BILL REQ. #:  H-3696.4 

Read first time 01/16/08.   Referred to Committee on Commerce & Labor.

     AN ACT Relating to real estate licensure law; amending RCW 18.85.010, 18.85.030, 18.85.040, 18.85.050, 18.85.055, 18.85.060, 18.85.071, 18.85.080, 18.85.085, 18.85.090, 18.85.097, 18.85.100, 18.85.110, 18.85.120, 18.85.130, 18.85.140, 18.85.155, 18.85.165, 18.85.170, 18.85.180, 18.85.190, 18.85.200, 18.85.210, 18.85.215, 18.85.220, 18.85.225, 18.85.227, 18.85.230, 18.85.240, 18.85.261, 18.85.271, 18.85.281, 18.85.310, 18.85.315, 18.85.317, 18.85.320, 18.85.330, 18.85.340, 18.85.345, 18.85.350, 18.85.520, 18.85.530, and 18.85.560; adding new sections to chapter 18.85 RCW; recodifying RCW 18.85.010, 18.85.071, 18.85.080, 18.85.085, 18.85.040, 18.85.060, 18.85.210, 18.85.220, 18.85.030, 18.85.050, 18.85.055, 18.85.090, 18.85.560, 18.85.097, 18.85.110, 18.85.120, 18.85.130, 18.85.140, 18.85.155, 18.85.165, 18.85.170, 18.85.180, 18.85.190, 18.85.200, 18.85.215, 18.85.310, 18.85.320, 18.85.330, 18.85.315, 18.85.317, 18.85.100, 18.85.225, 18.85.227, 18.85.230, 18.85.240, 18.85.261, 18.85.271, 18.85.281, 18.85.340, 18.85.345, 18.85.350, 18.85.550, 18.85.520, 18.85.530, and 18.85.540; repealing RCW 18.85.095, 18.85.150, 18.85.400, 18.85.450, 18.85.460, 18.85.470, and 18.85.480; prescribing penalties; and providing an effective date.

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

Sec. 1   RCW 18.85.010 and 2003 c 201 s 1 are each amended to read as follows:
     ((In this chapter words and phrases have the following meanings unless otherwise apparent from the context:
     (1) "Real estate broker," or "broker," means a person, while acting for another for commissions or other compensation or the promise thereof, or a licensee under this chapter while acting in his or her own behalf, who:
     (a) Sells or offers for sale, lists or offers to list, buys or offers to buy real estate or business opportunities, or any interest therein, for others;
     (b) Negotiates or offers to negotiate, either directly or indirectly, the purchase, sale, exchange, lease, or rental of real estate or business opportunities, or any interest therein, for others;
     (c) Negotiates or offers to negotiate, either directly or indirectly, the purchase, sale, lease, or exchange of a manufactured or mobile home in conjunction with the purchase, sale, exchange, rental, or lease of the land upon which the manufactured or mobile home is, or will be, located;
     (d) Advertises or holds himself or herself out to the public by any oral or printed solicitation or representation that he or she is so engaged; or
     (e) Engages, directs, or assists in procuring prospects or in negotiating or closing any transaction which results or is calculated to result in any of these acts;
     (2) "Real estate salesperson" or "salesperson" means any natural person employed, either directly or indirectly, by a real estate broker, or any person who represents a real estate broker in the performance of any of the acts specified in subsection (1) of this section;
     (3) An "associate real estate broker" is a person who has qualified as a "real estate broker" who works with a broker and whose license states that he or she is associated with a broker;
     (4) The word "person" as used in this chapter shall be construed to mean and include a corporation, limited liability company, limited liability partnership, or partnership, except where otherwise restricted;
     (5))) The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Advertising" means any attempt by publication or broadcast, whether oral, written, or otherwise, to induce a person to use the services of a real estate firm, broker, managing broker, or designated broker.
     (2) "Broker" means a natural person acting on behalf of a real estate firm to perform real estate brokerage services under the supervision of a designated broker or managing broker.
     (3) "Business opportunity" ((shall)) means and includes business, business ((opportunity)) entity, and good will of an existing business or any one or combination thereof((;
     (6) "Commission" means the real estate commission of the state of Washington;
     (7) "Director" means the director of licensing;
     (8) "Real estate multiple listing association" means any association of real estate brokers:
     (a) Whose members circulate listings of the members among themselves so that the properties described in the listings may be sold by any member for an agreed portion of the commission to be paid; and
     (b) Which require in a real estate listing agreement between the seller and the broker, that the members of the real estate multiple listing association shall have the same rights as if each had executed a separate agreement with the seller;
     (9))) when the transaction or business includes an interest in real property.
     (4) "Clear and conspicuous" in an advertising statement means the representation or term being used is of such a color, contrast, size, or audibility, and presented in a manner so as to be readily noticed and understood.
     (5) "Clock hours of instruction" means actual hours spent in classroom instruction in any tax supported, public technical college, community college, or any other institution of higher learning or a correspondence course from any of the aforementioned institutions certified by such institution as the equivalent of the required number of clock hours, and the real estate commission may certify courses of instruction other than in the aforementioned institutions((;)).
     (((10) "Incapacitated" means the physical or mental inability to perform the duties of broker prescribed by this chapter; and
     (11))) (6) "Commercial real estate" means any parcel of real estate in this state other than real estate containing one to four residential units. "Commercial real estate" does not include a single-family residential lot or single-family residential units such as condominiums, townhouses, manufactured homes, or homes in a subdivision when sold, leased, or otherwise conveyed on a unit-by-unit basis, even when those units are part of a larger building or parcel of real estate, unless the property is sold or leased for a commercial purpose.
     (7) "Commission" means the real estate commission of the state of Washington.
     (8) "Controlling interest" means the ability to control either the operational or financial, or both, decisions of a firm.
     (9) "Department" means the Washington department of licensing.
     (10) "Designated broker" means:
     (a) A natural person who owns a sole proprietorship real estate firm; or
     (b) A natural person with a controlling interest in the firm who is designated by a legally recognized business entity such as a corporation, limited liability company, limited liability partnership, or partnership real estate firm, to act as a designated broker on behalf of the real estate firm, and whose managing broker's license receives an endorsement from the department of "designated broker."
     (11) "Director" means the director of the department of licensing.
     (12) "Inactive license" means the status of a license that is not expired and is not affiliated with a firm.
     (13) "Licensee" means a person holding a license as a real estate firm, managing broker, or broker.
     (14) "Managing broker" means a natural person acting on behalf of a real estate firm to perform real estate brokerage services under the supervision of the designated broker, and who may supervise other brokers or managing brokers licensed to the firm.
     (15) "Person" includes a natural person, corporation, limited liability company, limited liability partnership, partnership, or public or private organization or entity of any character, except where otherwise restricted.
     (16) "Real estate brokerage services" means any of the following services offered or rendered directly or indirectly to another, or on behalf of another for compensation or the promise or expectation of compensation, or by a licensee on the licensee's own behalf:
     (a) Listing, selling, purchasing, exchanging, optioning, leasing, renting of real estate, or any real property interest therein; or any interest in a cooperative;
     (b) Negotiating or offering to negotiate, either directly or indirectly, the purchase, sale, exchange, lease, or rental of real estate, or any real property interest therein; or any interest in a cooperative;
     (c) Listing, selling, purchasing, exchanging, optioning, leasing, renting, or negotiating the purchase, sale, lease, or exchange of a manufactured or mobile home in conjunction with the purchase, sale, lease, exchange, or rental of the land upon which the manufactured or mobile home is or will be located;
     (d) Advertising or holding oneself out to the public by any solicitation or representation that one is engaged in real estate brokerage services;
     (e) Advising, counseling, or consulting buyers, sellers, landlords, or tenants in connection with a real estate transaction;
     (f) Issuing a broker's price opinion. For the purposes of this chapter, "broker's price opinion" means an oral or written report of property value that is prepared by a licensee under this chapter;
     (g) Collecting, holding, or disbursing funds in connection with the negotiating, listing, selling, purchasing, exchanging, optioning, leasing, or renting of real estate or any real property interest; and
     (h) Performing property management services, which includes with no limitation: Marketing; leasing; renting; the physical, administrative, or financial maintenance of real property; or the supervision of such actions.
     (17) "Real estate firm" or "firm" means a sole proprietorship, partnership, limited liability partnership, corporation, limited liability company, or other legally recognized business entity conducting real estate brokerage services in this state and licensed by the department as a real estate firm.

