Chapter 45
(Daniel – the pages with titles in red have changes made) (Insert beginning slide – 00)
WASHINGTONSTATE - REAL ESTATE REGULATIONS
Revised Code of Washington - RCWs - The RCWs are a collection of statutory State laws. These are a group of laws passed by the State legislature, and are called the Revised Code of Washington. The codes dealing with the area of real estate law are Chapter 18 of the RCWs.
Example: RCW 18.63.135 deals with the responsibility of the broker to provide services.
1. Protect the Public - The purpose of statutory laws passed regarding real estate is to protect the rights of the real estate buying and selling general public in the State of Washington against illegal practices. These laws will deal with land use, subdivision control, construction standards, licensing qualifications and standards, and the regulations and discipline of brokers, salespersons, and escrow officers, after they become licensed.
(On the next page please insert – Sect 45 – 001 & 001A)
DEPARTMENT OF LICENSING (DOL) – THE DIRECTOR
- Department of Licensing (DOL) – The government body that controls and enforces the real estate code is known as the Department of Licensing. The State legislature cannot enforce all these rules. They had to create a police force, if you will, to act as a watchdog to make sure the laws are obeyed. That is the job of the Department of Licensing.
Business and Professional Licensing Division– To separate from public licensing, the Department of Licensing (DOL) has a second department called the Business and Professional Licensing division. Public licensing would be like your driver’s license. Your real estate license is a professional license and under the Business and Professional Licensing division. The real estate division is under the Business and Professional Licensing Division.
Real Estate Division– The real estate division is run by a Governor appointed Director who is in charge of the staff who runs the department. The Director and staff are forbidden by law to have any interest in the real estate profession, obviously, as that would be a conflict of interest.
Administrator– The Director has a real estate program administrator who oversees the day-to-day operations of the real estate section, which includes discipline, licensing, education, and community support services. The real estate Director is empowered to issue rules and interpret statutory law. These administrative rules and regulations are called the Washington Administrative Code or WACs. They are not laws, but more like housekeeping rules. To a licensee they might as well be laws, because violations of them could cost you your license. The WACs are created to interpret and carry out the intent of the Code, the Revised Code of Washington or RCWs.
2. WACs– In addition to State statutes there are rules and regulations called the Washington Administrative Code or WACs.
Example: The State legislature passed an RCW saying there will be a real estate exam; the problem is that they did not give all the necessary details. Therefore, the Director and the Real Estate Commission will make reasonable interpretations as to what the legislators wanted and fill in between the lines. They will fill in such things as how many questions, what the passing grade is, and where the examinations will be held.
WACs– These administrative rules will also govern professional real estate activity. They control the acts of licensed people and how one obtains a license. The real estate Director has the power to hold hearings whenever there is a violation of the Code. He/she also has the power to suspend or revoke licenses, to set education requirements, and set the time and place for holding the exam.
(On the next page insert Sect 45 – 002 & 002A)
THE REAL ESTATE COMMISSION
R. E. Commission - The State of Washington also established the Real Estate Commission. They serve as an advisory body to the Director of Licensing and Real Estate Management Program. The Real Estate Commission is composed of the Director of The Department of Licensing and six Commissioners who are appointed by the Governor. They serve six year staggered terms. That is every year in August, the term of one of the Commissioners expires. That member will have to be replaced. This system is intended to produce continuity of thinking on the part of the Commission. At least two of the Commissioners must be from the west side of the Cascade Mountains and at least two from east of the Cascades so that there is input and thinking from all areas of the State. They must have at least five years experience in the sale, operation, or management of real estate in this State or at least three years of experience in investigative work of a similar nature preferably in connection with the administration of real estate law of this State or elsewhere.
State Exam - The Commission's main job is to prepare the licensing exam. The law says the exam must be given monthly. It must be given at least six times every year in each of the six major geographical areas of the State. Currently they are holding the exam every month in the more populated areas and every other month in the rest of the State. The Commission also must approve any required courses. The Commission meets publicly four times a year. Courses like this one that you are studying must be submitted to them and approved by them before the course(s) can be used. In summary remember, the Commission does not determine qualifications for the exam applicants; the Director of Licensing does this. They do not engage in the enforcement of the Code upon violators or in any disciplinary action. They are basically there as advisors to the Director, to approve courses and to administer the exam.
