WSR 98-22-003

PROPOSED RULES

DEPARTMENT OF LICENSING

(Real Estate Commission)

[Filed October 22, 1998, 9:56 a.m.]

Original Notice.

Preproposal statement of inquiry was filed as WSR 98-13-071.

Purpose: Amend title of chapter 308-124 WAC, the new name will be gender neutral.

Amend WAC 308-124-007 Meetings, the proposed changes will provide more information regarding the commission's schedule of annual regular meetings.

Amend WAC 308-124-021 Definitions, the proposed changes to this section are to make it easier to read. The definition of incorporated associated broker is eliminated, and the payment of commissions to incorporated licensees is addressed in new proposed rule WAC 308-124D-080.

Repeal WAC 308-124-001 Promulgation--Authority and 308-124-005 Organization, these sections are duplicative of statutory language.

Amend WAC 308-124A-200 Corporate or copartnership applicants for licenses--Proof required, the proposed changes eliminate the credit reference requirement in light of changing business practices in the profession.

Amend WAC 308-124A-460 Real estate brokers and salespersons and land development representative fees, the proposed changes will increase fees within I-601 and help the department meet its operating costs and expenses.

Amend WAC 308-124B-140 Multiple business usage of office, the proposed changes are a reflection of changing business practices in the profession.

Amend WAC 308-124B-150 Office requirement for brokers actively licensed in another jurisdiction, the proposed changes clarify out-of-state licensees' requirements for maintaining the location of trust accounts.

Amend WAC 308-124C-010 Licensee's responsibilities, the proposed changes will require the licensee to keep the department informed of changes in mailing address rather than changes in home address.

Amend WAC 308-124D-061 Broker supervision of affiliated licensees, this clarifies the standards for broker supervision.

New WAC 308-124D-070 Discriminatory acts--Prohibition, this moves a former WAC section into this chapter, allowing the department to eliminate chapter 308-124F WAC.

New WAC 308-124D-080 Payment of earned commissions, this section is proposed in light of changing practices in the profession.

Repeal WAC 308-124F-010 Real estate office in same building as residence requirements, this section is a proposed repealer because the requirement is no longer relevant in light of changing business practices in the profession.

Repeal WAC 308-124F-020 Discriminatory acts--Prohibition, this section has been moved and proposed as new section WAC 308-124D-070. Moving this section out of chapter 308-124F WAC allows the department to eliminate a WAC chapter.

Repeal WAC 308-124F-030 Misuse of broker's license--Prohibited, this section has been moved and proposed in new section WAC 308-124D-061. The repeal of chapter 308-124F WAC allows the department to eliminate chapter 308-124F WAC.

Statutory Authority for Adoption: RCW 18.85.040.

Statute Being Implemented: Governor's Executive Order on Regulatory Improvement 97-02.

Reasons Supporting Proposal: Most of the proposed changes are a result of a regulatory improvement review designed to streamline and eliminate irrelevant or obsolete information in rules. The proposed rules relating to fee increases are necessary to help the Department of Licensing meet its statutory mandate to cover its operating costs from the fees it collects.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Bob Mitchell, Real Estate Program Manager, P.O. Box 9015, Olympia, WA 98057-9015, fax (360) 586-0998, e-mail bmitchell@dol.wa.gov, (360) 586-6012.

Name of Proponent: Department of Licensing, Real Estate Commission, governmental.

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

Explanation of Rule, its Purpose, and Anticipated Effects: See Purpose above.

Proposal Changes the Following Existing Rules: See Purpose above.

No small business economic impact statement has been prepared under chapter 19.85 RCW.

RCW 34.05.328 does not apply to this rule adoption.

Hearing Location: Washington Housing Finance Commission Office, 1000 Second Avenue, Seattle, WA, on Friday, December 4, 1998, at 9:00 a.m.

Assistance for Persons with Disabilities: Contact Bob Mitchell by Monday, November 30, 1998.

Submit Written Comments to: Fax (360) 586-0998, by Monday, November 30, 1998.

Date of Intended Adoption: December 4, 1998.

October 21, 1998

Linda M. Moran

Senior Assistant

Attorney General

OTS-2594.1

Chapter 308-124 WAC

REAL ESTATE BROKERS AND ((SALESMEN)) SALESPERSONS--GENERAL PROVISIONS

AMENDATORY SECTION (Amending WSR 90-23-039, filed 11/15/90, effective 12/16/90)

WAC 308-124-007  Meetings. The real estate commission meets quarterly, March, June, September and December or at the call of the director. Individuals desiring to be informed as to date, time, place and agenda of the meeting must make a written request to the real estate program. Annual notice of the commission's yearly schedule will be published by the code reviser at the beginning of each new year.

