Real Estate Brokerage Relationships Act

Key Takeaways

• The Real Estate Brokerage Relationships Act is the common name for chapter 18.86 RCW, Washington's real estate agency statute.
• A broker who performs brokerage services for a buyer is the buyer's agent by default, unless the firm has appointed that broker to represent the seller.
• The duties listed in RCW 18.86.030 are owed to the principal and to all parties in the transaction, and they cannot be waived.
• Paying or agreeing to pay compensation does not create an agency relationship between the payer and the broker.

What It Means

The Real Estate Brokerage Relationships Act is the working name Washington brokers use for chapter 18.86 RCW, the statute that sets out who a broker represents and what that broker owes every party in a transaction. It is agency law written down. Rather than leaving representation to common law and office custom, the chapter fixes the default relationships, the paperwork, the non-waivable duties, and the compensation rules in one place.

Three ideas carry most of the weight. First, a broker who performs brokerage services for a buyer is the buyer's agent by default, unless the firm has appointed that broker to the seller. Second, the firm must have a Written Services Agreement with its principal, and that agreement has to state the term, the appointed broker, whether the relationship is exclusive, and whether the principal consents to Limited Dual Agency, a role the statute keeps deliberately narrow (how limited dual agency works in Washington). Third, a list of duties runs to the principal and to every party, and it cannot be waived.

The chapter was overhauled by SB 5191 (chapter 318 of the 2023 session laws), titled "Reforming the real estate agency law" and effective January 1, 2024. Washington brokers know it as the written services agreement law, walked through in this guide to the new agency law.

How It Works in Washington

Start with RCW 18.86.020. A broker performing real estate brokerage services for a buyer is a buyer's agent unless the broker's firm appointed that broker to represent the seller under a services agreement, or appointed the broker to both sides, which makes the broker a limited dual agent, or the broker is the seller. The firm must enter into a services agreement with the principal before, or as soon as reasonably practical after, the appointed broker starts rendering services. Where the principal is a buyer, the agreement carries a default term of 60 days with the option of a longer term. RCW 18.86.020(3) sets out the exception: no services agreement is required when a broker acts as a buyer's agent solely for commercial real estate.

RCW 18.86.030 lists the duties a broker owes the principal and all parties, and says they may not be waived. They are reasonable skill and care, honesty and good faith, timely presentation of all written offers and notices, disclosure of every existing Material Fact known to the broker and not apparent or readily ascertainable, timely accounting for money and property, delivery of the pamphlet prescribed by RCW 18.86.120 with an acknowledgment of receipt, and a written Agency Disclosure set out in a separate paragraph titled "Agency Disclosure" before the principal signs an offer.

Compensation is handled in RCW 18.86.080. A firm may be paid by the seller, the buyer, a third party, or by sharing between firms, and a firm needs a services agreement stating the terms of compensation in order to be paid at all. Most importantly, an agreement to pay or payment of compensation does not establish an agency relationship between the party who paid and the broker. These duties have teeth: RCW 18.86.031 makes a violation of RCW 18.86.030 a violation of RCW 18.85.361, the disciplinary grounds in the license law enforced by the Department of Licensing.

Example

Nadia Okonkwo, a broker at Sound Ridge Realty, meets Ben Alvarez at an open house in Tacoma on April 3. He asks for help buying. Before she starts showing homes, her firm signs Ben to a buyer services agreement: Nadia is the appointed broker, the term runs the default 60 days, Ben checks the nonexclusive box, and he separately initials his consent to limited dual agency. Nadia gives Ben the agency pamphlet and collects his signed acknowledgment. In May Ben offers $612,000 on a Sound Ridge listing held by a different broker at the same firm. Because Ben consented in writing, the firm's designated broker can act as a limited dual agent for that deal. Nadia's Agency Disclosure paragraph in the purchase and sale agreement states in writing that she represents the buyer, and it also states the compensation the listing firm has offered her firm. The listing side pays that compensation at closing, and it changes nothing about who Nadia represents.

Common Mistakes and Exam Traps

• Payment does not create agency. Under RCW 18.86.080, an agreement to pay or the payment of compensation does not establish an agency relationship between the payer and the broker.
• The residential default is buyer agency. A broker working with a buyer represents that buyer unless the firm appointed the broker to the seller under a services agreement.
• The duties in RCW 18.86.030 run to all parties in the transaction, not only to the principal, and no party can waive them by agreement.
• The 60 day buyer services agreement term is a default, not a maximum. The parties may agree to a longer term.