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                       ENGROSSED SUBSTITUTE HOUSE BILL 2248

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State of Washington              52nd Legislature             1992 Regular Session

By House Committee on Financial Institutions & Insurance (originally sponsored by Representatives Broback, Dellwo, Mielke, Forner, Tate, Zellinsky, Winsley, D. Sommers, Casada, Paris, May and Silver)

Read first time 01/24/92.  Requiring disclosure of certain interests during real estate transactions.

     AN ACT Relating to the conveyance of real property; and adding a new section to chapter 64.04 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1.  A new section is added to chapter 64.04 RCW to read as follows:

     (1) As used in this section:

     (a) "Real estate settlement services" means any service provided in connection with a conveyance of real estate, any interest therein, and any contract creating or evidencing any encumbrance upon real estate including, but not limited to, title searches, title examinations, the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals, pest and fungus inspections, services rendered by a real estate agent or broker, and the handling of the processing, and closing or settlement;

     (b) "Controlled business arrangement" means an arrangement in which a person who is in a position to refer business incident to or a part of a real estate settlement service or an associate of such person has either an affiliate relationship with or a direct or beneficial ownership interest of more than one percent in a provider of settlement services and either of those persons directly or indirectly refers such business to that provider or affirmatively influences the selection of that provider;

     (c) "Associate" means a person who has one or more of the following relationships with a person in a position to refer settlement business:

     (i) A spouse, parent, or child of such person;

     (ii) A corporation or business entity that controls or is controlled by, or is under common control with such person;

     (iii) An employer, officer, director, partner, franchisor, or franchisee of such person; or

     (iv) Anyone who has an agreement, arrangement, or understanding, with such person, the purpose or substantial effect of which is to enable the person in a position to refer settlement business to benefit financially from the referrals of such business.

     (2) Controlled business arrangements are prohibited unless at or prior to the time of the referral a disclosure is made of the existence of such an arrangement to the person being referred.

     (3) This section does not apply to controlled business arrangements governed by the federal real estate settlement procedures act (12 U.S.C. Sec. 2601 et seq.).