Understand the legal and regulatory environment affecting real estate licensees in the State of Washington
When looking to understand the legal and regulatory environment affecting real estate licensees in the State of Washington, Washington Real Estate Law is perfect for you! Covering topics like contracts, discrimination, agency law, and more.
Plus, you'll learn how to navigate mandatory disclosures, and closing issues. With this course under your belt, you'll be able to confidently and comfortably practice real estate in Washington. Enroll today and gain the confidence that comes with knowing you're always acting within the bounds of the law.
Upon completion of this section the student should be able to:
This course follows the required Washington department of licensing curriculum and is meant to cover the laws and rules which govern real estate. In Washington, that means a complete knowledge of our Revised Codes of Washington (RCW's) and Washington Administrative Codes (WAC's). While the state requires all brokers who get their license for the first time to learn these same laws and rules, it is intended that brokers reacquaint themselves with the law after having the experience as a broker. Your perspective on many of the laws will certainly be different from when you first learned this prior to taking the state exam.
Washington state department of licensing rules and the laws the legislature puts in place are meant primarily to protect the public. This is an overriding theme you will see throughout the course and all of the state laws. It's important as a broker that you understand this goal since it will provide you with a good rule of thumb when you are in the field and may not remember a specific law or rule. You should always confirm your actions are lawful with your supervising managing broker, but acting in the public good is a great start.
Designated Broker is the title of the person who is recognized by the Washington State Department of Licensing Real Estate Division and most local Multiple Listing Services (MLS) as the responsible member for the brokerage. This person is ultimately responsible for the actions of all licensees within the brokerage. Also included in this title, maybe certain voting rights at the local MLS and authorization to sign certain documents. When a licensee leaves a brokerage, the designated broker is responsible for signing their license and returning it to the department of licensing in Olympia. There is only one designated broker per brokerage. Branch offices of a brokerage will be required to have a managing broker or branch manager. The nomenclature for the designated broker classification has not changed from the previous classification.
Managing Broker is the title of a person who may be managing a brokerage or a branch office or a licensee who has the education to manage an office, even if they are currently not doing so. The managing broker is responsible for the supervision of their licensees. Including, but not limited to: adherence of the licensees to local, state and federal regulations and making sure that contracts and transaction paperwork is done correctly.
A branch manager is responsible for the affiliates of a branch office. A brokerage must have more than one office to have a "branch office." A brokerage with a single office is not considered a "branch," and the manager will therefore not be a branch manager. There is one branch manager for each branch officeS. A branch manager is usually considered a member by most MLS's. Licensees are usually subscribers. Members in most Multiple Listing Services (MLS) have voting rights in the MLS. Like a designated broker, a branch manager has the duty and authority to:
A broker is all other licenses not listed above.
A broker has a duty to his/her client and other parties involved. The distinction between a client and a customer has to do with responsibility and agency.
A licensee in a relationship with a client must:
A licensee in a relationship with a customer and a client must:
Example:
Susan with ABC Realty is the listing agent for the Browns. Because Susan has a listing agreement with the Browns, she has established an agency with the Browns as their broker. During an open house, the Smith's visit the home and want to buy it. Susan decides not to be a dual agent and to only represent the Brown’s. She writes up an offer stating that she is representing the Browns and that the buyers are representing themselves. She further advises the Smiths to seek independent legal counsel before signing the contract. While Susan has supplied real estate services to the Smiths by writing up the offer, the Smiths are not her clients. They are her customers and she owes a duty to the Smiths as stated above.
A licensee must deal in good faith and in a professional ethical manner with all parties involved in a transaction.
A broker should avoid drafting contracts, contract provisions, and legal documents that could be construed as the product of an unlicensed practice of law. Your job is to assist your clients in completing the standard contract forms. Guide your clients by educating them on each of the clauses in the contract and how they might best draft the agreements. Advise your clients to seek proper legal counsel if the contract should extend beyond the standard form, or if your client wishes to have a custom agreement drafted. Use only standard forms in the exercise of your duties. Such forms must be reviewed and approved by real estate attorneys. Use extreme caution in adding anything to these standard forms.
The court ruled that licensees must take great care in writing real estate contracts, use standardized forms and ensure that all additions/addendums are in line with the terms and conditions of the contract; otherwise, the licensee can be held liable for damages and losses. According to the ruling:
"[An agent] is permitted to complete simple printed standardized real estate forms, which forms must be approved by a lawyer, it being understood that these forms shall not be used for other than simply real estate transactions which arise in the usual course of the [agent's] business and that such forms will be used only in connection with real estate transactions actually handled by such [agent] as [an agent] and then without charge for the simple service of completing the form."
