WSR 13-11-077

PROPOSED RULES

DEPARTMENT OF LICENSING


[ Filed May 16, 2013, 3:04 p.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 13-08-046.

Title of Rule and Other Identifying Information: Chapters 308-124 and 308-124A through 308-124H WAC, real estate licensing, real estate consumer protections and real estate continuing education.

Hearing Location(s): 2000 4th Avenue West, 2nd Floor Conference Room, Olympia, WA, on June 25, 2013, at 1:30 p.m.

Date of Intended Adoption: June 26, 2013.

Submit Written Comments to: Jerry McDonald, 2000 4th Avenue West, Olympia, WA 98507, e-mailjmcdonald@dol.wa.gov, fax (360) 570-7051, by June 14, 2013.

Assistance for Persons with Disabilities: Contact Sally Adams by June 14, 2013, TTY (360) 664-0116 or (360) 664-6524.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The amendments will clarify existing rules to assist education providers and licensees regarding education classes and scores, processes for transferring licenses, and use of company names. Clarify existing consumer protection rules regarding trust funds, maintenance of consumer transaction records, and notifications when closing a real estate firm. The language will also be updated to reflect language used in current practice. All proposed rule amendments are requested by real estate commission, industry or in response to legislation and meet exemption criteria outlined in Executive Order 10-06.

Reasons Supporting Proposal: Consumer protection and updating to current terminology.

Statutory Authority for Adoption: RCW 18.85.041.

Statute Being Implemented: RCW 18.85.041, 18.85.181, 18.85.221, 18.85.275, 18.85.285, 18.85.361.

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

Name of Proponent: Real estate commission, 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. These rules are for professional licensees and are not relevant to business. The department of licensing and the real estate commission utilized stakeholders, including professional licensees, to participate in the making of this rule proposal.

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

May 16, 2013

Damon Monroe

Rules Coordinator

OTS-5445.1


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

WAC 308-124-300   Definitions.   Words and terms used in this chapter shall have the same meaning as each has under chapter 18.85 RCW unless otherwise clearly provided in this chapter, or the context in which they are used in this chapter clearly indicates that they be given some other meaning.

(1) "Branch manager" is the natural person who holds a managing broker's license and has delegated authority by the designated broker to manage a single physical location of a branch office. The department shall issue an endorsement for "branch managers."

(2) "Affiliated licensees" are the natural persons licensed as brokers or managing brokers employed by a firm and who are licensed to represent the firm in the performance of any of the acts specified in chapter 18.85 RCW.

(3) (("Prospect procurement" is initiating contact with a prospective buyer, seller, landlord or tenant for the purpose of engaging in a sale, lease or rental of real estate or a business opportunity, and the contact is initiated under a promise of compensation.

(4))) "Brokerage service contracts" include, but are not limited to, purchase and sale agreements, lease or rental agreements, listings, options, agency agreements, or property management agreements.

(((5))) (4) "Branch office" means:

(a) A separate physical office of the real estate firm; and

(b) Has a different mailing address of the main firm office; and

(c) Uses the real estate firm's UBI (unified business identifier) number.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124-300, filed 3/1/10, effective 7/1/10.]

OTS-5446.1


NEW SECTION
WAC 308-124A-726   Reversion from managing broker to broker license.   A managing broker may apply to revert from a managing broker license to a broker license by completing the department form and paying all fees, if applicable. If the managing broker is in active status, the managing broker needs to secure the designation broker's signature acknowledging the reversion of managing broker license to a broker's license. The new broker license renewal date remains the same. To revert to a managing broker license the broker must meet all of the requirements listed in RCW 18.85.111 including taking the examination.

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

WAC 308-124A-760   Grading of examinations.   (1) To pass the broker examination a minimum scaled score of 70 is required on each portion. The broker examination shall consist of two portions:

(a) The national portion consisting of questions that test general real estate practices; and

(b) The state portion consisting of questions that test on Washington laws and regulations related to real estate licensing.

(2) To pass the managing broker examination a minimum scaled score of 75 is required on each portion. The managing broker examination shall consist of two portions:

(a) The national portion consisting of simulation examination questions that test general real estate brokerage practices which include information gathering and decision-making aspects. A candidate must achieve a minimum scaled score of 75 on each aspect to pass the entire portion; and

(b) The state portion consisting of questions that test on Washington laws and regulations related to real estate licensing, and the closing/settlement process.

(3) A passing score for a portion of an examination is valid for a period of six months.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124A-760, filed 3/1/10, effective 7/1/10.]


