RCW 18.85.053 Controlling Interest—Prohibited Practices +27Washington · Real Estate · English

A real estate licensee or person with controlling interest in a real estate business may not give or accept fees/kickbacks for referring title insurance business to an agent in which they have a financial interest, and may not require a consumer to obtain title insurance from an agent in which the licensee has a financial interest. Licensees may not solicit/accept anything of value a title company is not permitted by law to give.

• ✓Licensees may not give or accept kickbacks for title insurance referrals
• ✓A licensee may not require a consumer to use a title agent in which the licensee has a financial interest

A licensee may not prevent a title company from delivering title insurance promotional materials to the licensee's office/clients as long as materials are business appropriate, not misleading/false, do not malign the licensee, are limited to public-access areas, and the conduct is appropriate and safe.

• ✓Promotional materials must be business appropriate and not misleading or false
• ✓Delivery must be limited to public-access areas of the licensee's office

Brief adjudicative proceedings are conducted by a presiding officer designated by the director. The presiding officer must not have personally participated in the decision that resulted in the request for the proceeding, ensuring impartiality.

• ✓The presiding officer is designated by the director
• ✓The presiding officer must not have personally participated in the underlying decision

Parties or their representatives may present written documentation by a date designated by the presiding officer. The officer may, at discretion, entertain oral argument. No witnesses may appear to testify, and the officer may employ agency expertise in addition to the record as a basis for the decision.

• ✓Parties may submit written documentation by the designated deadline
• ✓The presiding officer may entertain oral argument at discretion
• ✓No witnesses may appear to testify
• ✓The officer may employ agency expertise in addition to the record

The presiding officer shall not issue an oral order. Instead, within ten days of the final date for submission of materials or oral argument, the officer must enter a written initial order.

• ✓The presiding officer may not issue an oral order
• ✓An initial order must be entered within ten days of the final submission/argument date

Complaints are reviewed to determine if allegations describe an apparent violation of laws the department administers. Staff may perform fact-finding to determine merit. Even meritorious complaints may not be investigated due to gravity of the alleged violation or department resources and priorities. Department-initiated complaints are referred to the investigation or audit section.

• ✓Complaints are reviewed to determine whether allegations describe an apparent violation of administered laws
• ✓Even if a complaint has merit, the department may decline to investigate based on gravity or department resources/priorities
• ✓Department-initiated complaints are referred to the investigation or audit section and assigned to an investigator or auditor if warranted

During an audit or investigation, if the auditor or investigator discovers evidence of additional violations outside the original complaint allegations, they may investigate those additional violations and request records and detailed explanations from the licensee.

• ✓Auditors/investigators may investigate additional violations discovered outside the original complaint scope
• ✓They may request records and detailed explanations regarding additional violations found

An approved school may offer courses (except mandated courses) already approved for another secondary education school after obtaining written authorization and department-issued certificate. The applicant uses the original course approval number and approval is valid only for originally approved dates.

• ✓Written authorization from the secondary education school and a department certificate are required before using shared course content
• ✓The applicant must use the course approval number issued by the department on all completion certificates
• ✓Secondary school approval is prohibited for mandated courses like fundamentals, law, brokerage/business management, fair housing, and the core course

Real estate firms are subject to routine audits scheduled approximately every three years. Audits are conducted at the location the firm is licensed to conduct brokerage activity or at a facility chosen by the department. An audit can be initiated at any time based on prior audit results or a complaint.

• ✓Routine audits are scheduled approximately every three years
• ✓Audits are conducted at the licensed business location or a facility chosen by the department
• ✓An audit can be initiated at any time based on previous audit results or a complaint

Audits are not scheduled but are normally conducted between 8:00 a.m. and 5:30 p.m., Monday through Friday, excluding state holidays. Auditors may appear unannounced during these hours. An auditor may not forcibly enter a licensed location unless accompanied by law enforcement with a valid search warrant. Refusal to permit access may result in disciplinary action.

