WSR 10-16-031

PROPOSED RULES

DEPARTMENT OF LICENSING


[ Filed July 26, 2010, 9:44 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 10-12-102 [10-12-105].

Title of Rule and Other Identifying Information: WAC 308-124E-100, 308-124C-125, 308-124C-130, 308-124C-135, 308-124C-137, 308-124C-140 and 308-124C-145, Responsibilities for real estate licensees -- Review of new licensee's work.

Hearing Location(s): 2000 4th Avenue West, 2nd Floor Conference Room, Olympia, WA, on September 9, 2010, at 4:00 p.m.

Date of Intended Adoption: September 9, 2010, or after.

Submit Written Comments to: Jerry McDonald, 2000 4th Avenue West, Olympia, WA 98507, e-mail jmcdonald@dol.wa.gov, fax (360) 570-7051, by September 1, 2010.

Assistance for Persons with Disabilities: Contact Sally Adams, by September 1, 2010, TTY (360) 664-0116 or (360) 664-6526.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: Licensees have duties and obligations that are required. Timelines need to be set to ensure that compliance is achievable.

Reasons Supporting Proposal: These rules will establish procedures for licensee on handling earnest money and brokerage service contracts.

Statutory Authority for Adoption: RCW 18.85.041(1).

Statute Being Implemented: RCW 18.85.041(5).

Rule is not necessitated by federal law, federal or state court decision.

Name of Proponent: Department of licensing, governmental.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Jerry McDonald, 2000 4th Avenue West, Olympia, WA, (360) 664-6525.

No small business economic impact statement has been prepared under chapter 19.85 RCW. This is a rule for individual licensees. The department of licensing and the real estate commission utilized parties to participate in the rule-making process.

A cost-benefit analysis is not required under RCW 34.05.328. The department of licensing is exempt from the provisions of this chapter.

July 26, 2010

Walt Fahrer

Rules Coordinator

OTS-3287.1


AMENDATORY SECTION(Amending WSR 10-06-078, filed 3/1/10, effective 7/1/10)

WAC 308-124C-125   Designated broker responsibilities.   Designated broker responsibilities include, but are not limited to:

(1) Assuring all real estate brokerage services in which he/she participated are in accordance with chapters 18.85, 18.86, 18.235 RCW and the rules promulgated thereunder.

(2) Cooperating with the department in an investigation, audit or licensing matter.

(3) Ensuring accessibility of the firm's offices and records to the director's authorized representatives, and ensure that copies of required records are made available upon demand.

(4) Ensuring monthly reconciliation of trust bank accounts are completed, up-to-date and accurate.

(5) Ensuring monthly trial balances are completed, accurate and up-to-date.

(6) Ensuring that the trial balance and the reconciliation show the account(s) are in balance.

(7) Ensuring policies or procedures are in place to account for safe handling of customer or client funds or property.

(8) Maintaining up-to-date written assignments of delegations of managing brokers and branch manager duties. The delegation agreement(s) must be signed by all parties to the agreement. Delegations must:

(a) Only be made to managing brokers licensed to the firm.

(b) Address duties of record maintenance, advertising, trust accounting, safe handling of customer/client funds and property, authority to bind, review of contracts, modify or terminate brokerage service contracts on behalf of the firm, supervision of brokers and managing brokers, and heighten supervision of brokers that are licensed for less than two years.

(c) Address hiring, transferring and releasing licensees to or from the firm.

(9) Maintaining, implementing and following a written policy that addresses:

(a) Referral of home inspectors in compliance with Washington Administrative Code.

(b) Levels of supervision of all brokers ((and)), managing brokers and branch managers of the firm.

(c) ((The)) Review of all brokerage service contracts ((which involve)) involving any ((affiliated licensee)) broker of the firm ((that has been)) licensed for less than two years. ((This)) Review must be completed by the designated broker or their delegated managing broker within five ((calendar)) business days of ((client's signature and shall be evidenced by the reviewer's initials and date on the first page of the documents)) mutual acceptance. Documented proof of review shall be maintained at the firm's record locations.

(10) Ensuring that all persons performing real estate brokerage services on behalf of the firm and the firm itself are appropriately licensed.

(11) Ensuring affiliated licensees submit their transaction documents to the designated broker, branch manager or delegated managing broker in a ((timely manner)) within two business days of mutual acceptance.