[Statutory Authority: RCW 18.85.040. 90-23-039, § 308-124-007, filed 11/15/90, effective 12/16/90; 87-20-091 (Order PM 683), § 308-124-007, filed 10/7/87; Order RE 114, § 308-124-007, filed 7/2/75; Order RE-104, § 308-124-007, filed 2/16/72; Order RE-103, § 308-124-007, filed 12/14/71.]

AMENDATORY SECTION (Amending WSR 98-01-107, filed 12/17/97, effective 1/17/98)

WAC 308-124-021  Definitions. (((1))) Words and terms used in these rules shall have the same meaning as each has under chapter 18.85 RCW unless otherwise clearly provided in these rules, or the context in which they are used in these rules clearly indicates that they be given some other meaning.

(((2))) (1) "Designated broker" is the natural person designated by a corporation, limited liability company, limited liability partnership or partnership to act as a broker on behalf of the corporation, limited liability company, limited liability partnership or partnership. The designated broker must be an officer of the corporation, manager or member of the limited liability company, partner of the limited liability partnership or a general partner of the partnership and must be separately qualified for licensure as a real estate broker.

(((3))) (2) "Principal owner" is a person who owns or controls, directly or indirectly, ten percent or more of a real estate brokerage, regardless of whether such interest stands in the person's true name or in the name of a nominee.

(((4))) (3) "Individual broker" is the natural person who owns a sole proprietorship brokerage company and is the licensed broker of the firm.

(((5) "Incorporated associate broker" is the natural person qualified as a broker who works with a broker and who is licensed as a corporation and whose license states that he or she is associated with a broker.

(6))) (4) "Affiliated licensees" are the natural persons licensed as salespersons, associate brokers, ((incorporated associate brokers,)) and/or branch managers employed by a real estate broker and who are licensed to represent a broker in the performance of any of the acts specified in chapter 18.85 RCW.

[Statutory Authority: RCW 18.85.040. 98-01-107, § 308-124-021, filed 12/17/97, effective 1/17/98; 90-23-039, § 308-124-021, filed 11/15/90, effective 12/16/90; 88-24-059 (Order PM 811), § 308-124-021, filed 12/7/88; 87-20-091 (Order PM 683), § 308-124-021, filed 10/7/87; 81-05-016 (Order RE 128), § 308-124-021, filed 2/10/81; 78-11-052 (Order RE 125), § 308-124-021, filed 10/23/78; Order RE 120, § 308-124-021, filed 9/20/77; Order RE 114, § 308-124-021, filed 7/2/75; Order RE-102, § 308-124-021, filed 10/28/71.]

REPEALER

The following sections of the Washington Administrative Code are repealed:

WAC 308-124-001 Promulgation--Authority.

WAC 308-124-005 Organization.

OTS-2595.1

AMENDATORY SECTION (Amending WSR 98-01-107, filed 12/17/97, effective 1/17/98)

WAC 308-124A-200  Corporate or copartnership applicants for licenses--Proof required. The minimum qualifications for a corporation, limited liability company, limited liability partnership or partnership to receive a broker's license are:

(1) An officer in the corporation, a manager or member in the limited liability company, a partner in the limited liability partnership or a general partner in the partnership, as the case may be, shall be designated as the broker and shall separately qualify for a valid broker's license. The corporation, limited liability company, limited liability partnership or partnership and the designated broker are required to pay only a single license and license renewal fee.

(2) ((The applicant shall furnish a character and credit rating of the designated broker, officers, managers or members and principal owners of the corporation or limited liability company directly involved in the company's Washington real estate activity and, in the case of a partnership or limited liability partnership, the general partners and all principal owners. A new credit rating is not required if one has been filed with the department within the preceding eighteen months.

(3))) If the applicant is a partnership or limited liability partnership, it shall furnish a copy of its partnership or limited liability partnership agreement.

(((4))) (3) Licenses issued to corporations, limited liability companies, limited liability partnerships and partnerships expire two years from the date of issuance which date will be the renewal date.

(((5) If a corporation applies for licensure as an incorporated associate broker, the associate broker shall be the sole licensee of the corporation. The renewal period for the incorporated associated broker shall be the same as the renewal period for corporations, limited liability companies, limited liability partnerships or partnerships under this chapter.))

