CERTIFICATION OF ENROLLMENT

 

                   SUBSTITUTE HOUSE BILL 1955

 

 

                   Chapter 217, Laws of 1997

 

 

 

 

                        55th Legislature

                      1997 Regular Session

 

 

REAL ESTATE BROKERAGE RELATIONSHIPS

 

 

 

EFFECTIVE DATE:  Sections 1-6 & 8 which become effective 4/25/97; & section 7 which becomes effective 1/1/98.

Passed by the House March 13, 1997

  Yeas 96   Nays 0

 

 

 

             CLYDE BALLARD

Speaker of the

      House of Representatives

 

Passed by the Senate April 15, 1997

  Yeas 47   Nays 0

             CERTIFICATE

 

I, Timothy A. Martin, Chief Clerk of the House of Representatives of the State of Washington, do hereby certify that the attached is SUBSTITUTE HOUSE BILL 1955  as passed by the House of Representatives and the Senate on the dates hereon set forth.

 

 

 

               BRAD OWEN

President of the Senate

          TIMOTHY A. MARTIN

                          Chief Clerk

 

 

Approved April 25, 1997 Place Style On Codes above, and Style Off Codes below.   

                                FILED          

 

 

           April 25, 1997 - 4:19 p.m.

 

 

 

              GARY LOCKE

Governor of the State of Washington

                   Secretary of State

                  State of Washington


          _______________________________________________

 

                    SUBSTITUTE HOUSE BILL 1955

          _______________________________________________

 

             Passed Legislature - 1997 Regular Session

 

State of Washington      55th Legislature     1997 Regular Session

 

By House Committee on Commerce & Labor (originally sponsored by Representatives McMorris, Quall, Bush and Hatfield)

 

Read first time 03/05/97.

  Regulating real estate brokerage relationships.  


    AN ACT Relating to real estate brokerage relationships including different licensees affiliated with the same broker representing different buyers and sellers in competing transactions involving the same property, termination of those relationships, and consumer information about those relationships; amending RCW 18.86.020, 18.86.040, 18.86.050, 18.86.060, 18.86.070, 18.86.080, and 18.86.120; creating a new section; providing an effective date; and declaring an emergency.

 

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

 

    Sec. 1.  RCW 18.86.020 and 1996 c 179 s 2 are each amended to read as follows:

    (1) A licensee who performs real estate brokerage services for a buyer is a buyer's agent unless the:

    (a) Licensee has entered into a written agency agreement with the seller, in which case the licensee is a seller's agent;

    (b) Licensee has entered into a subagency agreement with the seller's agent, in which case the licensee is a seller's agent;

    (c) Licensee has entered into a written agency agreement with both parties, in which case the licensee is a dual agent;

    (d) Licensee is the seller or one of the sellers; or

    (e) Parties agree otherwise in writing after the licensee has complied with RCW 18.86.030(1)(f).

    (2) In a transaction in which different licensees affiliated with the same broker represent different parties, the broker is a dual agent, and must obtain the written consent of both parties as required under RCW 18.86.060.  In such a case, each licensee shall solely represent the party with whom the licensee has an agency relationship, unless all parties agree in writing that both licensees are dual agents.

    (3) A licensee may work with a party in separate transactions pursuant to different relationships, including, but not limited to, representing a party in one transaction and at the same time not representing that party in a different transaction involving that party, if the licensee complies with this chapter in establishing the relationships for each transaction.

 

    Sec. 2.  RCW 18.86.040 and 1996 c 179 s 4 are each amended to read as follows:

    (1) Unless additional duties are agreed to in writing signed by a seller's agent, the duties of a seller's agent are limited to those set forth in RCW 18.86.030 and the following, which may not be waived except as expressly set forth in (e) of this subsection:

    (a) To be loyal to the seller by taking no action that is adverse or detrimental to the seller's interest in a transaction;

    (b) To timely disclose to the seller any conflicts of interest;

    (c) To advise the seller to seek expert advice on matters relating to the transaction that are beyond the agent's expertise;

    (d) Not to disclose any confidential information from or about the seller, except under subpoena or court order, even after termination of the agency relationship; and

    (e) Unless otherwise agreed to in writing after the seller's agent has complied with RCW 18.86.030(1)(f), to make a good faith and continuous effort to find a buyer for the property; except that a seller's agent is not obligated to seek additional offers to purchase the property while the property is subject to an existing contract for sale.

    (2) ((A seller's agent may show alternative properties not owned by the seller to prospective buyers and may list competing properties for sale without breaching any duty to the seller)) (a) The showing of properties not owned by the seller to prospective buyers or the listing of competing properties for sale by a seller's agent does not in and of itself breach the duty of loyalty to the seller or create a conflict of interest.

    (b) The representation of more than one seller by different licensees affiliated with the same broker in competing transactions involving the same buyer does not in and of itself breach the duty of loyalty to the sellers or create a conflict of interest.