• ✓Audits are normally done between 8:00 a.m. and 5:30 p.m., Monday through Friday, excluding state holidays
• ✓An auditor may appear unannounced during these hours and require production of all required records
• ✓An auditor may not forcibly enter unless accompanied by law enforcement with a valid search warrant
• ✓Refusal to permit access may result in disciplinary action under chapters 18.85 and 18.235 RCW

The department may not charge for the cost of routine audits. However, audit costs may be charged to the licensee under RCW 18.235.110(2) when the audit was pursuant to a complaint, violations were found, and the director issued an order imposing sanctions under RCW 18.235.110(1). An auditor and licensee may mutually agree to complete or continue an audit outside normal time/date limits.

• ✓The department may not charge for the cost of routine audits
• ✓Audit costs may be charged when audit was pursuant to complaint, violations were found, and sanctions were ordered under RCW 18.235.110(1)
• ✓An auditor and licensee may mutually agree to complete or continue an audit outside the time and date limitations

All requests for records during an audit must be issued by an authorized representative of the director, such as auditors, investigators, program staff, or other designees.

• ✓All requests for records must be issued by an authorized representative of the director
• ✓Authorized representatives include auditors, investigators, program staff, or other designees

Applicants who lack the three years of full-time broker experience required by RCW 18.85.111 may qualify via practical experience in an allied or related business. Applications go to the real estate program with a letter requesting approval, a detailed personal history or work resume, supporting documentation, and a certified license affidavit as applicable.

• ✓Applicants lacking three years full-time broker experience may use alternative qualifications
• ✓A letter requesting approval plus detailed resume and supporting documentation are required
• ✓A certified license affidavit from the issuing agency must be included as applicable

Alternatives in lieu of three years full-time broker experience include: postsecondary education in real estate plus one year as a broker in good standing; one year as a licensed attorney practicing real estate; five years as a licensed mortgage broker/loan originator; five years as a limited practice officer or escrow agent; five years as a licensed/certified real property appraiser; or five years managing/leasing/selling real property for a third-party entity. All experience must have been completed within the six years immediately preceding application.

• ✓Postsecondary real estate education plus one year as a broker qualifies
• ✓Five years' full-time experience in listed allied fields qualifies as an alternative
• ✓All experience must be completed within six years immediately preceding application

Branch managers oversee licensees and operations at the branch location, ensuring compliance, proper licensing, and cooperation with the department.

• ✓Must assure all brokerage services comply with chapters 18.85, 18.86, and 18.235 RCW
• ✓Must cooperate with the department in investigations, audits, or licensing matters
• ✓Must ensure all persons at the branch are appropriately licensed and oversee branch licensees, employees, and contractors
• ✓Must ensure affiliated licensees submit transaction documents within two business days of mutual acceptance
• ✓Must oversee all branch activity including heightened supervision of brokers licensed less than two years

When delegated by the designated broker, branch managers assume specific trust accounting and operational duties, including reconciliations, contract review, and policy implementation.

• ✓If delegated, must ensure monthly trust account reconciliation and trial balances are completed, accurate, and in balance
• ✓If delegated, must ensure safe handling of customer/client funds and property
• ✓If delegated, responsible for record maintenance, proper advertising, contract review, and modifying/terminating brokerage service contracts
• ✓If delegated, must follow and implement the designated broker's written policies on home inspector referrals, supervision, and contract review of new brokers within five business days

For a firm actively licensed in another jurisdiction where its headquarter office is located, the term 'office' in RCW 18.85.231 means the Washington location where trust account and transaction records are maintained. These records must be retained for three years and be open and accessible to the department of licensing.

• ✓'Office' means the Washington location where trust account and transaction records are maintained
• ✓Records must be maintained for three years and be open and accessible to department of licensing representatives
• ✓Parties to a transaction have access to the transaction records prepared or retained for the requesting party

A firm whose headquarter office is licensed in another jurisdiction and seeking Washington licensure must obtain a firm license and register a qualifying Washington managing broker with a controlling interest as the firm's Washington designated broker. The firm must notify the real estate program of the Washington records address and post its license there.