Sec. 2   RCW 18.85.030 and 1997 c 322 s 2 are each amended to read as follows:
     The director shall appoint ((an)) adequate staff to assist him or her.

Sec. 3   RCW 18.85.040 and 2002 c 86 s 229 are each amended to read as follows:
     (1) The director, with the advice and approval of the commission, may issue rules ((and regulations)) to govern the activities of real estate brokers, ((associate real estate)) managing brokers, designated brokers, and ((salespersons)) real estate firms, consistent with this chapter and chapters 18.86 and 18.235 RCW, fix the times and places for holding examinations of applicants for licenses, and prescribe the method of conducting them.
     (2)(a) The director shall enforce all laws((,)) and rules((, and regulations)) relating to the licensing of real estate firms, brokers, ((associate real estate)) managing brokers, and ((salespersons)) designated brokers, grant or deny licenses including temporary licenses to real estate firms, brokers, ((associate real estate)) and managing brokers, ((and salespersons,)) and hold hearings.
     (b) The director shall enforce all laws and rules relating to the issuance of certificates of approval to real estate schools, real estate school administrators and instructors, and approval of real estate education courses.
     (3) The director shall establish by rule standards for licensure of applicants licensed in other jurisdictions and for reciprocity including the use of written recognition agreements.
     (4) The director may issue rules requiring all applicants to submit to a criminal background check, and the applicant is responsible for the payment of any fees incurred.
     (5) The director shall adopt rules and establish standards relating to permissible forms of clear and conspicuous advertising by licensees.
     (6) The director shall institute a program of real estate education ((including, but not limited to, instituting a)). The program ((of education)) may include courses at institutions of higher education in Washington, trade schools, private real estate schools, and preapproved forums and conferences. The ((overall)) program shall include establishing minimum levels of ongoing education for licensees relating to the practice of real estate ((by real estate brokers and salespersons)) under this chapter. The program may also include the development or implementation of curricula courses, educational materials, or approaches to education relating to real estate when required((,)) or approved((, or certified)) for continuing education credit. The director may develop and provide educational programs and materials for members of the public. The director may enter into contracts with other persons or entities, whether publicly or privately owned or operated, to assist in developing or implementing the real estate education program.
     (((5))) (7) The director shall charge a fee((, as prescribed by the director by rule,)) for the certification of courses of instruction, instructors, and schools.
     (8) The director may take disciplinary action against real estate schools and real estate school administrators and instructors based upon conduct, acts, or conditions prescribed by rule, and may impose any or all of the following sanctions and fines:
     (a) Withdrawal of the certificate of approval;
     (b) Suspension of the certificate of approval for a fixed or indefinite term;
     (c) Stayed suspension for a designated period of time;
     (d) Censure or reprimand;
     (e) Payment of a fine for each violation not to exceed one thousand dollars per day per violation. Each day a violation continues or occurs is a separate violation for purposes of imposing a penalty;
     (f) Denial of an initial or renewal application for a certificate of approval; and
     (g) Other corrective action.

Sec. 4   RCW 18.85.050 and 1972 ex.s. c 139 s 4 are each amended to read as follows:
     ((Neither)) While employed with the department, the director ((nor any)) and employees((, shall be interested in any real estate business regulated by chapter 139, Laws of 1972 ex. sess.: PROVIDED, That)) who administer, regulate, or enforce real estate laws and rules must relinquish interest in any real estate business regulated by this chapter. If any real estate ((broker, associate real estate broker, or salesman)) licensee is employed by the director ((or by the commission)) as an employee, the license of ((such)) the broker, ((associate)) real estate ((broker)) firm, or ((salesman shall not be revoked, suspended, or canceled by reason thereof)) managing broker is placed on inactive status and remains inactive until the cessation of employment with the director.

Sec. 5   RCW 18.85.055 and 1987 c 514 s 2 are each amended to read as follows:
     ((No)) Persons licensed under this chapter who ((is employed by the state and who is conducting real estate transactions on behalf of the state may hold an active license under this chapter)) are employed by a town, city, or county, and who are conducting real estate transactions on behalf of the town, city, or county, may hold active licenses under this chapter, and their designated and managing brokers are not responsible for their real estate transactions on behalf of their town, city, or county employer.

Sec. 6   RCW 18.85.060 and 1997 c 322 s 3 are each amended to read as follows:
     The director shall adopt a seal with the words "real estate director, state of Washington," and such other device as the director may approve engraved thereon, by which ((he or she)) the director shall authenticate the proceedings of the office. Copies of all records and papers in the office of the director certified to be ((a)) true ((copy)) copies under the hand and seal of the director shall be received in evidence in all cases equally and with like effect as the originals. The director may ((deputize)) authorize one or more assistants to certify records and papers.

Sec. 7   RCW 18.85.071 and 1972 ex.s. c 139 s 6 are each amended to read as follows:
     There is established the real estate commission of the state of Washington, consisting of the director who is the chair of the commission and six commission members who shall act in an advisory capacity to the director. The commission shall annually elect a vice-chair to conduct the commission meetings in the absence of the director.
     The governor must appoint six commission members ((shall be appointed by the governor in the following manner:)) for a term of six years each((, with the exception of the first appointees, who shall be appointed one for a term of one year, one for a term of two years, one for a term of three years, one for a term of four years, one for a term of five years, and one for a term of six years, with all other subsequent appointees to be appointed for a six year term)). At least two of the commission members shall be selected from the area in the state west of the Cascade mountain range and at least two shall be selected from that area of the state east of the Cascade mountain range. No commission member shall be appointed who has had less than five years' experience in ((the sale, operation, or management of)) performing real estate brokerage services in this state, or has had at least three years' experience in investigative work of a similar nature, preferably in connection with the administration of real estate license law of this state or elsewhere. The governor must fill by appointment any vacancies on the commission ((shall be filled by appointment by the governor)) for the unexpired term.

Sec. 8   RCW 18.85.080 and 1984 c 287 s 49 are each amended to read as follows:
     The six board members of the commission shall be compensated in accordance with RCW 43.03.240, plus travel expenses in accordance with RCW 43.03.050 and 43.03.060 when they ((shall be)) are called into session by the director ((or when presiding at examinations for applicants for licenses)) or when otherwise engaged in the business of the commission. The commission shall meet four times a year or at the call of the director.

Sec. 9   RCW 18.85.085 and 1997 c 322 s 4 are each amended to read as follows:
     The commission shall have authority to hold educational conferences for the benefit of the industry, and shall conduct examinations of applicants for licenses under this chapter. The commission shall ensure that examinations are prepared and administered at examination centers throughout the state and may approve examination locations in foreign jurisdictions.

NEW SECTION.  Sec. 10   (1) The minimum requirements for a firm to receive a license are that the firm:
     (a) Designates a managing broker as the "designated broker" who has authority to act for the firm, and provides the director with the name of the owner or owners or any others with a controlling interest in the firm;
     (b) Assures that no person with controlling interest in the firm is the subject of a final departmental order, as provided in chapter 34.05 RCW, suspending or revoking any type of real estate license; and
     (c) Does not adopt a name that is the same or similar to currently issued licenses or that implies the real estate firm is a nonprofit or research organization, or is a public bureau or group.
     (2) An applicant for a real estate firm's license shall provide the director with:
     (a) The firm name and unified business identifier number;
     (b) Washington business mailing and street address, contact telephone number, if any, and a mailing and physical address for either the firm's trust account or business records location, or both;
     (c) Internet home page site and business e-mail address, if any;
     (d) Application fee prescribed by the director; and
     (e) Any other information the director may require.
     (3) The firm must provide the following to the department for renewal of the firm's license:
     (a) Renewal fee;
     (b) Notice of any change in controlling interest for the firm; and
     (c) Notice of any change in the firm's registration or certificate of authority filed with the secretary of state.