NEW SECTION
WAC 308-124A-788   License activation.   (1) An inactive license may be placed on active status pursuant to RCW 18.85.265.

(2) A broker may use a thirty clock hour course from a curriculum approved by the director, in advanced real estate practices or real estate law for both activation of a license that has been inactive for three or more years and for first renewal of an active license as required in WAC 308-124A-785.

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AMENDATORY SECTION(Amending WSR 11-09-009, filed 4/8/11, effective 5/9/11)

WAC 308-124A-790   Continuing education clock hour requirements.   A licensee shall submit to the department evidence of satisfactory completion of clock hours, pursuant to RCW 18.85.211, in the manner and on forms prescribed by the department.

(1) A licensee applying for renewal of an active license shall submit evidence of completion of at least thirty clock hours of instruction in a course(s) approved by the real estate program and commenced within ((thirty-six)) forty-eight months of a licensee's renewal date. A minimum of fifteen clock hours must be completed within twenty-four months of the licensee's current renewal date, and a portion of that fifteen must include three hours of the prescribed core curriculum defined in WAC 308-124A-800. Up to fifteen clock hours of instruction beyond the thirty clock hours submitted for a previous renewal date may be carried forward to the following renewal date. Failure to report successful completion of the prescribed core curriculum clock hours shall result in denial of license renewal.

(2) The thirty clock hours shall be satisfied by evidence of completion of approved real estate courses as defined in WAC 308-124H-820. A portion of the thirty clock hours of continuing education must include three clock hours of prescribed core curriculum defined in WAC 308-124A-800 and three clock hours of prescribed transition course pursuant to RCW 18.85.481(2).

(3) Courses for continuing education clock hour credit shall be commenced after issuance of a first license.

(4) A licensee shall not place a license on inactive status to avoid the continuing education requirement or the post-licensing requirements. A licensee shall submit evidence of completion of continuing education clock hours to activate a license if activation occurs within one year after the license had been placed on inactive status and the last renewal of the license had been as an inactive license. A licensee shall submit evidence of completing the post-licensing requirements if not previously satisfied upon returning to active status.

(5) Approved courses may be repeated for continuing education credit in subsequent renewal periods.

(6) Clock hour credit for continuing education shall not be accepted if:

(a) The course is not approved pursuant to chapter 308-124H WAC and chapter 18.85 RCW;

(b) Course(s) was taken to activate an inactive license pursuant to RCW 18.85.265(3);

(c) Course(s) submitted to satisfy the requirements of RCW 18.85.101 (1)(c), broker's license, RCW 18.85.211, 18.85.111, managing broker's license and WAC 308-124A-780, reinstatement.

(7) Instructors shall not receive clock hour credit for teaching or course development.

[Statutory Authority: RCW 18.85.041, 18.85.101, and 18.85.181. 11-09-009, 308-124A-790, filed 4/8/11, effective 5/9/11. Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124A-790, filed 3/1/10, effective 7/1/10.]


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

WAC 308-124A-815   ((Firm names -- Name)) Prohibited firm and assumed names.   (1) Department can deny, suspend, reject firm names or assumed names that are in the department's opinion: Derogatory, similar or the same as other licensed firm names, implies that it is a public agency or government, implies nonprofit or research organization.

(2) A real estate firm shall not be issued a license nor advertise in any manner using a name((s or trade styles)) which ((are)) is in the department's opinion similar to currently issued firm or assumed name licenses or imply that either the real estate firm is a nonprofit organization, research organization, public bureau or public group. A bona fide franchisee may be licensed using the name of the franchisor with the firm name of the franchisee.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124A-815, filed 3/1/10, effective 7/1/10.]

OTS-5447.1


NEW SECTION
WAC 308-124B-207   Real estate firm identification.   Any firm or branch office of the real estate firm shall be identified by displaying the name, visible to the public, of the firm or the assumed name as licensed at the address appearing on the license.

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OTS-5448.1


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

WAC 308-124C-105   Required records.   The designated broker is required to keep the following on behalf of the firm:

(1) Trust account records:

(a) Duplicate receipt book or cash receipts journal recording all receipts;

(b) Sequentially numbered, nonduplicative checks with check register, cash disbursements journal or check stubs;

(c) Validated duplicate bank deposit slips or daily verified bank deposit;

(d) Client's accounting ledger summarizing all moneys received and all moneys disbursed for each real estate or business opportunity transaction or each property management account, contract or mortgage collection account;

(e) In conjunction with (d) of this subsection, separate ledger sheets for each tenant (including security deposit), lessee, vendee or mortgagor; for automated systems, the ledger sheets may be a computer generated printout which contains required entrees;

(f) Reconciled bank statements and canceled checks for all trust bank accounts.