[Statutory Authority: RCW 18.85.040. 98-01-107, § 308-124A-200, filed 12/17/97, effective 1/17/98; 90-23-039, § 308-124A-200, filed 11/15/90, effective 12/16/90; 88-20-037 (Order PM 775), § 308-124A-200, filed 9/30/88. Statutory Authority: RCW 18.85.040, 18.85.140 and 18.85.190. 87-17-051 (Order PM 673), § 308-124A-200, filed 8/18/87, effective 10/1/87. Statutory Authority: RCW 18.85.040. 81-05-016 (Order RE 128), § 308-124A-200, filed 2/10/81; Order RE 114, § 308-124A-200, filed 7/2/75.]

AMENDATORY SECTION (Amending WSR 93-24-096, filed 11/30/93, effective 1/1/94)

WAC 308-124A-460  Real estate brokers and salespersons and land development representative fees. These fees are applicable to all original licenses, examination services, and fee generating services issued or performed after June 30, 1999, and all renewals for existing licenses with expiration date after June 30, 1999. The following fees for a two-year period shall be charged by professional licensing services of the department of licensing:

[Statutory Authority: RCW 18.85.040. 93-24-096, § 308-124A-460, filed 11/30/93, effective 1/1/94; 90-23-039, § 308-124A-460, filed 11/15/90, effective 12/16/90. Statutory Authority: RCW 18.85.220 and 43.24.086. 90-02-048, § 308-124A-460, filed 12/29/89, effective 1/29/90. Statutory Authority: RCW 18.85.040. 89-08-009 (Order PM 829), § 308-124A-460, filed 3/24/89. Statutory Authority: RCW 18.85.040, 18.85.140 and 18.85.190. 87-17-051 (Order PM 673), § 308-124A-460, filed 8/18/87, effective 10/1/87.]

OTS-2596.1

AMENDATORY SECTION (Amending Order 130, filed 8/13/82)

WAC 308-124B-140  Multiple business usage of office. (((1))) A broker may conduct a real estate brokerage business at an office location where the broker concurrently conducts a separate, ((compatible)) business activity. The brokerage business activities shall be carried out and business records shall be maintained separate and apart from any other business activities by the broker.

(((2) Two or more licensed real estate brokerage businesses may be conducted at an office location with a common entrance and mailing address, if each business is clearly identified by a sign visible to the public, each business is physically separated within the office facility, and no deception of the public as to the separate identities of the brokerage business firms results.))

[Statutory Authority: RCW 18.85.040. 82-17-039 (Order 130), § 308-124B-140, filed 8/13/82.]

NEW SECTION

WAC 308-124B-145  Two or more real estate businesses in same location. Two or more licensed real estate brokerage businesses may be conducted at an office location with a common entrance and mailing address, if each business is clearly identified by a sign visible to the public, each business is physically separated within the office facility, and no deception of the public as to the separate identities of the brokerage business firms results.

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AMENDATORY SECTION (Amending Order PM 711, filed 3/1/88)

WAC 308-124B-150  Office requirement for brokers actively licensed in another jurisdiction. The term "office" in RCW 18.85.180 for a broker actively licensed in another jurisdiction in which the broker's headquarter office is located shall mean the ((maintenance of trust account and transaction records for a period of three years in the state of Washington in one location at the Washington office of an escrow agent licensed in the state of Washington, a real estate broker licensed in the state of Washington, attorneys at law licensed to practice in the state of Washington or title companies for all Washington transactions for the broker)) 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, shall notify the department 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 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 (Spokane, Seattle, or Olympia) nearest to the location of the records to sign the audit report.

[Statutory Authority: RCW 18.85.040. 88-06-039 (Order PM 711), § 308-124B-150, filed 3/1/88.]

OTS-2597.1

AMENDATORY SECTION (Amending WSR 90-23-039, filed 11/15/90, effective 12/16/90)

WAC 308-124C-010  Licensee's responsibilities. (1) The real estate broker shall be responsible for the custody, safety and correctness of entries of all required real estate records. The broker retains this responsibility even though another person or persons may be assigned by the broker the duties of preparation, custody or recording.

(2) It is the responsibility of each and every licensee to obtain a copy of and be knowledgeable of and keep current with the rules implementing chapter 18.85 RCW.

(3) It is the responsibility of each and every licensee to keep the director informed of his or her current ((home)) mailing address.

(4) It is the broker's responsibility to ensure accessibility of their offices and records to auditors of the department. The broker shall provide copies of required records upon demand by the director or the director's authorized representative.

[Statutory Authority: RCW 18.85.040. 90-23-039, § 308-124C-010, filed 11/15/90, effective 12/16/90; 87-20-091 (Order PM 683), § 308-124C-010, filed 10/7/87; 81-05-016 (Order RE 128), § 308-124C-010, filed 2/10/81; Order RE 114, § 308-124C-010, filed 7/2/75.]