Sec. 11   RCW 18.85.090 and 1994 c 291 s 1 are each amended to read as follows:
     (1) The minimum requirements for an individual to receive a broker's license are that the individual:
     (a) Is eighteen years of age or older;
     (b) Has a high school diploma or its equivalent;
     (c) ((Has had a minimum of two years of actual experience as a full-time real estate salesperson in this state or in another state having comparable requirements within the five years previous to applying for the broker's license examination or is, in the opinion of the director, otherwise and similarly qualified, or is otherwise qualified by reason of practical experience in a business allied with or related to real estate;
     (d))) Except as provided in RCW 18.85.097 (as recodified by this act), has furnished proof, as the director may require, that the applicant has successfully completed ((one hundred twenty)) ninety hours of instruction in real estate. Instruction must include ((one course in brokerage management, one course in real estate law, one course in business management, and one elective course)) courses as prescribed by the director including fundamentals and practices. Each course must be completed within ((five)) two years ((prior to)) before applying for the broker's license examination((, be at least thirty clock hours,)) and be approved by the director. The applicant must pass a course examination, approved by the director for each course used to satisfy the broker's license requirement; and
     (((e))) (d) Has passed the broker's license examination.
     (2) ((Nothing in this section applies to persons who are licensed as brokers under any real estate law in Washington that exists prior to this law's enactment, but only if their license has not been subsequently canceled or revoked.)) The broker's license may be renewed upon completion of continuing education courses and payment of the renewal fee as prescribed by the director. The education requirements for the first renewal of the broker's license must include ninety hours of courses as prescribed by the director, including real estate law, advance practices, and continuing education.
     (3) The broker is licensed to one firm at a time and is supervised by a designated or managing broker.

NEW SECTION.  Sec. 12   (1) The minimum requirements for an individual to receive a managing broker's license are that the individual:
     (a) Is eighteen years of age or older;
     (b) Has a high school diploma or its equivalent;
     (c) Has had a minimum of three years of licensed experience as a full-time real estate broker in this state or in another jurisdiction having comparable requirements within the five years previous to applying for the managing broker's license examination or is otherwise qualified by reason of practical experience in a business allied with or related to real estate as prescribed by rule;
     (d) Except as provided in RCW 18.85.097 (as recodified by this act), has furnished proof, as the director may require, that the applicant has successfully completed ninety hours of instruction in real estate. Instruction must include courses as prescribed by the director including real estate brokerage management, business management, and advanced real estate law. The director may approve and accept other related education. Each course must be completed within three years before applying for the managing broker's license examination, be at least thirty clock hours, and be approved by the director. The applicant must pass a course examination, approved by the director for each course that is used to satisfy the managing broker's license requirement; and
     (e) Has passed the managing broker's license examination.
     (2) A managing broker's license may be renewed upon completion of continuing education courses and payment of the renewal fee as prescribed by the director.
     (3) A managing broker can be licensed to one firm only at any one time.

NEW SECTION.  Sec. 13   (1) A designated broker must hold a license as a managing broker in accordance with section 12 of this act, and may act as a designated broker for more than one firm. The department shall register designated brokers.
     (2) A managing broker for a firm must be registered to that firm as its designated broker if that managing broker accepts endorsements from other firms as their designated broker.
     (3) Registered designated brokers must immediately notify the department of additional firms for which they serve as designated broker, and shall receive a printed endorsement on their managing broker's licenses indicating the names of all firms for which they serve as designated broker.

Sec. 14   RCW 18.85.097 and 1994 c 291 s 4 are each amended to read as follows:
     The director may allow for substitution of the clock-hour requirements in RCW 18.85.090(1)(((d) and 18.85.095(1)(b))) (c) (as recodified by this act) and section 12(1)(d) of this act, if the director makes a determination that the individual is otherwise and similarly qualified by reason of completion of equivalent educational coursework in any institution of higher education as defined in RCW 28B.10.016 or any degree-granting institution as defined in RCW 28B.85.010 approved by the director. The director shall establish, by rule, guidelines for determining equivalent educational coursework.

Sec. 15   RCW 18.85.100 and 1997 c 322 s 6 are each amended to read as follows:
     It ((shall be)) is unlawful for any person to act as a real estate broker, ((associate real estate)) managing broker, or real estate ((salesperson)) firm without first obtaining a license therefor, and otherwise complying with the provisions of this chapter.
     No suit or action shall be brought for the collection of compensation as a real estate broker, ((associate)) real estate firm, managing broker, or ((real estate salesperson)) designated broker, without alleging and proving that the plaintiff was a duly licensed real estate broker, ((associate real estate)) managing broker, or real estate ((salesperson prior to)) firm before the time of offering to perform any ((such act or service)) real estate transaction or procuring any promise or contract for the payment of compensation for any ((such)) contemplated ((act or service)) real estate transaction.

Sec. 16   RCW 18.85.110 and 1997 c 322 s 7 are each amended to read as follows:
     This chapter shall not apply to:
     (1) Any person who purchases or disposes of property and/or a business opportunity for ((his or her)) that individual's own account, or that of a group of which ((he or she)) the person is a member((, or who, as the owner or part owner of property, and/or a business opportunity, in any way disposes of the same; nor,)), and their employees;
     (2) Any duly authorized attorney-in-fact acting under a power of attorney without compensation((, or));
     (3) An attorney-at-law in the performance of ((his or her duties; nor, (3))) the practice of law;
     (4) Any receiver, trustee in bankruptcy, executor, administrator, guardian, personal representative, or any person acting under the order of any court, ((or)) selling under a deed of trust, or acting as trustee under a trust; ((nor, (4)))
     (5) Any secretary, bookkeeper, accountant, or other office personnel who does not engage in any conduct or activity specified in any of the definitions under RCW 18.85.010 (as recodified by this act); ((nor, (5) any owner of rental or lease property, members of the owner's family whether or not residing on such property, or a resident manager of a complex of residential dwelling units wherein such manager resides; nor, (6) any person who manages residential dwelling units on an incidental basis and not as his or her principal source of income so long as that person does not advertise or hold out to the public by any oral or printed solicitation or representation that he or she is so engaged; nor, (7)))
     (6) Employees of towns, cities, counties, or governmental entities involved in an acquisition of property for right-of-way, eminent domain, or threat of eminent domain;
     (7) Only with respect to the rental or lease of individual storage space, any person who owns or manages a self-service storage facility as defined under chapter 19.150 RCW;
     (8) Any person providing referrals to licensees who is not involved in the negotiation, execution of documents, or related real estate brokerage services, and compensation is not contingent upon receipt of compensation by the licensee or the real estate firm;
     (9) Certified public accountants if they do not promote the purchase, listing, sale, exchange, optioning, leasing, or renting of a specific real property interest;
     (10) Any natural persons or entities including title or escrow companies, escrow agents, attorneys, or financial institutions acting as escrow agents if they do not promote the purchase, listing, sale, exchange, optioning, leasing, or renting of a specific real property interest;
     (11) Investment counselors if they do not promote the purchase, listing, sale, exchange, optioning, leasing, or renting of a specific real property interest; and
     (12) Any person employed or retained by, for, or on behalf of the owner or on behalf of a designated or managing broker if the person is limited in property management to any of the following activities:
     (a) Delivering a lease application, a lease, or any amendment thereof to any person;
     (b) Receiving a lease application, lease, or amendment thereof, a security deposit, rental payment, or any related payment for delivery to and made payable to the real estate firm or owner;
     (c) Showing a rental unit to any person, or executing leases or rental agreements, and the employee or retainee is acting under the direct instruction of the owner or designated or managing broker;
     (d) Providing information about a rental unit, a lease, an application for lease, or a security deposit and rental amounts to any prospective tenant; or
     (e) Assisting in the performance of property management functions by carrying out administrative, clerical, or maintenance tasks.