(2) Other records:

(a) An accurate, up-to-date log of all agreements or contracts for brokerages services submitted by the firm's affiliated licensees.

(b) A legible copy of the transaction or contracts for brokerage services shall be retained in each participating real estate firm's files.

(c) A transaction folder containing all agreements, receipts, contracts, documents, leases, closing statements and material correspondence for each real estate or business opportunity transaction, and for each rental, lease, contract or mortgage collection account.

(d) All required records shall be maintained at one location where the firm is licensed. This location may be the main or any branch office.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124C-105, filed 3/1/10, effective 7/1/10.]


AMENDATORY SECTION(Amending WSR 12-02-065, filed 1/3/12, effective 2/3/12)

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) Procedures for referring a home inspector to buyers or sellers. The policy will address the consumer's right to freely pick a home inspector of the buyer's or seller's choice and prevent any collusion between the home inspector and a real estate licensee. If a licensee refers a home inspector to a buyer or seller with whom they have or have had a relationship including, but not limited to, a business or familial relationship, then full disclosure of the relationship must be provided in writing prior to the buyer or seller using the services of the home inspector.

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

(c) Review of all brokerage service contracts involving any broker of the firm licensed for less than two years. Review must be completed by the designated broker or their delegated managing broker within five business days of 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 within two business days of mutual acceptance.

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

(13) Within five business days provide the department with a closing firm affidavit when closing the firm.

(14) Within five business days ensure that all brokerage services contracts are either terminated or transferred to another licensed real estate firm with the parties' written authorization.

(15) Within five business days notify all parties to pending brokerage service transaction(s) that the real estate firm is closing and that the firm will either:

(a) Transfer the pending transaction documents, with the parties' written authorization(s) to another real estate firm; or

(b) Ensure the transaction(s) are completed without any new licensable activity.

[Statutory Authority: RCW 18.85.041. and RCW 18.85.035. 12-02-065, 308-124C-125, filed 1/3/12, effective 2/3/12. Statutory Authority: RCW 18.85.041 (1), (7), (12)(a), and 18.85.275. 10-20-100, 308-124C-125, filed 9/30/10, effective 10/31/10. Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124C-125, filed 3/1/10, effective 7/1/10.]

OTS-5449.1


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

WAC 308-124D-200   Checks -- Payee requirements.   All checks received as earnest money, security or damage deposits, rent, lease payments, contract or mortgage payments on real property or business opportunities owned by clients shall be made payable to the real estate firm as licensed, unless it is mutually agreed in writing by the principals that the deposit shall be paid to ((the lessor,)) the seller or an escrow agent named in the agreement. The ((designated broker)) real estate firm shall retain a copy of the written agreement.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124D-200, filed 3/1/10, effective 7/1/10.]


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

WAC 308-124D-220   Office requirement for brokers actively licensed in another jurisdiction.   The term "office" in RCW ((18.85.180)) 18.85.231 for a ((broker)) firm actively licensed in another jurisdiction in which the broker's headquarter office is located shall mean the Washington location where trust account and transaction records are maintained. Such records are required to be maintained for three years. The trust account and transaction records shall be open and accessible to representatives of the department of licensing. The parties to the transaction shall have access to the transaction records prepared or retained for the requesting party.

A ((broker actively licensed in another jurisdiction seeking licensure in Washington, whose headquarter office is located in that other jurisdiction,)) firm whose headquarter office is actively licensed in another jurisdiction and is seeking licensure in Washington must obtain a firm license. The firm must also register a natural person who qualifies as a managing broker in Washington and has a controlling interest in the firm to be the firm's Washington designated broker. The firm shall notify the ((department)) real estate program of the location address where the records are maintained in the state of Washington and shall include this address with the headquarter's address on the license application.

The Washington license shall be posted at the licensed Washington location where the records are being maintained.

Within thirty days after mailing of the notice of audit, the broker shall come to the department's office, after making an appointment((,)) in ((the geographic location (Seattle or)) Olympia(() nearest to the location of the records)) to sign the audit report.