• ✓The out-of-state firm must obtain a Washington firm license
• ✓The firm must register a natural person qualifying as a Washington managing broker with a controlling interest as the designated broker
• ✓The firm must notify the real estate program of the Washington records address, include it on the application, and post the license at that location

Within thirty days after mailing of the notice of audit, the broker must come to the department's office in Olympia, after making an appointment, to sign the audit report.

• ✓The broker must sign the audit report at the department's Olympia office
• ✓This must occur within thirty days after the notice of audit is mailed, by appointment

All fees are set by the director per RCW 43.24.086 and paid to the state treasurer, placed in the real estate commission account. All money from fines is deposited in the real estate education program account created in RCW 18.85.321.

• ✓Fees are deposited in the real estate commission account
• ✓Fine money is deposited in the real estate education program account

A distance education delivery method is one where instruction takes place other than in a live classroom, with instructor and student in physically separate locations, using interactive methods such as video-based instruction, computer/video conferencing, interactive audio/software, webcast, webinar, or internet-based instruction.

• ✓Distance education requires instruction outside a live classroom with instructor and student physically separated
• ✓Interactive instructional methods (video conferencing, webinar, internet-based) must be used

Interactive means the course structure and technologies promote active student involvement, including ability to access/bypass optional content, submit questions/answer test items with direct feedback, and communicate with instructor/students immediately or on reasonably delayed basis. It specifically excludes passive-only content delivery.

• ✓Interactive courses must allow students to submit questions or answer test items and receive direct feedback
• ✓Interactive instruction specifically excludes courses that only provide passive delivery of instructional content

An investigator may inspect a licensee's business location and records without a warrant pursuant to an investigation approved or assigned by the director or designee, between 8:00 a.m. and 5:30 p.m., Monday through Friday (excluding state holidays), or during an agreed appointment. An investigator may not forcibly enter unless accompanied by law enforcement with a valid search warrant.

• ✓An investigator may inspect a licensed location and records without a warrant during 8:00 a.m.–5:30 p.m., Monday–Friday, excluding holidays, or by appointment
• ✓An investigator may not forcibly enter unless accompanied by law enforcement with a valid search warrant
• ✓Refusal to permit access may result in disciplinary action under chapters 18.85 and 18.235 RCW

All record requests must be issued by an authorized representative of the director. Requests for records, documents, or detailed explanations must be in writing by regular mail, facsimile, electronic mail, or in person pursuant to an investigation. Telephone requests are not used unless followed by a written request.

• ✓Requests for records, documents, or explanations must be in writing (mail, fax, email, or in person)
• ✓Investigators will not request documents or explanations by telephone unless followed by a written request
• ✓All requests must be issued by an authorized representative of the director

A licensee will not be charged for failure to cooperate unless the investigator made a written request for records the licensee is required to keep and described them with sufficient specificity to notify the licensee of what is sought.

• ✓A licensee cannot be charged for failure to cooperate unless a written request was made for records the licensee is required to keep
• ✓The written request must describe records with sufficient specificity to notify the licensee of what is being sought

A firm must designate a managing broker as its 'designated broker' with authority to act, provide owner/controlling-interest information, assure no controlling-interest person is under a final order suspending/revoking a real estate license, and not adopt a misleading name. Applicants provide firm name/UBI number, addresses, contact info, application fee, and other required information.

• ✓A firm must designate a managing broker as its designated broker
• ✓No person with controlling interest may be subject to a final order suspending/revoking a real estate license
• ✓A firm's name may not imply it is a nonprofit, research organization, or public bureau

For renewal, the firm must provide the renewal fee, notice of any change in controlling interest, and notice of any change in the firm's registration or certificate of authority filed with the secretary of state.

• ✓Firm renewal requires notice of any change in controlling interest
• ✓Firm renewal requires notice of changes to secretary of state registration

A managing broker applicant approved to take the exam based on alternate qualifications or experience under WAC 308-124A-713 who subsequently fails the exam is not permitted to repeat the exam using alternative qualifications or experience.

• ✓An applicant who fails after using alternate qualifications cannot retake using them again
• ✓This restriction applies specifically to alternate qualification approval under WAC 308-124A-713

Managing brokers must ensure compliance, cooperate with the department, keep the program informed of their address, and follow licensing laws regarding funds, delivery, and advertising.