Sec. 17   RCW 18.85.120 and 1997 c 322 s 8 are each amended to read as follows:
     ((Any)) (1) A person desiring a license as a real estate firm shall apply on a form prescribed by the director. A person desiring ((to be)) a license as a real estate broker((, associate real estate broker,)) or ((real estate salesperson,)) managing broker must pay an examination fee and pass an examination ((as provided in this chapter)). ((Such)) The person shall ((make application)) apply for an examination and for a license on a form prescribed by the director. Concurrently, the applicant shall:
     (((1) Pay an examination fee as prescribed by the director by rule.)) (a) Furnish other proof as the director may require concerning the honesty, truthfulness, and good reputation, as well as the identity, which may include fingerprints and criminal background checks, of any applicants for a license, or of the officers of a corporation, limited liability company, other legally recognized business entity, or the partners of a limited liability partnership or partnership, making the application;
     (((2))) (b) If the applicant is a corporation, furnish a certified copy of its articles of incorporation, and a list of its officers and directors and their addresses. If the applicant is a foreign corporation, the applicant shall furnish a certified copy of certificate of authority to conduct business in the state of Washington, a list of its officers and directors and their addresses, and evidence of current registration with the secretary of state. If the applicant is a limited liability company or other legally recognized business entity, the applicant shall furnish a list of the members and managers of the company and their addresses. If the applicant is a limited liability partnership or partnership, the applicant shall furnish a list of the partners thereof and their addresses((.));
     (((3) Furnish such other proof as the director may require concerning the honesty, truthfulness, and good reputation, as well as the identity, which may include fingerprints, of any applicants for a license, or of the officers of a corporation, or limited liability company, or the partners of a limited liability partnership or partnership, making the application.)) (c) Unless the applicant is a corporation or limited liability company, complete a fingerprint-based background check through the Washington state patrol criminal identification system and through the federal bureau of investigation. The applicant must submit the fingerprints and required fee for the background check to the director for submission to the Washington state patrol. The director may consider the recent issuance of a license that required a fingerprint-based national criminal information background check, or recent employment in a position that required a fingerprint-based national criminal information background check, in addition to fingerprints to accelerate the licensing and endorsement process. The director may adopt rules to establish a procedure to allow a person covered by this section to have the person's background rechecked under this subsection upon application for a renewal license.
     (2) The director must develop by rule a procedure and schedule to ensure all applicants for licensure have a fingerprint and background check done on a regular basis.

Sec. 18   RCW 18.85.130 and 1997 c 322 s 9 are each amended to read as follows:
     The director shall provide each original applicant for an examination ((with a manual containing)) a sample list of questions and answers pertaining to real estate law and the operation of the business and may provide the same at cost to any licensee or to other members of the public. The director shall ascertain by written examination, that each applicant((, and in case of a corporation, limited liability company, limited liability partnership, or partnership, that each officer, agent, or partner thereof whom it proposes to act as licensee,)) has:
     (1) An appropriate knowledge of the English language, including reading, writing, ((spelling,)) and ((arithmetic)) mathematics;
     (2) An understanding of the principles of conveying real estate ((conveyancing,)) and the general purposes and legal effect of deeds, ((mortgages, land contracts of sale, exchanges, rental and option agreements)) finance contracts, and leases;
     (3) An understanding of the principles of ((land economics)) real estate investment, property valuation, and appraisals;
     (4) An understanding of ((the obligations between principal and agent)) real estate broker agency relationships;
     (5) An understanding of the principles of real estate practice and the canons of business ethics pertaining thereto; and((,))
     (6) An understanding of the provisions of chapters 18.86 and 18.235 RCW and this chapter.
     The examination for real estate managing brokers shall be more exacting than that for real estate ((salespersons)) brokers.
     All moneys received for the sale of ((the manual)) educational literature to licensees and members of the public shall be placed in the real estate commission fund ((to be returned to the current biennium operating budget)).

Sec. 19   RCW 18.85.140 and 1997 c 322 s 10 are each amended to read as follows:
     Before receiving ((his or her)) a license, every real estate broker, ((every associate real estate)) managing broker, and ((every real estate salesperson)) firm must pay a license fee as prescribed by the director by rule. ((Every)) A license issued under the provisions of this chapter expires ((on the applicant's second birthday following issuance of the license)) two years from the issuance date. Licenses issued to real estate firms that are partnerships, limited liability partnerships, limited liability companies, ((and)) corporations, and other legally recognized business entities expire on ((a)) the date ((prescribed by the director by rule, except that if)) when the registration or certificate of authority filed with the secretary of state expires((, the real estate broker's license issued shall expire on that date)). Licenses must be renewed every two years on or before the date established under this section and a biennial renewal license fee as prescribed by the director by rule must be paid. A license is considered expired when the licensee fails to meet the renewal requirements as of the date of renewal for that license.
     If the ((application for a renewal license is not received by the)) director does not receive the application for a renewal license on or before the renewal date, a penalty fee as prescribed by the director by rule shall be paid. Acceptance by the director of an application for renewal after the renewal date shall not be a waiver of the delinquency.
     The license of ((any)) a person whose license renewal fee is not received within one year from the date of expiration ((shall be)) is canceled. This person may obtain a new license by satisfying the procedures and requirements as prescribed by the director by rule.
     The director ((shall)) may issue to each active licensee a license and a pocket identification card in ((such)) the form and size as ((he or she shall prescribe)) prescribed by rule.
     The director must develop by rule a procedure and a schedule to ensure all active licensees and licensees applying for active status, renewal, or reinstatement have a fingerprint and background check done on a regular basis.

Sec. 20   RCW 18.85.155 and 1997 c 322 s 12 are each amended to read as follows:
     Responsibility for any ((salesperson, associate)) real estate broker, managing broker, or branch manager in conduct covered by this chapter shall rest with the designated broker to which such licensees shall be licensed.
     In addition to the designated broker, a branch manager shall bear responsibility for ((salespersons and associate)) brokers and managing brokers operating under the branch manager at a branch office.

NEW SECTION.  Sec. 21   (1) The designated broker or managing broker shall supervise the conduct of brokers and managing brokers for compliance with this chapter, chapter 18.235 RCW, and RCW 18.86.030.
     (2) Listings, transactions, management agreements, and other contracts relating to providing brokerage services are property of the real estate firm. Brokers shall timely deliver to their appointed managing broker all funds and records required to be held or maintained by the real estate firm. A managing broker is responsible for such funds and records only after they are received from the broker. A managing broker shall timely deliver to the designated broker all funds and records required to be held or maintained by the real estate firm. The designated broker is responsible for such funds and records only after they are received from the managing broker or broker.
     (3) The designated broker may delegate by written agreement the duties of safe handling of client funds, maintenance of trust accounts, and transaction and trust account records, along with supervision of brokers, to a managing broker licensed to the firm. The designated broker shall maintain a record of the firm's managing brokers and delegations to managing brokers.
     (4) The designated broker or the designated broker's delegate has the authority to amend, modify, bind, create, rescind, terminate, or release real estate brokerage service contracts on behalf of the real estate firm. The designated broker has the authority to accept new or transferred licensees to represent the real estate firm.
     (5) A broker who supervises or exercises right of control over other brokers in the performance of real estate brokerage services must be licensed as a managing broker.
     (6) During the first two years of a broker's licensure, a managing broker must provide a heightened level of supervision as provided by rule of the director.

Sec. 22   RCW 18.85.165 and 1997 c 322 s 13 are each amended to read as follows:
     All real estate brokers((, associate brokers,)) and ((salespersons)) managing brokers shall furnish proof as prescribed by rule of the director ((may require)) that they have successfully completed ((a total of thirty)) at least the required minimum number of thirty clock hours of instruction every two years in real estate courses approved by the director ((in order)) to renew their licenses. The director may adopt rules to limit the number of hours of distance education courses that may be used for license renewal. Up to fifteen clock hours of instruction ((beyond the thirty hours in two years)) in excess of the required thirty clock hours acquired within the immediately preceding two-year period may be carried forward for credit in a subsequent two-year period. ((To count towards this requirement, a course shall be commenced within thirty-six months before the proof date for renewal.)) Examinations shall not be required to fulfill any part of the education requirement in this section. ((This section shall apply to renewal dates after January 1, 1991.))

Sec. 23   RCW 18.85.170 and 1997 c 322 s 14 are each amended to read as follows:
     No license issued under the provisions of this chapter shall authorize any person other than the person ((to whom it is issued)) named on the license to do any act by virtue thereof nor to operate in any other manner than under ((his or her own)) the name ((except:
     (1) When a license is issued to a corporation it shall entitle one officer thereof, to be named by the corporation in its application, who shall qualify the same as any other broker, to act as a real estate broker on behalf of said corporation, without the payment of additional fees;
     (2) When a license is issued to a limited liability company it shall entitle one manager or member of the company, to be named by the limited liability company in its application, who shall qualify the same as any broker, to act as a real estate broker on behalf of the limited liability company, without the payment of additional fees;
     (3) When a license is issued to a limited liability partnership or partnership it shall entitle one partner thereof to be named in the application, who shall qualify to act as a real estate broker on behalf of the limited liability partnership or partnership, without the payment of additional license fees;
     (4) A licensed broker, associate broker, or salesperson may operate and/or advertise under a name other than the one under which the license is issued by obtaining the written consent of the director to do so;
     (5) A broker may establish one or more branch offices under a name or names different from that of the main office if the name or names are approved by the director, so long as each branch office is clearly identified as a branch or division of the main office. No broker may establish branch offices under more than three names. Both the name of the branch office and of the main office must clearly appear on the sign identifying the office, if any, and in any advertisement or on any letterhead of any stationery or any forms, or signs used by the real estate firm on which either the name of the main or branch offices appears)) appearing on the license. A real estate firm has the option to utilize one or more assumed names in the conduct and operation of the firm's real estate business. However, before using a name other than that appearing on the license, the firm must obtain a separate license for each and every additional assumed name. All real estate brokerage services shall be conducted in the name of the real estate firm or its licensed assumed name or names.