((If a real estate licensee actively licensed in another jurisdiction, whose headquarter office is located in that other jurisdiction, has obtained a Washington real estate license through a license recognition agreement, that licensee may maintain required Washington real estate transaction records in their out-of-state jurisdiction and with the out-of-state broker to whom they are licensed, providing it is allowed for in the license recognition agreement.))

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124D-220, filed 3/1/10, effective 7/1/10.]


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

WAC 308-124D-225   Multiple business usage of office.   A ((broker)) firm may conduct ((a)) real estate brokerage ((business)) services at an office location where the firm or designated broker concurrently conducts a separate, business activity. The real estate brokerage ((business)) service activities shall be carried out and business records shall be maintained separate and apart from any other business activities by the firm or designated broker.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124D-225, filed 3/1/10, effective 7/1/10.]

OTS-5450.2


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

WAC 308-124E-105   Administration of funds held in trust -- General procedures.   Any real estate broker who receives funds or moneys from any principal or any party to a real estate or business opportunity transaction, property management agreement, contract/mortgage collection agreement, or advance fees, shall hold the funds or moneys in trust for the purposes of the brokerage service contract or transaction, and shall not utilize such funds or moneys for the benefit of the broker, managing broker, real estate firm or any person not entitled to such benefit. Designated brokers are responsible for ensuring their affiliated licensees safeguard client funds by following these rules. Funds or moneys received in trust shall be deposited in a bank, savings association, or credit union insured by the Federal Deposit Insurance Corporation or the share insurance fund of the National Credit Union Administration, or any successor federal deposit insurer. The financial institution must be doing business in and able to accept service in Washington state. The designated broker is responsible for the administration of trust funds and accounts to include, but not be limited to:

Depositing;

Holding;

Disbursing;

Receipting;

Posting;

Recording;

Accounting to principals;

Notifying principals and cooperating licensees of material facts; and

Reconciling and properly setting up a trust account. The designated broker is responsible for handling trust funds as provided herein.

(1) Bank accounts shall be designated as trust accounts in the firm name or assumed name as licensed.

(2) Interest credited to a client's account must be recorded as a liability on client ledger. Interest assigned or credited by written assignment agreement to the firm may not be maintained in the trust account. The designated broker is responsible for making arrangements with the financial institution to credit this interest to the general account of the firm.

(3) The designated broker shall establish and maintain a system of records and procedures approved by the real estate program that provides for an audit trail accounting of all funds received and disbursed. All funds must be identified to the account of each individual client.

(4) Alternative systems of records or procedures proposed by a designated broker shall be approved in advance in writing by the real estate program.

(5) The designated broker shall be responsible for deposits, disbursements, or transfers of clients' funds received and held in trust.

(6) All funds or moneys received for any reason pertaining to the sale, renting, leasing, optioning of real estate or business opportunities, contract or mortgage collections or advance fees shall be deposited in the firm's real estate trust bank account not later than the ((first)) next banking day following receipt thereof; except:

(a) Cash must be deposited in the firm's trust account not later than the next banking day;

(b) Checks received as earnest money deposits when the earnest money agreement states that a check is to be held for a specified length of time or until the occurrence of a specific event; and

(c) For purposes of this section, Saturday, Sunday, or other legal holidays as defined in RCW 1.16.050 shall not be considered a banking day.

(7) All checks, funds or moneys received shall be identified by the date received and by the amount, source and purpose on either a cash receipts journal or duplicate receipt retained as a permanent record.

(8) All deposits to the trust bank account shall be identified by the source of funds and transaction to which it applies.

(9) An individual client's ledger sheet shall be established and maintained for each client for whom funds are received in trust, which shows all receipts and disbursements. The firm will maintain the minimum amount required by the financial institution in the trust account to prevent the trust account from being closed. A ledger sheet identified as "opening account" will be required for funds that are used to open the account or to keep the trust account from being closed. The credit entries must show the date of deposit, amount of deposit, and item covered including, but not limited to "earnest money deposit," "down payment," "rent," "damage deposit," "rent deposit," "interest," or "advance fee." The debit entries must show the date of the check, check number, amount of the check, name of payee and item covered. The "item covered" entry may indicate a code number per chart of accounts, or may be documented by entry in a cash receipts journal, cash disbursements journal, or check voucher.

(10) The reconciled real estate trust bank account balance must be equal at all times to the outstanding trust liability to clients and the funds in the "open account" ledger. The balance shown in the check register or bank control account must equal the total liability to clients and the "open account" ledger.