• ✓Must assure brokerage services comply with chapters 18.85, 18.86, and 18.235 RCW
• ✓Must cooperate with the department and be knowledgeable of the relevant chapters and rules
• ✓Must keep the real estate program informed of current mailing address and be appropriately licensed
• ✓Must deliver transaction documents and brokerage service contracts to the designated broker or delegated managing broker within two business days of mutual acceptance
• ✓Must follow laws on safe handling and timely delivery of client funds/property, proper advertising, and contract modification/termination

A firm may conduct real estate brokerage services at an office location where the firm or designated broker concurrently conducts a separate business activity, provided the brokerage activities and records are kept separate from other business activities.

• ✓A firm may share an office with a separate business activity of the firm or designated broker
• ✓Real estate brokerage activities must be carried out separate and apart from other business activities
• ✓Business records must be maintained separate and apart from any other business activities

Applicants must submit a separate application for each distance education delivery method. Requirements include specifying learning objectives, demonstrating mastery through learning units/modules, similar content to classroom courses, interactive events, remediation mechanisms, progress measurement, instructor availability, security to verify student identity, technology descriptions, orientation, and a course evaluation form.

• ✓A separate application is required for each distance education delivery method
• ✓Computer-based instruction software must include automatic shutdown after a period of inactivity
• ✓Both the approved school and student must certify in writing that the student completed the course and required clock hours

To receive a broker's license, an individual must be 18 or older, have a high school diploma or equivalent, complete 90 hours of instruction (including fundamentals with 3 hours of fair housing/consumer protection, and practices), complete each course within two years before the exam, pass each course exam, and pass the broker's license examination.

• ✓Applicant must be at least 18 and have a high school diploma or equivalent
• ✓Applicant must complete 90 hours of instruction including 3 hours of fair housing/consumer protection
• ✓Courses must be completed within two years before the license exam

The broker's license renews upon completing continuing education and paying the fee. First renewal requires 90 hours of courses including real estate law (with 3 hours of fair housing/consumer protection), advanced practices, and continuing education. A broker is licensed to one firm at a time, supervised by a designated or managing broker.

• ✓First renewal requires 90 hours including real estate law and advanced practices
• ✓A broker may be licensed to only one firm at a time

A person applying who is actively licensed in the same or greater capacity in another jurisdiction and has maintained good standing (or was licensed in good standing within the preceding six months) is only required to take the Washington law portion of the examination. Evidence of licensure must be submitted via a license verification form completed by the other jurisdiction's licensure authority.

• ✓Actively licensed out-of-jurisdiction applicants in good standing take only the Washington law portion
• ✓Good standing within the preceding six months also qualifies
• ✓A license verification form completed by the licensure authority must be submitted

The director, upon advice of the Washington state real estate commission, may enter written recognition agreements with jurisdictions that license brokers similarly. Such agreements require the other jurisdiction to grant Washington licensees the same licensing process Washington offers to their applicants.

• ✓The director may enter recognition agreements upon commission advice
• ✓Recognition agreements must require reciprocal licensing processes

When delegated by the designated broker, managing brokers assume comprehensive oversight of trust accounting, records, supervision, and policy compliance for the firm.

• ✓Must ensure monthly trust account reconciliation, trial balances, and account balancing are current and accurate
• ✓Must ensure required records are maintained, advertising is proper and legal, and contracts are reviewed timely
• ✓Must ensure delegated persons are appropriately licensed and provide proper supervision, including heightened supervision of brokers licensed less than two years
• ✓Must ensure accessibility of firm offices and records to the director's representatives and provide copies upon demand
• ✓Must ensure all affiliated licensees follow the designated broker's written policies on inspector referrals, supervision, and contract review within five business days

An applicant providing evidence of ARELLO (Association of Real Estate License Law Officials) certification of a distance education delivery method need not submit a separate application when delivering the same course in Washington, provided a clock hour enforcement mechanism is in place.