Sec. 24   RCW 18.85.180 and 1997 c 322 s 15 are each amended to read as follows:
     Every licensed real estate ((broker)) firm must have and maintain an office or records depositories accessible in this state ((accessible)) to ((the public which shall serve as the office for the transaction of business. Any office so established must comply with the zoning requirements of city or county ordinances and the broker's license must be prominently displayed therein)) representatives of the director. The firm must maintain and produce a complete set of records as required by this chapter. The director may prescribe rules for alternative and electronic record storage.

Sec. 25   RCW 18.85.190 and 1989 c 161 s 3 are each amended to read as follows:
     A ((real estate)) designated broker may apply to the director for authority to establish one or more branch offices under the same name as the ((main office)) real estate firm upon the payment of a fee as prescribed by the director by rule. The director shall issue a duplicate license for each of the branch offices showing the location of the ((main office)) real estate firm and the particular branch. Each duplicate license shall be prominently displayed in the office for which it is issued. Each branch office shall be required to have a branch manager who shall be ((an associate)) a managing broker authorized by the designated broker to perform the duties of a branch manager.
     A branch office license shall not be required where real estate sales activity is conducted on and, limited to a particular subdivision or tract, if a licensed office or branch office is located within thirty-five miles of the subdivision or tract.

Sec. 26   RCW 18.85.200 and 1987 c 332 s 7 are each amended to read as follows:
     A designated broker, managing broker, or firm shall give notice in writing ((shall be given)) to the director of any change ((by a real estate broker, associate broker, or salesperson)) of ((his or her)) that licensee's business or records depository location ((or of any branch office)). Upon the surrender of the original license for the business ((or the duplicate license applicable to a branch office,)) and a payment of a fee as prescribed by the director by rule, the director shall issue a new license ((or duplicate license, as the case may be,)) covering the new location.

Sec. 27   RCW 18.85.210 and 1997 c 322 s 16 are each amended to read as follows:
     The director may publish a copy of this chapter and ((such)) information relative to the enforcement of this chapter and may mail a copy of this chapter and the information to each licensed broker, managing broker, and firm.

Sec. 28   RCW 18.85.215 and 1994 c 291 s 3 are each amended to read as follows:
     (1) Any license issued under this chapter and not otherwise revoked ((shall be)) is deemed "inactive" at any time it is delivered to the director. Until reissued under this chapter, the holder of an inactive license ((shall be deemed to be unlicensed)) is prohibited from conducting real estate brokerage services.
     (2) An inactive license may be renewed on the same terms and conditions as an active license, except that a person with an inactive license need not comply with the education requirements of RCW ((18.85.095(2)(a))) 18.85.090(1)(c) or 18.85.165 (as recodified by this act). Failure to renew shall result in cancellation in the same manner as an active license.
     (3) An inactive license may be placed in an active status upon completion of an application as provided by the director and upon compliance with this chapter and the rules adopted pursuant thereto. If a holder has an inactive license for more than three years, the holder must show proof of successfully completing a thirty clock hour course in real estate within one year ((prior to)) before the application for active status. Holders employed by the state and conducting real estate transactions on behalf of the state are exempt from this course requirement.
     (4) The provisions of this chapter relating to the denial, suspension, and revocation of a license ((shall be)) are applicable to an inactive license as well as an active license, except that when proceedings to suspend or revoke an inactive license have been initiated, the license shall remain inactive until the proceedings have been completed.

Sec. 29   RCW 18.85.220 and 1993 c 50 s 1 are each amended to read as follows:
     All fees required under this chapter shall be set by the director in accordance with RCW 43.24.086 and shall be paid to the state treasurer. All fees paid under the provisions of this chapter shall be placed in the real estate commission account in the state treasury. All money derived from fines imposed under this chapter shall be deposited in the real estate education program account created ((by)) in RCW 18.85.317 (as recodified by this act).

Sec. 30   RCW 18.85.225 and 1996 c 293 s 14 are each amended to read as follows:
     The director shall suspend the license of any natural person who has been certified by a lending agency and reported to the director for nonpayment or default on a federally or state-guaranteed educational loan or service-conditional scholarship. ((Prior to)) Before the suspension, the agency must provide the ((person)) individual an opportunity for a brief adjudicative proceeding under RCW 34.05.485 through 34.05.494 and issue a finding of nonpayment or default on a federally or state-guaranteed educational loan or service-conditional scholarship. The ((person's)) individual's license shall not be reissued until the ((person)) individual provides the director a written release issued by the lending agency stating that the ((person)) individual is making payments on the loan in accordance with a repayment agreement approved by the lending agency. If the ((person)) individual has continued to meet all other requirements for licensure during the suspension, reinstatement ((shall be)) is automatic upon receipt of the notice and payment of any reinstatement fee the director may impose.

Sec. 31   RCW 18.85.227 and 1997 c 58 s 826 are each amended to read as follows:
     The director shall immediately suspend the license of ((a)) any broker or ((salesperson)) managing broker who has been certified pursuant to RCW 74.20A.320 by the department of social and health services as ((a person)) an individual who is not in compliance with a support order or a ((residential or)) visitation order. If the ((person)) individual has continued to meet all other requirements for reinstatement during the suspension, reissuance of the license ((shall be)) is automatic upon the director's receipt of a release issued by the department of social and health services stating that the ((person)) individual is in compliance with the order.

