Affiliated licensee

Key Takeaways

• Affiliated licensees are the natural persons licensed as brokers or managing brokers who are licensed to represent a firm in acts specified in chapter 18.85 RCW (WAC 308-124-300).
• The category covers exactly two license levels, because broker and managing broker are the only individual real estate licenses Washington issues.
• Being paid as an independent contractor does not remove a licensee from firm supervision (RCW 18.85.011).
• Listings, transactions, and management agreements are property of the firm, not of the affiliated licensee who wrote them (RCW 18.85.275).

What It Means

Affiliated licensee is the umbrella term Washington rules use for the individual licensees who work for a real estate firm. WAC 308-124-300 defines affiliated licensees as the natural persons licensed as brokers or managing brokers employed by a firm and who are licensed to represent the firm in the performance of any of the acts specified in chapter 18.85 RCW.

Two things follow from that sentence. The category holds exactly two license levels, Broker and Managing Broker, because those are the only individual real estate licenses this state issues. And the affiliation is what supplies the authority to act: the license authorizes the person to represent that firm, so the brokerage work is done on the firm's behalf rather than on the licensee's own account.

The word choice matters on the exam. A national textbook calls these people salespersons or agents. Washington stopped issuing the salesperson license effective July 1, 2010, when existing salesperson licenses were continued in effect but recognized by the department as broker licenses (RCW 18.85.481). An affiliated licensee in this state is therefore a broker or a managing broker, and nothing else.

How It Works in Washington

WAC 308-124-300 gives the definition and chapter 18.85 RCW gives it consequences. RCW 18.85.101 licenses a broker to one firm at a time under a designated or managing broker, and RCW 18.85.111 licenses a managing broker to one firm only at any one time, so a licensee is affiliated with exactly one firm at any moment. RCW 18.85.291 completes the picture: the firm holds the licenses, and when brokers or managing brokers cease to represent the firm their licenses cease to be in force until reissued.

Supervision travels with the affiliation. RCW 18.85.275 requires the Designated Broker or managing broker to supervise the conduct of brokers and managing brokers for compliance with chapter 18.85 RCW, chapter 18.235 RCW, and RCW 18.86.030. The same section makes listings, transactions, management agreements, and other contracts for brokerage services the property of the firm rather than of the individual who signed them.

Pay structure does not change any of this. RCW 18.85.011 recognizes an independent contractor relationship between a licensee and a firm, one where no written agreement makes the licensee an employee and substantially all compensation comes from the firm's brokerage services, and then states that nothing in that subsection relieves the managing broker or real estate firm of the supervisory duties in the chapter. A licensee treated as an independent contractor for tax purposes is supervised exactly like anyone else.

Example

Maya holds a Washington broker license and affiliates with Cascade Realty, whose designated broker is Ellen. Maya signs an independent contractor agreement: no employee contract, and substantially all of her compensation comes from the firm's brokerage services on a 70/30 split. Cascade Realty holds her license, and she is an affiliated licensee of that firm.

In April, Maya takes a listing. The listing agreement is between the seller and Cascade Realty, signed by Maya on the firm's behalf, and under RCW 18.85.275 the listing is property of the firm. The house closes at $510,000 with a listing-side fee of 2.5 percent, or $12,750, which is paid to Cascade Realty. The firm then pays Maya $8,925 and keeps $3,825. If Maya moves to a different firm in May, RCW 18.85.291 has her license cease to be in force at Cascade until a new one is issued, and the listing stays with Cascade Realty, because the contract was never hers to take.

Common Mistakes and Exam Traps

• Affiliated licensee is not a license type. It describes brokers and managing brokers in their relationship to a firm (WAC 308-124-300).
• "Salesperson" is the wrong Washington word. That license stopped being issued as of July 1, 2010 (RCW 18.85.481).
• Independent contractor status is a compensation arrangement, not an exemption from supervision (RCW 18.85.011).
• A firm is itself a licensed entity in Washington, so an affiliated licensee represents a license holder, not just an employer (RCW 18.85.011).