 

    Sec. 3.  RCW 18.86.050 and 1996 c 179 s 5 are each amended to read as follows:

    (1) Unless additional duties are agreed to in writing signed by a buyer's agent, the duties of a buyer's agent are limited to those set forth in RCW 18.86.030 and the following, which may not be waived except as expressly set forth in (e) of this subsection:

    (a) To be loyal to the buyer by taking no action that is adverse or detrimental to the buyer's interest in a transaction;

    (b) To timely disclose to the buyer any conflicts of interest;

    (c) To advise the buyer to seek expert advice on matters relating to the transaction that are beyond the agent's expertise;

    (d) Not to disclose any confidential information from or about the buyer, except under subpoena or court order, even after termination of the agency relationship; and

    (e) Unless otherwise agreed to in writing after the buyer's agent has complied with RCW 18.86.030(1)(f), to make a good faith and continuous effort to find a property for the buyer; except that a buyer's agent is not obligated to:  (i) Seek additional properties to purchase while the buyer is a party to an existing contract to purchase; or (ii) show properties as to which there is no written agreement to pay compensation to the buyer's agent.

    (2) ((A buyer's agent may show properties in which the buyer is interested to other prospective buyers without breaching any duty to the buyer)) (a) The showing of property in which a buyer is interested to other prospective buyers by a buyer's agent does not in and of itself breach the duty of loyalty to the buyer or create a conflict of interest.

    (b) The representation of more than one buyer by different licensees affiliated with the same broker in competing transactions involving the same property does not in and of itself breach the duty of loyalty to the buyers or create a conflict of interest.

 

    Sec. 4.  RCW 18.86.060 and 1996 c 179 s 6 are each amended to read as follows:

    (1) Notwithstanding any other provision of this chapter, a licensee may act as a dual agent only with the written consent of both parties to the transaction after the dual agent has complied with RCW 18.86.030(1)(f), which consent must include a statement of the terms of compensation.

    (2) Unless additional duties are agreed to in writing signed by a dual agent, the duties of a dual agent are limited to those set forth in RCW 18.86.030 and the following, which may not be waived except as expressly set forth in (e) and (f) of this subsection:

    (a) To take no action that is adverse or detrimental to either party's interest in a transaction;

    (b) To timely disclose to both parties any conflicts of interest;

    (c) To advise both parties to seek expert advice on matters relating to the transaction that are beyond the dual agent's expertise;

    (d) Not to disclose any confidential information from or about either party, except under subpoena or court order, even after termination of the agency relationship;

    (e) Unless otherwise agreed to in writing after the dual agent has complied with RCW 18.86.030(1)(f), to make a good faith and continuous effort to find a buyer for the property; except that a dual agent is not obligated to seek additional offers to purchase the property while the property is subject to an existing contract for sale; and

    (f) Unless otherwise agreed to in writing after the dual agent has complied with RCW 18.86.030(1)(f), to make a good faith and continuous effort to find a property for the buyer; except that a dual agent is not obligated to:  (i) Seek additional properties to purchase while the buyer is a party to an existing contract to purchase; or (ii) show properties as to which there is no written agreement to pay compensation to the dual agent.

    (3) ((A dual agent may show alternative properties not owned by the seller to prospective buyers and may list competing properties for sale without breaching any duty to the seller)) (a) The showing of properties not owned by the seller to prospective buyers or the listing of competing properties for sale by a dual agent does not in and of itself constitute action that is adverse or detrimental to the seller or create a conflict of interest.

    (b) The representation of more than one seller by different licensees affiliated with the same broker in competing transactions involving the same buyer does not in and of itself constitute action that is adverse or detrimental to the sellers or create a conflict of interest.

    (4) ((A dual agent may show properties in which the buyer is interested to other prospective buyers without breaching any duty to the buyer)) (a) The showing of property in which a buyer is interested to other prospective buyers or the presentation of additional offers to purchase property while the property is subject to a transaction by a dual agent does not in and of itself constitute action that is adverse or detrimental to the buyer or create a conflict of interest.

    (b) The representation of more than one buyer by different licensees affiliated with the same broker in competing transactions involving the same property does not in and of itself constitute action that is adverse or detrimental to the buyers or create a conflict of interest.

 

    Sec. 5.  RCW 18.86.070 and 1996 c 179 s 7 are each amended to read as follows:

    (1) The agency relationships set forth in this chapter commence at the time that the licensee undertakes to provide real estate brokerage services to a principal and continue until the earliest of the following:

    (a) Completion of performance by the licensee;

    (b) Expiration of the term agreed upon by the parties; ((or))

    (c) Termination of the relationship by mutual agreement of the parties; or

    (d) Termination of the relationship by notice from either party to the other.  However, such a termination does not affect the contractual rights of either party.