Sec. 32   RCW 18.85.230 and 2002 c 86 s 230 are each amended to read as follows:
     In addition to the unprofessional conduct described in RCW 18.235.130, the director may take disciplinary action against any person engaged in the business or acting in the capacity of a real estate broker, ((associate real estate)) managing broker, designated broker, or real estate ((salesperson)) firm, regardless of whether the transaction was for ((his or her)) the person's own account or in ((his or her)) a capacity as broker, ((associate real estate)) managing broker, designated broker, or real estate ((salesperson)) firm, and may impose any of the sanctions and fines specified in RCW 18.235.110 for any holder or applicant who is guilty of:
     (1) Violating any of the provisions of this chapter or any lawful rules ((or regulations)) made by the director pursuant thereto or violating a provision of chapter 64.36, 19.105, or ((58.19)) 18.235 RCW or RCW 18.86.030 or the rules adopted under those chapters or section;
     (2) Making, printing, publishing, distributing, or causing, authorizing, or knowingly permitting the making, printing, publication or distribution of false statements, descriptions or promises of such character as to reasonably induce any person to act thereon, if the statements, descriptions, or promises purport to be made or to be performed by either the licensee or his or her principal and the licensee then knew or, by the exercise of reasonable care and inquiry, could have known, of the falsity of the statements, descriptions or promises;
     (3) Knowingly committing, or being a party to, any material fraud, misrepresentation, concealment, conspiracy, collusion, trick, scheme, or device whereby any other person lawfully relies upon the word, representation or conduct of the licensee;
     (4) Accepting the services of, or continuing in a representative capacity, any ((associate)) broker or ((salesperson)) managing broker who has not been granted a license, or after his or her license has been revoked or during a suspension thereof;
     (5) Conversion of any money, contract, deed, note, mortgage, or abstract or other evidence of title, to ((his or her)) the person's own use or to the use of ((his or her)) that person's principal or of any other person, when delivered ((to him or her)) in trust or on condition, in violation of the trust or before the happening of the condition; and failure to return any money or contract, deed, note, mortgage, abstract, or other evidence of title within thirty days after the owner thereof is entitled thereto, and makes demand therefor, ((shall be)) is prima facie evidence of such conversion;
     (6) Failing, upon demand, to disclose any information within ((his or her)) the person's knowledge ((to)), or to produce any document, book, or record in ((his or her)) the person's possession for inspection ((of)) by the director or ((his or her)) the director's authorized representatives acting by authority of law;
     (7) Continuing to sell any real estate, or operating according to a plan of selling, whereby the interests of the public are endangered, after the director has, by order in writing, stated objections thereto;
     (8) Advertising in any manner without ((affixing)) including the ((broker's)) real estate firm's name or assumed name as licensed((, and in the case of a salesperson or associate broker, without affixing the name of the broker as licensed for whom or under whom the salesperson or associate broker operates, to)) in a clear and conspicuous manner in the advertisement; except, that ((a)) real estate brokers, ((associate real estate)) managing brokers, or ((real estate salesperson)) firms advertising their personally owned real property must only disclose that they hold a real estate license;
     (9) Accepting other than cash or its equivalent as earnest money unless that fact is communicated to the owner ((prior to his or her)) before the owner's acceptance of the offer to purchase, and such fact is shown in the ((earnest money receipt)) purchase and sale agreement;
     (10) Charging or accepting compensation from more than one party in any one transaction without first making full disclosure in writing of all the facts to all the parties interested in the transaction;
     (11) Accepting, taking, or charging any undisclosed commission, rebate, or direct profit on expenditures made for the principal;
     (12) Accepting employment or compensation for appraisal of real property contingent upon reporting a predetermined value;
     (13) Issuing ((an appraisal)) a report on any real property in which the broker, ((associate)) managing broker, or ((salesperson)) real estate firm has an interest unless ((his or her)) that interest is clearly stated in the ((appraisal)) report;
     (14) Misrepresentation of ((his or her)) membership in any state or national real estate association;
     (15) Discrimination against any person in hiring or in ((sales)) real estate brokerage service activity, on the basis of any of the provisions of any local, county, state, or federal antidiscrimination law;
     (16) Failing to keep an escrow or trustee account of funds deposited ((with him or her)) relating to a real estate transaction, for a period of three years, showing to whom paid, and ((such)) other pertinent information as the director may require, such records to be available to the director, or ((his or her)) the director's representatives, on demand, or upon written notice given to the bank;
     (17) In the case of a firm and its designated broker, failing to preserve ((for three years following its consummation)) records relating to any real estate transaction for three years following the submission of the records to the firm;
     (18) Failing to furnish a copy of any listing, sale, lease, or other contract relevant to a real estate transaction to all signatories thereof ((at the time of)) within a reasonable time following execution;
     (19) In the case of a broker or managing broker, acceptance ((by a branch manager, associate broker, or salesperson)) of a commission or any valuable consideration for the performance of any acts specified in this chapter, from any person, except the licensed real estate ((broker)) firm with whom ((he or she)) the broker or managing broker is licensed;
     (20) To direct any transaction involving his or her principal, to any lending institution for financing or to any escrow company, in expectation of receiving a kickback or rebate therefrom, without first disclosing ((such)) the expectation to his or her principal;
     (21) Buying, selling, or leasing directly, or through a third party, any interest in real property without disclosing in writing that ((he or she holds)) the person is a real estate licensee;
     (22) In the case of ((a broker licensee)) real estate firms, and managing and designated brokers, failing to exercise adequate supervision over the activities of ((his or her licensed associate)) their brokers and ((salespersons)) managing brokers within the scope of this chapter;
     (23) Any conduct in a real estate transaction which demonstrates bad faith, dishonesty, untrustworthiness, or ((incompetency)) incompetence;
     (24) Acting as a vehicle dealer, as defined in RCW 46.70.011, without having a license to do so; or
     (25) Failing to ensure that the title is transferred under chapter 46.12 RCW when engaging in a transaction involving a mobile or manufactured home as a broker, ((associate)) managing or designated broker, or ((salesperson)) firm.

Sec. 33   RCW 18.85.240 and 1988 c 205 s 6 are each amended to read as follows:
     The director may ((deputize)) authorize one or more assistants to perform ((his or her)) the director's duties with reference to disciplinary action.

Sec. 34   RCW 18.85.261 and 2002 c 86 s 231 are each amended to read as follows:
     The hearing officer shall cause a transcript of all ((such)) adjudicative proceedings to be kept by a reporter and shall upon request after completion thereof, furnish a copy of ((such)) the transcript to the licensed person or applicant accused in ((such)) the proceedings at the expense of the licensee or applicant. The hearing officer shall certify the transcript of proceedings to be true and correct. If the director finds that the statement or accusation is not proved by a fair preponderance of evidence, the director shall notify the licensee or applicant and the person making the accusation and shall dismiss the case.

Sec. 35   RCW 18.85.271 and 2002 c 86 s 232 are each amended to read as follows:
     If the director decides, after ((such)) an adjudicative hearing, that the evidence supports the accusation by a preponderance of evidence, the director may impose sanctions authorized under RCW 18.85.040 (as recodified by this act). In such event the director shall enter an order to that effect and shall file the same in ((his or her)) the director's office and immediately mail a copy to the affected party at the address of record with the department. Upon instituting appeal in the superior court, the appellant shall give a cash bond to the state of Washington, which bond shall be filed with the clerk of the court, in the sum of ((five hundred)) one thousand dollars to be approved by the judge of said court, conditioned to pay all costs that may be awarded against ((such)) an appellant in the event of an adverse decision, ((such)) the bond and notice to be filed within thirty days from the date of the director's decision.

Sec. 36   RCW 18.85.281 and 1997 c 322 s 18 are each amended to read as follows:
     The director shall prepare at appellant's expense and shall certify a transcript of the whole record of all matters involved in the appeal, which ((shall be thereupon delivered by)) the director shall deliver to the court in which the appeal is pending. The appellant ((shall be)) is notified of the filing of the transcript and the cost thereof and shall within fifteen days thereafter pay the cost of said transcript. If the cost is not paid in full within fifteen days the appeal ((shall be)) is dismissed.