(12) Being knowledgeable of chapters 18.85, 18.86, and 18.235 RCW and their related rules.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124C-125, filed 3/1/10, effective 7/1/10.]


AMENDATORY SECTION(Amending WSR 10-06-078, filed 3/1/10, effective 7/1/10)

WAC 308-124C-130   Branch manager responsibilities.   Branch manager responsibilities include, but are not limited to:

(1) Assuring all real estate brokerage services in which he/she participated are in accordance with chapters 18.85, 18.86, 18.235 RCW and the rules promulgated thereunder.

(2) Cooperating with the department in an investigation, audit or licensing matter.

(3) Ensuring accessibility of the firm's offices and records to the director's authorized representatives, and ensuring that copies of required records are made available upon demand.

(4) Being knowledgeable of chapters 18.85, 18.86, and 18.235 RCW and their related rules.

(5) ((Following the written policy on referral of home inspectors.

(6))) Ensuring all persons employed, contracted or representing the firm at the branch location are appropriately licensed.

(((7))) (6) Overseeing of the branch licensees, employees and contractors.

(((8))) (7) Ensuring ((brokers, managing brokers and branch managers)) affiliated licensees are ((timely)) submitting their transaction documents to the designated broker or delegated managing broker((, if delegated)) within two business days of mutual acceptance.

(((9))) (8) Hiring, transferring and releasing licensees to and from the branch.

(((10))) (9) Overseeing all activity within the branch office including supervision of brokers and managing brokers, and heightened supervision of brokers ((that are)) licensed for less than two years.

(((11))) (10) If delegated - client/customer funds or property:

(a) Ensuring monthly reconciliation of trust bank accounts are completed, up-to-date and accurate.

(b) Ensuring monthly trial balances are completed, accurate and up-to-date.

(c) Ensuring that the trail balance and the reconciliation show the account(s) are in balance.

(d) Ensuring safe handling of customer/client funds and property.

(e) Ensuring policies or procedures are in place to account for safe handling of customer or client funds or property.

(((12))) (11) If delegated - other duties:

(a) Record maintenance.

(b) Proper and legal advertising.

(c) Review of contracts.

(d) Modify or terminate brokerage service contracts on behalf of the firm.

(e) Following and implementing the designated brokers written policy:

(i) On referral of home inspectors.

(ii) Addressing levels of supervision of all brokers and managing brokers.

(iii) That includes a review of all ((brokers (with less than two years of licensure) transactions within five calendar days of client's signature.

This review must be evidenced with the designated broker or delegated managing broker's initials and date on each brokerage service contract)) brokerage service contracts involving any broker licensed for less than two years. Review must be completed within five business days of mutual acceptance. Documented proof of review shall be maintained at the firm's record locations.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124C-130, filed 3/1/10, effective 7/1/10.]


AMENDATORY SECTION(Amending WSR 10-06-078, filed 3/1/10, effective 7/1/10)

WAC 308-124C-135   Managing broker responsibilities.   Managing broker responsibilities include, but are not limited to:

(1) Assuring all real estate brokerage services in which he/she participated are in accordance with chapters 18.85, 18.86, 18.235 RCW and the rules promulgated thereunder.

(2) Cooperating with the department in an investigation, audit or licensing matter.

(3) Being knowledgeable of chapters 18.85, 18.86, and 18.235 RCW and their related rules.

(4) Keeping the real estate program informed of his or her current mailing address.

(5) Following the designated broker's written policy on referral of home inspectors.

(6) Being appropriately licensed.

(7) Delivering transaction documents and brokerage service contracts to designated broker or delegated managing broker within two business days of mutual acceptance.

(8) Following licensing laws and rules regarding:

(a) Safe handling of customer/client funds and property.

(b) Timely delivery of customer/client funds or property.

(c) Proper and legal advertising.

(d) Modifying or terminating brokerage service contract on behalf of the firm.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124C-135, filed 3/1/10, effective 7/1/10.]


AMENDATORY SECTION(Amending WSR 10-06-078, filed 3/1/10, effective 7/1/10)

WAC 308-124C-137   Managing broker delegated responsibilities.   If delegated by the designated broker, the managing brokers responsibilities include, but are not limited to, ensuring:

(1) Monthly reconciliation of trust bank accounts are completed, up-to-date and accurate.

(2) Monthly trial balances are completed, accurate and up-to-date.