(On the next page insert Sect 45 – 003 & 003A)
NO SLIDES FOR THIS PAGE
WASHINGTONSTATE GOVERNMENT HIERARCHY
LICENSING REGULATIONS
License Required - A real estate license is required if a person, partnership, or corporation acts for another and receives compensation, commission, or promise thereof, if you get paid in any way, for any of the following acts:
1. Licensee Characteristics - Selling, offering to sell, listing, offering to list, buying, offering to buy, real estate or a business opportunity. Business opportunity requires a real estate license even if there is no real estate involved. Remember a business opportunity is the right to do business. As an example, if you are going to sell someone's videotape store, they may just be renting the building and there would be no real estate to sell. You are only selling his/her good will, his/her business name, stock and inventory, all of which is personal property, but this sale requires a real estate license.
2. Commercial Sales - A real estate license is required if one negotiates or offers to negotiate, directly or indirectly, the purchase, sale, exchange, rental, or lease of real estate or a business opportunity or any interest therein for others; anytime you are open to the public and charging a commission.
3. Mobile Home Sales - Anyone that negotiates or offers to negotiate, either directly or indirectly, the purchase, sale, or exchange of a used mobile home in conjunction with the purchase, sale, exchange, lease or rental of the land where it is located. If you are selling a mobile home on property and you are selling the property and the mobile home, you must have a real estate license. What if the mobile home is new or you list a used mobile without land included as one in a mobile park? Real property is the key to the requirement of a real estate license requirement. A new mobile home including property requires a real estate license. A new or used mobile home without property does not require a real estate license, but it does require a mobile home dealer's license.
4. Acts as Licensee - Anyone that advertises or holds himself/herself out to the public by any oral or printed solicitation or representation and engages in any of those things above then they are in the business of real estate.
Prospects for Clients - Anyone that engages, directs, or assists in procuring prospects or in negotiating or closing any transaction that engages in or results in the above. As an example, it would be totally illegal for you to pay your unlicensed friend a fee for every person he/she brings in to list with you by canvassing his/her neighborhood for prospects. That would be compensating an unlicensed person for performing professional real estate activity.
(On the next page insert Sect 45 – 004 & 004A)
EXEMPTED - INDIVIDUALS WHO DON'T NEED A LICENSE
Exceptions: The following individuals do not need to be licensed:
1. Owner Sells - If you are the owner and selling your own property; the term owner also includes a corporation, limited liability company, limited liability partnership or partnership which sells that property belonging to the corporation or partnership. You don't need a license to sell your own property whether you are a business or an individual because you are not acting for others. Remember the key is acting for another.
2. Family Members - There is an exemption for residential landlords that pay immediate family members to manage their property for them. Those family members don't need a license.
3. Residential Landlord - Residential managers are also exempt for a single group of residential units. The apartment manager is not open to the public. They are not managing for several different apartment owners that would be property management. They are possibly getting a reduction in rent for managing only one apartment, hotel, hotel complex, or managing and running only one condominium complex and getting paid for it. They are exempt because they are working for only one owner, and not open to manage other complexes to the general public, therefore they don't need a real estate license.
4. For Parents - Persons acting as an attorneys-in-fact or holding the power of attorney are exempt. If you have the power of attorney for your parents, you would be referred to as an attorney-in-fact, in the eyes of the law; you would be your parents. You would not need a real estate license to sell your own real property.
5. Court Ordered - Another exemption is any person acting under a court order, such as a guardianship or foreclosure. If the court orders you to do something with the real estate property, you do not need a license.
6. Attorneys - Attorneys while rendering related legal activities do not need a license. Attorneys that open a real estate business, or property management business and collect commissions do need a real estate license, the same as anyone rendering real estate services.
7. Office Staff - Secretaries, bookkeepers, clerks, and office staffs not engaging in professional real estate activities are exempt.
8. Self-Service Storage - Owners or managers of self-service individual storage facilities are also exempt.
(On the next page insert Sect 45 – 005 & 005A)
LICENSING - SALESPERSON LICENSE
Salesperson License - The salesperson license is usually the first license someone would obtain. The requirements for this license are:
1. Individual 18 - A person must be 18 years of age or older and a natural person, not a corporation or partnership.
2. Honest - You must be honest, truthful, and of good reputation, which may require an affidavit for proof.
3. No Fingerprinting - The requirement for fingerprinting of all applicants has been repealed unless an applicant has a conviction within the prior 10 years of application.