Sec. 37   RCW 18.85.310 and 1999 c 48 s 1 are each amended to read as follows:
     (1) ((Every licensed real estate broker)) Brokers and managing brokers must submit complete copies of their transactions to their firm. The designated broker shall keep adequate records of all real estate transactions handled by or through the ((broker)) firm or firms to which the designated broker is registered. The records shall include, but are not limited to, a copy of the purchase and sale agreement, earnest money receipt, and an itemization of the ((broker's)) receipts and disbursements with each transaction. These records and all other records ((hereinafter)) specified ((shall be)) by the director by rule are open to inspection by the director or the director's authorized representatives.
     (2) If any licensee exercises control over real estate transaction funds, those funds are considered trust funds.
     (3) Every real estate ((broker)) licensee shall ((also)) deliver or cause to be delivered to all parties signing the same, ((at the time of)) within a reasonable time after signing, ((conformed copies of all earnest money receipts)) purchase and sale agreements, listing agreements, and all other like or similar instruments signed by the parties((,including the closing statement.
     (3) Every real estate broker shall also keep separate real estate fund accounts in a recognized Washington state depositary authorized to receive funds in which shall be kept separate and apart and physically segregated from licensee broker's own funds, all funds or moneys of clients which are being held by such licensee broker pending the closing of a real estate sale or transaction, or which have been collected for said client and are being held for disbursement for or to said client and such funds shall be deposited not later than the first banking day following receipt thereof)).
     (4) ((Separate accounts comprised of clients' funds required to be maintained under this section, with the exception of property management trust accounts, shall be interest-bearing accounts from which withdrawals or transfers can be made without delay, subject only to the notice period which the depository institution is required to reserve by law or regulation.
     (5))) Every real estate firm that keeps separate real estate trust fund accounts must keep the accounts in a recognized Washington state depository. A real estate firm must maintain an adequate amount of funds in the trust fund accounts to facilitate the opening of the trust fund accounts or to prevent the closing of the trust fund accounts.
     (5) All licensees shall keep separate and apart and physically segregated from the licensees' own funds, all funds or moneys including advance fees of clients that are being held by the licensees pending the closing of a real estate sale or transaction, or that have been collected for the clients and are being held for disbursement for or to the clients.
     (6) A firm is not required to maintain a trust fund account for transactions concerning a purchase and sale agreement that instructs the broker to deliver the earnest money check directly to a named closing agent or to the seller.
     (7) Brokers must deposit all funds into their firm's trust bank account the next banking day following receipt of the funds unless the purchase and sale agreement provides for deferred deposit or delivery. In that event, the broker must promptly deposit or deliver funds in accordance with the terms of the purchase and sale agreement.
     (8)(a) If a real estate broker ((shall)) receives or maintains earnest money or client funds for deposit, the real estate firm shall maintain a pooled interest-bearing ((escrow)) trust account for deposit of client funds, with the exception of property management trust accounts((, which are nominal. As used in this section, a "nominal" deposit is a deposit of not more than ten thousand dollars)).
     (b) The interest accruing on this account, net of any reasonable and appropriate financial institution service charges or fees, shall be paid to the state treasurer for deposit in the Washington housing trust fund created in RCW 43.185.030 and the real estate education program account created in RCW 18.85.317 (as recodified by this act). Appropriate service charges or fees are those charges made by financial institutions on other demand deposit or "now" accounts. ((An agent may, but shall)) The firm or designated broker is not ((be)) required to((,)) notify the client of the intended use of ((such)) the funds.
     (((6) All client funds not required to be deposited in the account specified in subsection (5) of this section shall be deposited in:
     (a) A separate interest-bearing trust account for the particular client or client's matter on which the interest will be paid to the client; or
     (b) The pooled interest-bearing trust account specified in subsection (5) of this section if the parties to the transaction agree.))
     (c) The department ((of licensing)) shall ((promulgate regulations which)) adopt rules that will serve as guidelines in the choice of an account specified ((in subsection (5) of this section or an account specified)) in this subsection.
     (((7))) (9) If trust funds are claimed by more than one party, the designated broker or designated broker's delegate must promptly provide written notification to all contracting parties to a real estate transaction of the intent of the designated broker or designated broker's delegate to disburse client funds. The notification must include the names and addresses of all parties to the contract, the amount of money held and to whom it will be disbursed, and the date of disbursement that must occur no later than thirty consecutive days after the notification date.
     (10) For an account created under subsection (((5))) (8) of this section, ((an agent)) the designated or managing broker shall direct the depository institution to:
     (a) Remit interest or dividends, net of any reasonable and appropriate service charges or fees, on the average monthly balance in the account, or as otherwise computed in accordance with an institution's standard accounting practice, at least quarterly, to the state treasurer for deposit in the housing trust fund created by RCW 43.185.030 and the real estate education program account created in RCW 18.85.317 (as recodified by this act); and
     (b) Transmit to the director of community, trade, and economic development a statement showing the name of the person or entity for whom the remittance is spent, the rate of interest applied, and the amount of service charges deducted, if any, and the account balance(s) of the period in which the report is made, with a copy of ((such)) the statement to be transmitted to the depositing person or firm.
     (((8))) (11) The director of community, trade, and economic development shall forward a copy of the reports required by subsection (((7))) (10) of this section to the department ((of licensing)) to aid in the enforcement of the requirements of this section consistent with the normal enforcement and auditing practices of the department ((of licensing)).
     (((9))) (12)(a) This section does not relieve any real estate broker ((from)), managing broker, or firm of any obligation with respect to the safekeeping of clients' funds.
     (((10))) (b) Any violation by ((a)) real estate brokers, managing brokers, or firms of any of the provisions of this section, ((or)) RCW 18.85.230 (as recodified by this act), ((shall be)) or chapter 18.235 RCW is grounds for ((revocation of)) disciplinary action against the licenses issued to the brokers, managing brokers, or firms.

Sec. 38   RCW 18.85.315 and 1993 c 50 s 3 are each amended to read as follows:
     Remittances received by the state treasurer pursuant to RCW 18.85.310 (as recodified by this act) shall be divided between the housing trust fund created by RCW 43.185.030, which shall receive seventy-five percent and the real estate education program account created by RCW 18.85.317 (as recodified by this act), which shall receive twenty-five percent.

Sec. 39   RCW 18.85.317 and 1997 c 322 s 19 are each amended to read as follows:
     The real estate education program account is created in the custody of the state treasurer. All moneys received for credit to this account pursuant to RCW 18.85.315 (as recodified by this act) and all moneys derived from fines imposed under this chapter shall be deposited into the account. Expenditures from the account may be made only upon the authorization of the director or a duly authorized representative of the director, and may be used only for the purposes of carrying out the director's programs for education of real estate licensees ((and)), others in the real estate industry, and members of the public as described in RCW 18.85.040(((4))) (6) (as recodified by this act). All expenses and costs relating to the implementation or administration of, or payment of contract fees or charges for, the director's real estate education programs may be paid from this account. The account is subject to appropriation under chapter 43.88 RCW.

Sec. 40   RCW 18.85.320 and 1987 c 332 s 14 are each amended to read as follows:
     The licenses of a real estate ((salesperson or associate real estate)) broker and managing broker shall be ((retained)) kept at all times by ((his or her designated broker)) their firm and when ((any)) real estate ((salesperson or associate real estate broker ceases)) brokers or managing brokers cease to represent ((his or her broker his or her)) the firm, their licenses shall cease to be in force. ((Notice of such termination shall be given by the broker)) Brokers and managing brokers must submit written notification to the designated broker for their firm when they terminate affiliation with their firm. The firm, through the designated broker, shall give notice to the director and such notice shall be accompanied by and include the surrender of the ((salesperson's or associate real estate)) broker's or managing broker's license. Failure of any designated broker for the firm to promptly notify the director of ((such salesperson's or associate real estate)) a broker's or managing broker's termination after demand by the affected ((salesperson or associate real estate)) broker or managing broker shall ((work a forfeiture of the broker's license)) be grounds for disciplinary action against the firm and designated broker. Upon application of the ((salesperson or associate real estate)) broker or managing broker, and the payment of a fee as prescribed by the director by rule, the director shall issue a new license for the unexpired term, if ((such salesperson or associate real estate)) the broker or managing broker is otherwise entitled thereto. When ((a real estate salesperson's or associate real estate)) the firm terminates a broker's or managing broker's services ((shall be terminated by his or her broker)) for a violation of ((any of the provisions of RCW 18.85.230,)) this chapter, or chapter 18.86 or 18.235 RCW, the firm shall immediately file a written statement of the facts in reference thereto ((shall be filed forthwith)) with the director ((by the broker)).

Sec. 41   RCW 18.85.330 and 1998 c 46 s 3 are each amended to read as follows:
     (1) Except under subsection (4) of this section, it ((shall be)) is unlawful for any licensed firm, broker, or managing broker to pay any part of ((his or her)) the licensee's commission or other compensation to any person who performs real estate brokerage services and who is not a licensed firm, real estate broker, or managing broker in any state of the United States or its possessions ((or any province of the Dominion of Canada)) or any foreign jurisdiction with a real estate regulatory program.
     (2) Except under subsection (4) of this section, it ((shall be)) is unlawful for any licensed ((broker)) real estate firm to pay any part of ((his or her)) the firm's commission from brokerage services or other compensation to a real estate ((salesperson)) broker or managing broker not licensed to do business for ((such broker)) the firm.
     (3) Except under subsection (4) of this section, it ((shall be)) is unlawful for ((any)) licensed ((salesperson)) brokers or managing brokers to pay any part of ((his or her)) their commission from brokerage services or other compensation to any person, whether licensed or not, except through ((his or her)) the firm's designated broker.
     (4) A commission may be shared with a manufactured housing retailer, licensed under chapter 46.70 RCW, on the sale of personal property manufactured housing sold in conjunction with the sale or lease of land.

Sec. 42   RCW 18.85.340 and 1997 c 322 s 21 are each amended to read as follows:
     Any person acting as a real estate broker, ((associate real estate)) managing broker, or real estate ((salesperson)) firm, without a license, or violating any of the provisions of this chapter, ((shall be)) is guilty of a gross misdemeanor.

Sec. 43   RCW 18.85.345 and 1997 c 322 s 23 are each amended to read as follows:
     The attorney general shall ((render to)) give the director opinions upon all questions of law relating to the construction or interpretation of this chapter, or arising in the administration thereof, that may be submitted to the director, and shall act as attorney for the director in all actions and proceedings brought by or against ((him or her)) the director under or pursuant to any provisions of this chapter.

