Title: An act relating to allowing out-of-state licensees to practice commercial real estate.

Brief Description: Allowing out-of-state licensees to practice commercial real estate.

Sponsors: By House Committee on Commerce & Labor (originally sponsored by Representatives Conway, Chandler, Tom and Wood).

Brief Summary of Substitute Bill

• Allows an out-of-state real estate broker or salesperson to conduct commercial real estate transactions in Washington under certain conditions, including working in cooperation with a Washington real estate broker.

Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. Signed by 7 members: Representatives Wood, Vice Chair; Chandler, Ranking Minority Member; Condotta, Assistant Ranking Minority Member; Crouse, Holmquist, Hudgins and Kenney.

A real estate broker is a person who: (1) sells, lists, or buys real estate for others; (2) negotiates for others the purchase, sale, exchange, lease, or rental of real estate, business opportunities, or a manufactured home in conjunction with the land on which the home is located; (3) advertises or holds himself or herself out to the public as engaged in these activities; or (4) engages, directs, or assists in procuring prospects or in negotiating or closing any transaction which results in these activities.

A real estate salesperson is a natural person employed by a real estate broker in conducting the real estate business. An associate real estate broker is a person who has qualified as a broker, but who works with another broker and has a license stating that he or she is associated with another broker.

A real estate broker, associate broker, or salesperson is required to obtain a state license from the Department of Licensing. To receive a license, an individual must meet certain requirements, including passing the license examination established by the Washington Real Estate Commission and having minimum amounts of training. To receive a broker's license, the applicant must have at least two years of experience as a salesperson.

Unless a real estate broker from another state has a Washington license, the broker is not allowed to conduct real estate transactions in Washington.

An out-of-state broker may conduct transactions involving commercial real estate that require a real estate license in Washington if the broker:

• has a written agreement with the Washington broker regarding cooperation, oversight, and compensation;

• agrees to adhere to Washington law and consents to jurisdiction in Washington;

• furnishes a copy of his or her current out-of-state real estate broker's license;

• keeps records with the cooperating Washington broker for three years after the transaction or the date the documents were provided, whichever is later.

An out-of-state salesperson or associate broker may participate in transactions involving commercial real estate that require a real estate license in Washington if the salesperson or associate broker:

• is licensed with and works under the supervision of the out-of-state broker who meets all the Washington requirements established for the out-of-state broker; and

• provides the cooperating Washington broker a copy of his or her current out-of-state real estate salesperson's or associate broker's license.

Commercial real estate means real estate other than real estate with four or fewer residential units. Commercial real estate does not include a single-family residential lot or unit when the transaction is unit-by-unit, even though the unit is part of a larger building or parcel of real estate (such as condominiums or homes in a subdivision).

Effective Date: The bill takes effect ninety days after adjournment of session in which bill is passed.

Testimony For: This is a priority bill for the commercial brokers' associations. It only permits out-of-state broker arrangements in commercial transactions. Commercial practice is unique in requiring brokers to work all over the country. A number of states permit this cooperative arrangement. Washington border counties with large populations will particularly benefit from the cross-border business. The bill will improve Washington's regulatory oversight of these out-of-state entities by giving the Department of Licensing an audit process when there are complaints. If there are any problems, it will be the Washington broker who is responsible.

Testified: Bob Mitchell, Washington State Commercial Association of Realtors; Paul Chiles, Commercial Brokers Association; and Jana Jones, Department of Licensing.