Note: Many brokerages have policies which strictly prohibit licensees from writing in additional clauses in the contract without management approval. As a licensee, it is imperative that you understand your brokerage's policies regarding this.
You are writing up a Purchase and Sale Agreement for your buyer client. Your client may be exposed to a pay cut or layoff due to some union negotiations. Conversely, he may be eligible for a promotion and a pay increase depending on the union settlement. Your client has written three very detailed paragraphs on this situation and would like it to be a contingency to the contract so that he may not be bound to complete the purchase if certain circumstances should arise. He would like this verbiage to be added to the standard form as an addendum. As the buyer's broker, what is the best course of action that you can take?
A. Encourage the buyer to have their attorney review the Purchase and Sales Agreement and the verbiage that he would like to include.
B. Attach a copy of your client's handwritten contingency to the contract and label it Exhibit "A".
C. Rewrite the contingency into the body of the contract.
D. Submit the offer to the seller without the contingency and without the buyer's knowledge.
The correct answer is A.
Note: As a licensee, you are prohibited from giving tax or legal advice. As such, anytime an issue arises regarding these matters, you should advise your client to seek professional advice.
Let's explore some of the more common mistakes made by real estate licensees and then discuss resources that are available to help you avoid these mistakes.
Like any other business, a real estate business needs a business plan. A business plan is a detailed daily schedule of the actions that you will take to arrive at an established set of goals. Without a means by which to accomplish your goals, goal setting can become useless. A business plan serves the following purposes:
As a way to get started you could obtain an ink blotter type large desk calendar. The squares are large enough for you to write a detailed plan for each day. Firstly, enter your personal and family obligations for one week in advance (such as picking the kids up from school, your exercise workout time, having lunch with your father on a particular afternoon, etc.) Then enter your action plans for real estate for the week in advance. Be detailed (such as today I plan to make 10 calls to my sphere of influence, send out 5 handwritten notes and hold a broker’s open house). At the end of the day, use a highlighter and highlight the actions that were actually completed. If an action was not completed, add it to the next day’s activities. At the end of the week check to be sure that all items were completed and that you are on track with your plan. Repeat this each week and make adjustments if necessary (perhaps you may need to devote more time to your real estate career than you originally thought that you might).
To be able to execute your business plan, you’ll need to have a budget. Plan carefully and be realistic about expenses. Make adjustments when necessary (such as an increase in postage or the price of gas). Check this budget often to determine if you are staying within the planned guidelines. If you are over budget, attempt to invent ways to cut back on expenses.
The fact that real estate transactions can be complicated is just the nature of the business. Contributing to these complications is that so many different parties are involved in a typical transaction. These parties can include the sellers, buyers, structural inspectors, mortgage representatives, title companies, escrow (closing) agents and many others. Any problems encountered by any one of these parties can cause a delay in a transaction and can potentially cause a transaction to fail.
The phrase “It isn’t closed until it’s closed” is one you will hear often and you should not directly allocate these commission dollars until after you have been paid.
As an independent contractor, you are the owner of your own business. Your designated managing broker cannot tell you what office hours you must keep. You must have your own self-discipline to keep on track with your schedule and business plan.
Identify those things in your daily life that may act as distractions. This is especially true for licensees that are working from their homes.
Forms are one of the most important aspects of real estate. These forms, when filled out and signed by both the buyer(s) and the seller(s) represent a legally binding contract between the parties. The statute of fraud states that all real estate contracts in Washington State must be in writing. Should a dispute arise between the parties, a court of law will place more weight on the written contract than on parole (oral) evidence. Use only standard forms in the exercise of your duties. Such forms must be reviewed and approved by real estate attorneys. Use extreme caution in adding anything to these standard forms.
Many forms come with a manual that explains each clause of the contract. Nearly all are available online.
Note: Your managing broker or designated broker can be a very good resource when you need help with forms. There are also forms of classes taught by a number of individuals and groups such as the MLS, title companies, and real estate schools.
Don Sr. has been in the real estate business for over 40 years, working as a broker, running real estate offices, and developing property. He's the founder of Realestateschool.org and it's principal instructor. Don Sr. has a teaching degree from the University of Washington and has been teaching real estate for over 35 years.