Sec. 44   RCW 18.85.350 and 1997 c 322 s 24 are each amended to read as follows:
     The director may ((prefer)) refer a complaint for violation of any section of this chapter before any court of competent jurisdiction.
     The prosecuting attorney of each county shall prosecute any violation of the provisions of this chapter ((which)) that occurs in ((his or her)) the prosecuting attorney's county, and if the prosecuting attorney fails to act, the director may request the attorney general to take action in lieu of the prosecuting attorney.
     Process issued by the director shall extend to all parts of the state, and may be served by any person authorized to serve process of courts of record, or may be mailed by ((registered)) certified mail, return receipt requested, to the licensee's last business address of record in the office of the director.
     Whenever the director believes from evidence satisfactory to ((him or her)) the director that ((any)) a person has violated any of the provisions of this chapter, or any order, license, decision, demand or requirement, or any part or provision thereof, ((he or she)) the director may bring an action, in the superior court in the county wherein ((such)) the person resides, ((against such person)) to enjoin ((any such)) that person from continuing ((such)) the violation or engaging therein or doing any act or acts in furtherance thereof. In this action an order or judgment may be entered awarding ((such)) a preliminary or final injunction as may be proper.
     The director may petition the superior court in any county in this state for the immediate appointment of a receiver to take over, operate or close any real estate office in this state which is found, upon inspection of its books and records to be operating in violation of the provisions of this chapter, pending a hearing ((as herein provided)).

Sec. 45   RCW 18.85.520 and 2005 c 185 s 1 are each amended to read as follows:
     (1) A fee of ten dollars is created and shall be assessed on each real estate broker((, associate)) and managing broker((, and salesperson)) originally licensed after October 1, 1999, and upon each renewal of a license with an expiration date after October 1, 1999, including renewals of inactive licenses.
     (2) This section expires September 30, 2010.

Sec. 46   RCW 18.85.530 and 2005 c 185 s 2 are each amended to read as follows:
     (1) The Washington real estate research account is created in the state treasury. All receipts from the fee under RCW 18.85.520 (as recodified by this act) shall be deposited into the account. Moneys in the account may be spent only after appropriation. Expenditures from the account may be used only for the purposes of RCW 18.85.540 (as recodified by this act).
     (2) This section expires September 30, 2010.

Sec. 47   RCW 18.85.560 and 2003 c 201 s 2 are each amended to read as follows:
     (1) ((An out-of-state broker,)) Persons with licenses deemed equivalent to licenses held by Washington licensees, as determined by the director, for a fee, commission, or other valuable consideration, or in the expectation, or upon the promise of receiving or collecting a fee, commission, or other valuable consideration, may perform those acts that require a license under this chapter, with respect to commercial real estate, provided that the out-of-state ((broker)) licensee, as approved by the director, does all of the following:
     (a) Works in cooperation with a Washington real estate designated broker who holds a valid, active managing broker license issued under this chapter;
     (b) Enters into a written agreement with the Washington firm, through its designated broker, that includes the terms of cooperation, oversight by the Washington designated broker, compensation, and a statement that the approved out-of-state ((broker)) licensee and its agents will agree to adhere to the laws of Washington;
     (c) Furnishes the Washington designated broker with a copy of the out-of-state ((broker's)) approved licensee's current license in good standing from any jurisdiction where the out-of-state ((broker)) approved licensee maintains an active real estate license;
     (d) Consents to jurisdiction that legal actions arising out of the conduct of the approved out-of-state ((broker)) licensee or its agents may be commenced against the ((out-of-state broker)) approved licensee in the court of proper jurisdiction of any county in Washington where the cause of action arises or where the plaintiff resides;
     (e) Includes the name of the Washington broker, managing broker, or firm on all advertising in accordance with RCW 18.85.230(8) (as recodified by this act); and
     (f) Deposits all documentation required by this section and records and documents related to the transaction with the Washington broker, managing broker, or firm for a period of three years after the date the documentation is provided, or the transaction occurred, as appropriate.
     (2) ((An out-of-state salesperson or associate broker may perform those acts that require a real estate salesperson or associate broker license under this chapter with respect to commercial real estate, provided that the out-of-state salesperson or associate broker meets all of the following requirements:
     (a) Is licensed with and works under the direct supervision of an out-of-state broker who meets all of the requirements under subsection (1) of this section; and
     (b) Provides the Washington broker who is working in cooperation with the out-of-state broker with whom the salesperson or associate broker is associated with a copy of the salesperson's or associate broker's current license in good standing from the jurisdiction where the out-of-state salesperson or associate broker maintains an active real estate license in connection with the out-of-state broker.
     (3))) A person licensed in a jurisdiction where there is no legal distinction between a real estate broker license and a real estate salesperson license must meet the requirements of subsection (1) of this section before engaging in any activity described in this section that requires a real estate broker license in this state.

NEW SECTION.  Sec. 48   (1) The changes made by this act regarding the licensing categories do not affect the status of a complaint, investigation, or other proceeding. A rule or form adopted by the director before the effective date of this section remains in effect as a rule or form of the department until amended or changed.
     (2) After the effective date of this section, a salesperson's license is continued in effect but is recognized by the department as a broker's license; and associate broker's, branch manager's, and designated broker's licenses are continued in effect but are recognized by the department as managing broker's licenses. All licensees are required to take a transition course by the licensee's first renewal date after the effective date of this section. The department shall approve the transition course for continuing education credit. All licenses retain their renewal dates established prior to the effective date of this section. New licenses may be issued after completion of the transition course and at the time of the licensee's first renewal date after the effective date of this section.

NEW SECTION.  Sec. 49   The following sections are codified or recodified in chapter 18.85 RCW in the following order:
     RCW 18.85.010;
     RCW 18.85.071;
     RCW 18.85.080;
     RCW 18.85.085;
     RCW 18.85.040;
     RCW 18.85.060;
     RCW 18.85.210;
     RCW 18.85.220;
     RCW 18.85.030;
     RCW 18.85.050;
     RCW 18.85.055;
     Section 10 of this act;
     RCW 18.85.090;
     Section 12 of this act;
     Section 13 of this act;
     RCW 18.85.560;
     RCW 18.85.097;
     RCW 18.85.110;
     RCW 18.85.120;
     RCW 18.85.130;
     RCW 18.85.140;
     RCW 18.85.155;
     RCW 18.85.165;
     RCW 18.85.170;
     RCW 18.85.180;
     RCW 18.85.190;
     RCW 18.85.200;
     RCW 18.85.215;
     Section 21 of this act;
     RCW 18.85.310;
     RCW 18.85.320;
     RCW 18.85.330;
     RCW 18.85.315;
     RCW 18.85.317;
     RCW 18.85.100;
     RCW 18.85.225;
     RCW 18.85.227;
     RCW 18.85.230;
     RCW 18.85.240;
     RCW 18.85.261;
     RCW 18.85.271;
     RCW 18.85.281;
     RCW 18.85.340;
     RCW 18.85.345;
     RCW 18.85.350;
     RCW 18.85.550;
     RCW 18.85.520;
     RCW 18.85.530;
     RCW 18.85.540;
     Section 48 of this act.

NEW SECTION.  Sec. 50   The following acts or parts of acts are each repealed:
     (1) RCW 18.85.095 (Salespersons -- Requirements -- Renewal -- Exception) and 1997 c 322 s 5, 1994 c 291 s 2, 1988 c 205 s 3, 1987 c 332 s 3, 1985 c 162 s 2, 1977 ex.s. c 370 s 2, & 1972 ex.s. c 139 s 7;
     (2) RCW 18.85.150 (Temporary permits) and 1997 c 322 s 11 & 1979 c 25 s 3;
     (3) RCW 18.85.400 (Multiple listing associations -- Entrance requirements) and 1969 c 78 s 2;
     (4) RCW 18.85.450 (Land development representative -- Registration--Minimum requirements) and 1987 c 332 s 15 & 1977 ex.s. c 24 s 6;
     (5) RCW 18.85.460 (Land development representative -- Registration issued to employing broker -- Display -- Fee -- Transferability -- Period of validity) and 1987 c 332 s 16 & 1977 ex.s. c 24 s 7;
     (6) RCW 18.85.470 (Land development representative -- Authorized activities -- "Land development" defined) and 1977 ex.s. c 24 s 8; and
     (7) RCW 18.85.480 (Land development representative -- Responsibility of employing broker -- Violations) and 1977 ex.s. c 24 s 9.

NEW SECTION.  Sec. 51   This act takes effect July 1, 2010.