4. Fingerprinting - Fingerprints are required if convicted of a crime within 10 years of application.
5. 60 Hours - The Real Estate Fundamentals course of at least 60 clock hours must be successfully completed prior to the examination application.
6. 70% on Exam - The salesperson's exam must be successfully completed. The passing score of 70% must be obtained on each of the State and national sections of the examination.
No Residency Requirement - Licensees are not required to reside in the State of Washington (broker must have records here) as a requirement for a license.
(On the next page insert Sect 45 – 006 & 006A)
LICENSING - BROKER LICENSE
Broker License Qualifications:
1. Applicants - Successful applicants can become a sole proprietor broker, associate broker, or designated broker. To qualify for this license one must be at least 18 years of age.
2. H. S. Grad - A high school diploma or equivalent is required.
3. Two Year's Experience - An applicant must have at least two years of full-time experience as a real estate salesperson in last five years or its equivalent. A person seeking equivalence experience must submit their work history to the DOL for the approval of equivalence.
4. Honesty - The applicant must be honest, truthful, and of good reputation. The State may require proof of a good business reputation by affidavit or fingerprints.
5. Fingerprinting - Fingerprint identification is required if the applicant has been convicted of a crime within 10 years of the application for a broker license.
6. Credit Check - A credit report at Director's option may be required to show financial stability.
(On the next page insert Sect 45 – 007 & 007A)
LICENSING –MORE ON BROKER LICENSE
To sit for the Broker Examination, a person must fulfill the following additional requirements:
1. 120 Hours - The applicant must furnish proof of successfully completing the required 120 clock hours of approved education.
2. Required Courses - The required 120 clock hours must include a 30-clock hour Brokerage Management course, a 30-clock hour Business Management course, a 30-clock hour Law course, and one additional 30-hour course approved by the Department of Licensing.
Out-of-State Applicant - A broker from out-of-state that moves to Washington or wants a Washington Broker's license must successfully pass the Washington Broker Exam. The required score to pass the broker's exam is at least 75%. The national portion may be waived if the applicant came from a State that the Department of Licenses has determined has license standards of equal quality. The required 120 clock hours of courses may be waived if the applicant can prove completion of equal or greater education requirements in previous State within the past five years of application.
Broker's Exam - All applicants must pass the broker's exam composed of the same number of State and national questions as the salesperson's exam, but of more detailed content. The passing score on each section of the exam must be at least 75%.
(On the next page insert Sect 45 – 008 & 008A)
BROKER LICENSE - DIFFERENT TYPES OF BROKERS
Broker License - When a person obtains a Broker's License, the following are the different forms of a licensed broker.
1. Associate Broker - The associate broker has qualified to act as a broker. They have met the same qualifications and passed the same examination, but they do not run a real estate business. The one that runs a real estate business is a sole proprietor or designated broker.
2. Branch Manager - The associate broker may manage a branch office for his/her designated broker.
3. Licensee Entity - The associate broker may be a natural person or corporation. If they are an incorporated associate broker they must have a designated broker and only one natural person may be licensed to act for that corporation; the associate broker.
4. Designated/Acting Broker - The acting brokers (sole proprietor or designated broker) must organize, operate, and control the real estate brokerage firm or property management firm. The designated broker must be in charge and in control of the real estate business.
a. Responsibility - The designated broker is responsible for acts of associate brokers and salespersons licensed to work for their brokerage.
b. Manage Agents/Employees - The designated broker must control the real estate agents and employees of the brokerage at all times.
c. Liability - The designated broker is responsible for any wrongful losses of their clients caused by the real estate agents or employees working for the brokerage.
No Recovery Fund - Some States have a "Recovery Fund." Some States require bonds, and some States require professional malpractice insurance, or error and omission insurance for the brokerage. Washington does not require any of the above.
(On the next page insert Sect 45 – 009 & 009A)
LICENSED BROKER - FORMS OF PRACTICING REAL ESTATE
A real estate broker can conduct business in any manner desired. Also, some businesses will be allowed a real estate license.
1. Sole Proprietor - A real estate business operating as a Sole Proprietorship, is one that the broker owns and operates. It is solely owned and operated and is not a corporation or partnership. It is called a brokerage and the sole proprietor is the broker. The brokerage may operate as a D.B.A. (doing business as).
2. Corporation/Partnership - A designated broker that manages a real estate corporation or real estate partnership.