(3) ((The)) Trial balance and the reconciliation show the account(s) are in balance.

(4) Policies or procedures are in place to account for safe handling of customer or client funds or property.

(5) Required records are maintained and up-to-date.

(6) Advertising is proper and legal.

(7) Timely review of contracts.

(8) Brokerage service contracts are modified or terminated appropriately on behalf of the firm.

(9) Persons employed, contracted or representing the firm that the managing broker has delegated authority to supervise are appropriately licensed.

(10) Brokers and managing brokers ((timely)) submit their transaction documents to the designated broker or delegated managing broker((, if delegated)) within two business days of mutual acceptance.

(11) Proper and adequate supervision of brokers and managing brokers, and heighten supervision of brokers that are licensed for less than two years.

(12) Accessibility of the firm's offices and records to the director's authorized representatives, and must ensure that copies of required records are made available upon demand.

(13) All affiliated licensees are following the designated brokers written policy on:

(a) Referral of home inspectors.

(b) Levels of supervision for all brokers and managing brokers.

(c) ((All brokers' (with less than two years of licensure) transactions are reviewed within five calendar days of client's signature.

This review must be evidenced with the designated broker or delegated managing broker's initials and date on the first page of each brokerage service contract.)) Review of all brokerage service contracts involving any broker licensed for less than two years. Review must be completed within five business days of mutual acceptance. Documented proof of review shall be maintained by the firm at their record locations.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124C-137, filed 3/1/10, effective 7/1/10.]


AMENDATORY SECTION(Amending WSR 10-06-078, filed 3/1/10, effective 7/1/10)

WAC 308-124C-140   Broker responsibilities.   Broker responsibilities include, but are not limited to:

(1) Assuring all real estate brokerage services in which he/she participated are in accordance with chapters 18.85, 18.86, 18.235 RCW and the rules promulgated thereunder.

(2) Cooperating with the department in an investigation, audit or licensing matter.

(3) Being knowledgeable of chapters 18.85, 18.86, and 18.235 RCW and their related rules.

(4) Keeping the real estate program informed of his or her current mailing address.

(5) Following the designated broker's written policy on referral of home inspectors.

(6) Being appropriately licensed.

(7) Delivering transaction documents and brokerage service contracts to designated broker or delegated managing broker within two business days of mutual acceptance.

(8) Following licensing laws and rules regarding:

(a) Safe handling of customer/client funds and property.

(b) Timely delivery of ((transaction documents, brokerage service contracts and)) customer/client funds or property.

(c) Proper and legal advertising.

(d) Modifying or terminating brokerage service contracts on behalf of the firm.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124C-140, filed 3/1/10, effective 7/1/10.]


AMENDATORY SECTION(Amending WSR 10-06-078, filed 3/1/10, effective 7/1/10)

WAC 308-124C-145   Broker responsibilities (with less than two years experience).   Broker responsibilities (with less than two years experience) include, but are not limited to:

(1) All the responsibilities listed in WAC 308-124C-140.

(2) Being subject to a heightened degree of supervision for the initial two years of licensing which includes:

(a) Participating in all required reviews of real estate brokerage agreements and services by the designated broker or appointed managing broker.

(b) Submitting evidence of completion of department required clock hour education courses to the designated broker or appointed managing broker.

(c) Securing advice or assistance from the designated broker or appointed managing broker when offering brokerage services beyond the broker's level of expertise.

(d) Timely submission of brokerage service contracts, documents and funds to the appropriate managing broker or designated broker in accordance with designated broker's document and contract review policy.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124C-145, filed 3/1/10, effective 7/1/10.]

OTS-3288.1


AMENDATORY SECTION(Amending WSR 10-06-078, filed 3/1/10, effective 7/1/10)

WAC 308-124E-100   Delivery of client funds((,)) and negotiable instruments ((and transaction documents)).   All brokers and managing brokers will ((deliver or transmit all transaction records and brokerage agreements; and)) physically deliver all funds, moneys, negotiable instruments or items of value to the appropriate managing broker, branch manager or their designated broker within the shorter of the following:

(1) Two business days of the client's/customer's signature (business days are not Saturday, Sunday or other legal holidays as defined in RCW 1.16.050); or

(2) Sooner if the terms of the client/customer contract necessitate quicker delivery than two business days.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124E-100, filed 3/1/10, effective 7/1/10.]

Washington State Code Reviser's Office