OTS-2598.1

AMENDATORY SECTION (Amending WSR 98-01-107, filed 12/17/97, effective 1/17/98)

WAC 308-124D-061  Broker supervision of affiliated licensees. (1) A broker shall not permit the use of his or her license, whether for compensation or not, to enable anyone either licensed or unlicensed to in fact establish and carry on a brokerage business wherein the broker does not have full management responsibility for all real estate brokerage activities of the business or he/she does not exercise adequate supervision over the activities of his or her licensed salespersons, associate brokers or branch managers as required by chapter 18.85 RCW.

(2) Individual and designated brokers shall be responsible for supervising the conduct of all associate brokers and salespersons licensed to them, whether in an individual capacity or through a corporate, limited liability company, limited liability partnership or partnership entity. A broker shall not be held responsible for inadequate supervision if:

(a) An associate broker or salesperson violates a provision of chapter 18.85 RCW, or the rules promulgated thereunder, in contravention of the supervising broker's specific written policies or instructions;

(b) Reasonable procedures had been established to verify that adequate supervision was being performed;

(c) Upon learning of the violation, the broker attempted to prevent or mitigate the damage;

(d) The broker did not participate in the violation;

(e) The broker did not ratify the violation; and

(f) The broker did not attempt to avoid learning of the violation.

(((2))) (3) A broker may not avoid his or her management or supervisory responsibilities by any contract, agreement or understanding between the broker and any other person. The existence of an independent contractor relationship or any other special compensation arrangement between the broker and affiliated licensees shall not release the broker and licensee of any duties, obligations, or responsibilities.

[Statutory Authority: RCW 18.85.040. 98-01-107, § 308-124D-061, filed 12/17/97, effective 1/17/98; 90-01-044, § 308-124D-061, filed 12/14/89, effective 1/14/90.]

NEW SECTION

WAC 308-124D-070  Discriminatory acts--Prohibition. (1) Real estate licensees shall not:

(a) Refuse to communicate to the owner of a listed property any written offer, concerning the same, made by any person or persons because of race, color, creed, sex, marital status, familial status, age, national origin, or the presence of any sensory, mental, or physical handicap.

(b) Refuse to negotiate for the sale or rental of, or otherwise make available or deny, real property to any person because of race, color, creed, sex, marital status, familial status, age, national origin, or the presence of any sensory, mental, or physical handicap.

(c) Discriminate against any person in the terms, conditions, privileges of sale or rental of real property, or in the provision of services or facilities in connection therewith, because of race, color, creed, sex, marital status, familial status, age, national origin, or the presence of any sensory, metal, or physical handicap.

(d) Make, print, or publish or cause to be made, printed, or published any notice, statement, or advertisement with respect to the sale or rental of real property that indicates any preference, limitation or discrimination based on race, color, creed, sex, marital status, familial status, age, national origin, or the presence of any sensory, mental, or physical handicap, or an intention to make any such preference, limitation or discrimination.

(e) Represent to any person because of race, color, creed, sex, marital status, familial status, age, national origin, or the presence of any sensory, mental, or physical handicap that any real property is not available for inspection, sale or rental when such real property is in fact available.

(f) Induce or attempt to induce any person to sell or rent any real property by representations regarding the entry or prospective entry into the neighborhood of a person or persons of a particular race, color, creed, sex, marital status, familial status, age, national origin, or the presence of any sensory, mental, or physical handicap.

(2) Nothing in this regulation shall be construed to define or restrict the power of any other federal, state or local government agency to pursue such measures as such agency may deem appropriate to ensure that the opportunity to purchase, rent or lease real property is made available to all persons without regard to race, color, creed, sex, marital status, familial status, age, national origin, or the presence of any sensory, mental, or physical handicap.

[]

NEW SECTION

WAC 308-124D-080  Payment of earned commissions. A broker may disburse real estate commissions earned by an associate broker or salesperson directly to a third party, including a natural person, corporation, or other business entity provided:

(1) The broker has and maintains for a period of three years, written instructions from the salesperson or associate broker directing to whom the funds are to be paid;

(2) The disbursal is made by check from the broker's business account; and

(3) The person or business entity receiving the funds has not engaged in any unlicensed real estate activity.

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OTS-2599.1

REPEALER

The following chapter of the Washington Administrative Code is repealed:

WAC 308-124F-010 Real estate office in same building as residence requirements.

WAC 308-124F-020 Discriminatory acts--Prohibition.

WAC 308-124F-030 Misuse of broker's license--Prohibited.