    (2) Except as otherwise agreed to in writing, a licensee owes no further duty after termination of the agency relationship, other than the duties of:

    (a) Accounting for all moneys and property received during the relationship; and

    (b) Not disclosing confidential information.

 

    Sec. 6.  RCW 18.86.080 and 1996 c 179 s 8 are each amended to read as follows:

    (1) In any real estate transaction, the broker's compensation may be paid by the seller, the buyer, a third party, or by sharing the compensation between brokers.

    (2) An agreement to pay or payment of compensation does not establish an agency relationship between the party who paid the compensation and the licensee.

    (3) A seller may agree that a seller's agent may share with another broker the compensation paid by the seller.

    (4) A buyer may agree that a buyer's agent may share with another broker the compensation paid by the buyer.

    (5) A broker may be compensated by more than one party for real estate brokerage services in a real estate transaction, if those parties consent in writing at or before the time of signing an offer in the transaction.

    (6) A buyer's agent or dual agent may receive compensation based on the purchase price without breaching any duty to the buyer.

    (7) Nothing contained in this chapter ((obligates a buyer or seller to pay compensation to a licensee, unless the buyer or seller has entered into a written agreement with the licensee specifying the terms of such compensation)) negates the requirement that an agreement authorizing or employing a licensee to sell or purchase real estate for compensation or a commission be in writing and signed by the seller or buyer.

 

    Sec. 7.  RCW 18.86.120 and 1996 c 179 s 13 are each amended to read as follows:

    The pamphlet required under RCW 18.86.030(1)(f) shall consist of the entire text of RCW 18.86.010 through 18.86.030((,)) and 18.86.040 through 18.86.110((, and 18.86.900)) with a separate cover page.  The pamphlet shall be 8 1/2 by 11 inches in size, the text shall be in print no smaller than 10-point type, the cover page shall be in print no smaller than 12-point type, and the title of the cover page "The Law of Real Estate Agency" shall be in print no smaller than 18-point type.  The cover page shall be in the following form:

 

      The Law of Real Estate Agency

  This pamphlet describes your legal rights in dealing with a real estate broker or salesperson.  Please read it carefully before signing any documents.

 

The following is only a brief summary of the attached law:

Sec. 1. Definitions.  Defines the specific terms used in the law.

Sec. 2. Relationships between Licensees and the Public.  States that a licensee who works with a buyer or tenant represents that buyer or tenant‑-unless the licensee is the listing agent, a seller's subagent, a dual agent, the seller personally or the parties agree otherwise.  Also states that in a transaction involving two different licensees affiliated with the same broker, the broker is a dual agent and each licensee solely represents his or her client‑-unless the parties agree in writing that both licensees are dual agents.

Sec. 3. Duties of a Licensee Generally.  Prescribes the duties that are owed by all licensees, regardless of who the licensee represents.  Requires disclosure of the licensee's agency relationship in a specific transaction.

Sec. 4. Duties of a Seller's Agent.  Prescribes the additional duties of a licensee representing the seller or landlord only.

Sec. 5. Duties of a Buyer's Agent.  Prescribes the additional duties of a licensee representing the buyer or tenant only.

Sec. 6. Duties of a Dual Agent.  Prescribes the additional duties of a licensee representing both parties in the same transaction, and requires the written consent of both parties to the licensee acting as a dual agent.

Sec. 7. Duration of Agency Relationship.  Describes when an agency relationship begins and ends.  Provides that the duties of accounting and confidentiality continue after the termination of an agency relationship.

Sec. 8. Compensation.  Allows brokers to share compensation with cooperating brokers.  States that payment of compensation does not necessarily establish an agency relationship.  Allows brokers to receive compensation from more than one party in a transaction with the parties' consent.

Sec. 9. Vicarious Liability.  Eliminates the common law liability of a party for the conduct of the party's agent or subagent, unless the agent or subagent is insolvent.  Also limits the liability of a broker for the conduct of a subagent associated with a different broker.

Sec. 10. Imputed Knowledge and Notice.  Eliminates the common law rule that notice to or knowledge of an agent constitutes notice to or knowledge of the principal.

Sec. 11. Interpretation.  This law replaces the fiduciary duties owed by an agent to a principal under the common law, to the extent that it conflicts with the common law.

((Sec. 12.  Effective Date.  This law generally takes effect on January 1, 1997.))

 

    NEW SECTION.  Sec. 8.  Amendments set forth in sections 1 through 6 of this act are not required to be included in the pamphlet on the law of real estate agency required under RCW 18.86.030(1)(f) and 18.86.120 until January 1, 1998.

 

    NEW SECTION.  Sec. 9.  Sections 1 through 6 and 8 of this act are necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and take effect immediately.

 

    NEW SECTION.  Sec. 10.  Section 7 of this act takes effect January 1, 1998.


    Passed the House March 13, 1997.

    Passed the Senate April 15, 1997.

Approved by the Governor April 25, 1997.

    Filed in Office of Secretary of State April 25, 1997.