 18.85.011(8), (10), .121; WAC 308-124A-805]

Answer 13

A firm must have a designated broker who is responsible for its activities. A designated broker is a natural person who:

• owns a sole proprietorship firm, or
• acts as a designated broker on behalf of a firm that is a legally recognized business entity (e.g., a corporation, limited liability company, limited liability partnership, or partnership real estate firm) with its own Unified Business Identifier (UBI).

A designated broker must:

• have a controlling interest in the firm (e., the ability to control the operational and/or financial decisions of the firm), and
• hold a managing broker’s license with a “designated broker” endorsement from the Departme The address on his/her endorsement is the location where he/she is the managing broker.

Question 14

Branch Manager [WAC 308-124-300(1); WAC 308-124C-130]

Answer 14

A branch manager is a natural person who holds a managing broker’s license and has been delegated authority by the designated broker to manage a single physical location of a branch office. He/She is issued a branch manager endorsement by the Department.

Branch managers are responsible for overseeing the branch office’s licensees, employees, and contractors, including:

• the hiring, transferring, and releasing of licensees to and from the branch
• all activity within the branch office, including the supervision of brokers and managing brokers and the heightened supervision of brokers who have been licensed for less than two years

Question 15

Brokers [WAC 308-124C-140]

Answer 15

A broker’s responsibilities include:

• adhering to licensing laws and rules regarding the following:
  1. safe handling of customer or client funds and property
  2. timely delivery of transaction documents, brokerage service contracts, and customer or client funds and property
  3. proper and legal advertising
  4. modifying or terminating brokerage service contracts on behalf of the firm
• following the designated broker’s written policy on the referral of home inspectors
• delivering transaction documents and brokerage service contracts to the designated broker or delegated managing broker within two business days of mutual acceptance

Question 16

Designated Brokers [RCW 18.85.275; WAC 308-124-300, -124C-125]

Answer 16

A designated broker’s responsibilities include ensuring that:

• monthly trial balances and reconciliation of trust bank accounts are completed, up-to-date, accurate, and balanced
• policies and procedures are in place to account for safe handling of customer or client funds and property
• the accessibility of the firm’s offices and records to the Director’s authorized representatives and the availability of copies of required records upon demand
• all persons performing real estate brokerage services on behalf of the firm and the firm itself are appropriately licensed
• affiliated licensees (e., natural persons licensed as brokers or managing brokers employed by the firm and licensed to represent the firm in the performance of any real estate brokerage services) submit their transaction documents to the designated broker, branch manager, or delegated managing broker within two business days of mutual acceptance

Question 17

Commercial Real Estate by Out-Of-State Licensees [RCW 18.85.131]

Answer 17

In Washington, an out-of-state licensee who does not also hold a Washington license may render licensed services for commercial real estate (i.e., any real estate other than real estate containing one to four residential units) only if he/she does so under a written cooperation agreement with a licensed Washington designated broker who holds an active managing broker’s license. The agreement must include:

• the terms of cooperation
• oversight by the Washington broker
• explanation of compensation
• a statement that the out-of-state licensee and its agents will agree to adhere to Washington laws

The out-of-state licensee must also:

• give the Washington designated broker a copy of his/her current license in good standing from the jurisdiction where he/she maintains an active real estate license
• consent that legal actions arising out of his/her conduct or that of his/her agents may be commenced in any Washington county where the cause of action arises or where the plaintiff resides
• include the name of the Washington broker, managing broker ,or firm on all advertising
• deposit all required documentation, records, and documents related to the transaction with the Washington broker, managing broker, or firm to be held for three years

Question 18

Character [RCW 18.85.171; WAC 308-124A-700]

Answer 18

A license applicant must also provide the Director with proof concerning his honesty, truthfulness, and good reputation. Proof of the identity of the applicant or the officers or partners of a firm making the application must also be provided. This may include fingerprints and background checks.