(11) The designated broker shall be responsible for preparation of a monthly trial balance of the client's ledger, reconciling the ledger with both the trust account bank statement and the trust account check register or bank control account. The checkbook balance, the bank reconciliation and the client ledgers (including the "open account" ledger) must be in agreement at all times. A trial balance is a listing of all client ledgers, including the "open account" ledger, showing the owner name or control number, date of last entry to the ledger and the ledger balance.

(12) All disbursements of trust funds shall be made by check, or electronic transfer, drawn on the real estate trust bank account and identified thereon to a specific real estate or business opportunity transaction, or collection/management agreement. The number of each check, amount, date, payee, items covered and the specific client's ledger sheet debited must be shown on the check stub or check register and all data must agree exactly with the check as written. No check numbers on any single trust account can be duplicated.

(a) No disbursement from the trust account shall be made based upon wire transfer receipts until the deposit has been verified.

(b) The designated broker must provide a follow-up "hard-copy" debit memo when funds are disbursed via wire transfer.

(c) The designated broker shall retain in the transaction file a copy of instructions signed by the owner of funds to be wire-transferred which identifies the receiving entity and account number.

(13) Voided checks written on the trust bank account shall be permanently defaced and shall be retained.

(14) Commissions owed to another firm may be paid from the real estate trust bank account. Those commissions shall be paid promptly upon receipt of funds. Commissions shared with another firm are a reduction of the gross commissions received.

(15) No deposits to the real estate trust bank account shall be made of funds:

(a) That belong to the designated broker or the real estate firm, except that a designated broker may deposit a minimal amount to open the trust bank account or maintain a minimal amount to keep the account from being closed; or

(b) That do not pertain to a client's real estate or business opportunity sales transaction or are not received in connection with a client's rental, contract or mortgage collection account.

(16) No disbursements from the real estate trust bank account shall be made:

(a) For items not pertaining to a specific real estate or business opportunity transaction or a rental, contract or mortgage collection account;

(b) Pertaining to a specific real estate or business opportunity transaction or a rental, contract or mortgage collection account in excess of the actual amount held in the real estate trust bank account in connection with that transaction or collection account;

(c) In payment of a commission owed to any person licensed to the firm or in payment of any business expense of the firm. Payment of commissions to persons licensed to the firm or of any business expense of the designated broker or firm shall be paid from the regular business bank account of the firm.

(d) For bank charges of any nature, including bank services, checks or other items, except as specified in WAC 308-124E-110 (1)(a) and (d). Bank charges are business overhead expenses of the real estate firm. Arrangements must be made with the bank to have any such charges applicable to the real estate trust bank account charged to the regular business bank account, or to provide a separate monthly statement of bank charges so that they may be paid from the firm's business bank account.

(17) The provisions of this chapter are applicable to manual or computerized accounting systems. For clarity, the following is addressed for computer systems:

(a) The system must provide for a capability to back up all data files.

(b) Receipt, check or disbursement registers or journals, bank reconciliations, and monthly trial balances will be maintained ((in printed or electronic formats)) and available for immediate retrieval or printing upon demand of the department.

(c) The designated broker will maintain a ((printed,)) dated source document file or index file to support any changes to existing accounting records.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124E-105, filed 3/1/10, effective 7/1/10.]


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

WAC 308-124E-110   Administration of funds held in trust -- Real estate and business opportunity transactions.   The procedures in this section are applicable to funds received by the firm in connection with real estate sales, business opportunity transactions or options. These procedures are in addition to the requirements of the general trust account procedures contained in WAC 308-124E-105.

(1) Bank accounts, deposit slips, checks and signature cards shall be designated as trust accounts in the firm or assumed name as licensed. Trust bank accounts for real estate sales or business opportunity transactions shall be interest bearing demand deposit accounts. These accounts shall be established as described in RCW 18.85.285 and this section.

(a) The firm shall maintain a pooled interest-bearing trust account identified as housing trust fund account for deposit of trust funds which are ten thousand dollars or less.

Interest income from this account will be paid to the department by the depository institution in accordance with RCW 18.85.285(8) after deduction of reasonable bank service charges and fees, which shall not include check printing fees or fees for bookkeeping systems.

(b) The licensee shall disclose in writing to the party depositing more than ten thousand dollars that the party has an option between (b)(i) and (ii) of this subsection:

(i) All trust funds not required to be deposited in the account specified in (a) of this subsection shall be deposited in a separate interest-bearing trust account for the particular party or party's matter on which the interest will be paid to the party(ies); or

(ii) In the pooled interest-bearing account specified in (a) of this subsection if the parties to the transaction agree in writing.