• ✓ARELLO certification exempts applicants from separate delivery method application for the same course
• ✓A clock hour enforcement mechanism must be in place to qualify for the exemption

An applicant must be 18 or older, have a high school diploma or equivalent, have at least three years of licensed full-time broker experience within the previous five years (or qualifying related experience), complete 90 hours of instruction (brokerage management, business management, advanced real estate law) within three years before the exam with each course at least 30 clock hours, pass each course exam, and pass the managing broker exam.

• ✓Requires at least three years of licensed full-time broker experience within the previous five years
• ✓Requires 90 hours of instruction, each course at least 30 clock hours, completed within three years
• ✓A managing broker may be licensed to only one firm at any one time

Brokers must comply with law, cooperate with the department, maintain current address information, be properly licensed, and follow rules regarding funds, delivery, and advertising.

• ✓Must assure brokerage services comply with chapters 18.85, 18.86, and 18.235 RCW and cooperate with the department
• ✓Must be knowledgeable of the relevant chapters and keep the real estate program informed of current mailing address
• ✓Must follow the designated broker's written policy on referral of home inspectors and be appropriately licensed
• ✓Must deliver transaction documents and brokerage service contracts within two business days of mutual acceptance
• ✓Must follow licensing laws on safe handling/timely delivery of funds, proper advertising, and modifying/terminating contracts

A person seeking to be licensed as a real estate broker, managing broker, or endorsed as a branch manager or designated broker must apply on a director-approved form. The broker and managing broker application must be signed by the designated broker to whom the license will be issued. The branch manager may sign for the designated broker for licenses issued to that branch office.

• ✓Applications must be made on a director-approved form
• ✓The designated broker must sign the broker/managing broker application
• ✓A branch manager may sign for the designated broker for that branch office's licenses

Course materials must be updated no later than thirty days after the effective date of a change in federal, state, or local statutes/rules, or after procedural changes affecting the validity of course material. Substitute instructors must be currently approved to teach the topic area.

• ✓Course materials must be updated no later than thirty days after a statute or rule change
• ✓Changes in course instructors are allowed only if substitutes are currently approved to teach the topic area

Brokers with less than two years of experience carry all standard broker responsibilities plus a heightened degree of supervision during their initial two years of licensing.

• ✓Must fulfill all responsibilities listed in WAC 308-124C-140
• ✓Are subject to a heightened degree of supervision for the initial two years of licensing
• ✓Must participate in all required reviews of brokerage agreements and services by the designated or appointed managing broker
• ✓Must submit evidence of completion of required clock hour education courses to the supervising broker
• ✓Must secure advice or assistance when offering services beyond their expertise and timely submit contracts, documents, and funds per the review policy

A designated broker must hold a managing broker license and may serve as designated broker for more than one firm. The department registers designated brokers. A managing broker who accepts endorsements from other firms must be registered to a firm as its designated broker. Registered designated brokers must immediately notify the department of additional firms and receive printed endorsements listing all firms served.

• ✓A designated broker must hold a managing broker license
• ✓A designated broker may act for more than one firm
• ✓Registered designated brokers must immediately notify the department of additional firms served

A managing broker may revert to a broker license by completing the department form and paying applicable fees. If in active status, the managing broker must secure the designated broker's signature acknowledging the reversion. The new broker license renewal date remains the same. To revert back to a managing broker license, the broker must meet all RCW 18.85.111 requirements including taking the examination.

• ✓Reversion requires completing the department form and paying applicable fees
• ✓Active-status managing brokers need the designated broker's signature acknowledging reversion
• ✓Reverting back to managing broker requires meeting all RCW 18.85.111 requirements including the exam
• ✓The license renewal date remains unchanged upon reversion

Each approved school must issue a certificate of course completion to students who satisfactorily complete requirements. The certificate must include the student's name, school name and ID, commencement/completion dates, course title, clock hours, administrator signature, course ID number, instructor name/number, and exam completion if applicable.

• ✓Certificates must include student name, school name/ID, course dates, title, clock hours, and administrator signature
• ✓Certificates must include the department-issued course identification number and instructor name and number