(c)(i) For accounts established as specified in (a) of this subsection, the designated broker will maintain an additional ledger ((card)) with the heading identified as "Housing trust account interest." As the monthly bank statements are received, indicating interest credited, the designated broker will post the amount to the pooled interest ledger ((card)). When the bank statement indicates that the interest was paid to the state or bank fees were charged, the designated broker will debit the ledger ((card)) accordingly.

(ii) For accounts established as specified in (b)(i) of this subsection, the interest earned or bank fees charged will be posted to the individual ledger ((card)).

(d) When the bank charges/fees exceed the interest earned, causing the balance to be less than trust account liability, the designated broker shall within one banking day after receipt of such notice, deposit funds from the firm's business account or other nontrust account to bring the trust account into balance with outstanding liability. The designated broker may be reimbursed by the party depositing the funds for these charges for accounts established as specified in (b)(i) of this subsection if the reimbursement is authorized in writing by the party depositing the funds. For accounts established under (a) of this subsection, the designated broker will absorb the excess bank charges/fees as a business expense.

(2) A separate check shall be drawn on the real estate trust bank account, payable to the firm as licensed, for each commission earned, after the final closing of the real estate or business opportunity transaction. Each commission check shall be identified to the transaction to which it applies.

(3) No disbursements from the real estate trust bank account shall be made in advance of closing of a real estate or business opportunity transaction or before the happening of a condition set forth in the purchase and sale agreement, to any person or for any reason, without a written release from both the purchaser and seller; except that:

(a) If the agreement terminates according to its own terms prior to closing, disbursement of funds shall be made as provided by the agreement without a written release; and

(b) Funds may be disbursed to the escrow agent designated in writing by the purchaser and seller to close the transaction, reasonably prior to the date of closing in order to permit checks to clear.

(4) When a transaction provides for the earnest money deposit/note or other instrument to be held by a party other than the firm, a ((broker)) licensee shall deliver the earnest money deposit to the party designated by the terms of the purchase and sale agreement to hold the funds. The licensee shall obtain a dated receipt from the party holding the earnest money funds. The licensee shall deliver the receipt to the designated broker or responsible managing broker. The dated receipt shall be placed in and retained in all participating firm's transaction files. The designated broker ((will have)) has the ultimate responsibility ((to deliver)) for delivery of the funds. ((A dated receipt from the party receiving the funds will be obtained and placed in the transaction file.))

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124E-110, filed 3/1/10, effective 7/1/10.]

OTS-5451.1


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

WAC 308-124H-845   Distance education delivery methods certified by the Association of Real Estate License Law Officials (ARELLO).   An applicant who provides evidence of certification of the distance education delivery method for his or her course by the Association of Real Estate License Law Officials (ARELLO) need not submit an application for approval of the same distance education delivery method when delivering the same course within the state of Washington provided a clock hour enforcement mechanism is in place.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124H-845, filed 3/1/10, effective 7/1/10.]


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

WAC 308-124H-895   Administrator responsibilities.   Each school administrator shall be responsible for performing the following:

(1) Ensure that the school, course(s), and instructor(s) are all currently approved before offering clock hour courses;

(2) Ensure that all instructors are approved to teach in the appropriate topic area(s);

(3) Sign and verify all course completion certificates;

(4) Maintain all required records for five years, including attendance records, required publications, and course evaluations;

(5) Safeguard comprehensive examinations;

(6) Ensure the supervision and demonstrate responsibility for the conduct of employees and individuals affiliated with the school;

(7) Periodically review courses and advise department of content currency as required;

(8) Ensure each student is provided a course curriculum; and

(9) Ensure each student is provided a course evaluation form.

(10) Ensure that all broker candidates' completion dates are entered into the testing center's data base promptly.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124H-895, filed 3/1/10, effective 7/1/10.]


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

WAC 308-124H-970   Guest lecturer(s) -- Defined.   A topic area expert(s) may be utilized as a guest lecturer to assist an approved instructor to teach an approved course. The approved instructor is responsible for supervision of the approved course. Guest lecturer(s) shall not be utilized to circumvent the instructor approval requirements of this chapter. Guest lectures shall be limited to no more than fifteen minutes per clock hour. Guest lecturers can only be used when the approved instructor is present.

[Statutory Authority: RCW 18.85.040 and 18.85.041. 10-06-078, 308-124H-970, filed 3/1/10, effective 7/1/10.]