A Generous People - Puyallup, WA

House Bill HB 2778 & Senate Bill SB 6498

Summary of Legislation:

• Implements a “tiered-brokerage” licensing system of real estate broker, managing real estate broker, and designated real estate broker.
• Significantly amends the definition of real estate brokerage services and statutory exemptions from real estate licensing, including employees of employer-owners, property management personnel, and other.
• Nominal increases in education and experience requirements for real estate practitioners.
• Increase oversight and supervision for new licensees including document review.

Problem:
The Washington Real Estate License Law had not undergone a comprehensive review in over twenty years. The standards of practice within the industry have dramatically changed over the years, and many sections of the license law contain dated standards and archaic practices. In addition, several sections needed revisions to be consistent with administrative rules in the Washington Administrative Code. The license law needs significant revision to better protect and serve Washington real property buyers and sellers.

Background:
During 2004-2005, a task force of twenty-four industry representatives and ten public sector representatives met monthly to thoroughly review, analyze, and assess every section of the Real Estate Brokers and Salespersons License Law. The group presented their recommended discussion “Draft” to the Washington Real Estate Commission in December 2005. Throughout 2006, the proposal was shared with many external and internal stakeholder groups. During 2007, extensive negotiations were conducted with a variety of affected industry groups to address areas of concern and objections. Following extensive deliberation, the Washington Realtors® authorized the license law reform proposal be identified as a legislative priority for 2008.

Analysis:

• More supervision and oversight of newer licensees needs to be incorporated in to the license law.
• Experience requirements for individuals capable of managing others needs to be increased.
• Oversight and supervision standards for real estate teams operating with real estate firms needs to be addressed.
• Significant changes to the definition of real estate brokerage services, advertising standards, licensing exemptions, office and record requirements, and the licensing structure need to be implemented.
• Archaic and dated sections need to be deleted.

Section Provisions: Many sections will be amended. However, the following represent the more significant changes.
Sec. 1. Amends RCW 18.85.010 Definitions
Significantly amends the definitions of real estate brokerage services, licensing classifications and others.

Sec. 3. Amends RCW 18.85.040 Director-General Power and Duties
Amends authority regarding real estate school approval standards and disciplinary standards, reciprocity including written relationship agreements, criminal background checks, and education programs and materials for members of the public.

Sec. 11. Amends RCW 18.85.090 Broker’s license requirements
Increases real estate broker’s pre-license and post-license education requirements.

Sec. 12. NEW SECTION Managing Broker’s license requirements
Creates new licensing classification and addresses education and experience requirements.

Sec. 13. NEW SECTION Designated Broker requirements
Addresses the registration requirements for the designated broker of a real estate firm.

Sec. 16. Amends RCW 18.85.110 Exemptions from licensing
Amends the section to include municipal employees, limited referral activity, employees of employer-owners, property management personnel employed by broker or owners, attorneys, accountants, financial planners, and others.

Sec. 17. Amends RCW 18.85.120 Applications-conditions - fees
Amends licensing requirements to address real estate firms and fingerprinting.

Sec. 21. NEW SECTION Supervision requirements
Addresses supervision and oversight requirements for designated brokers.

Sec. 37. Amends RCW 18.85.310 Broker records and interest-bearing trust accounts
Amends and clarifies trust accounting procedures including procedures for disputed claims for funds.

Sec. 50. NEW SECTION Deletions
Deletes previous sections regarding temporary permits, multiple listing association entrance requirements and land development representative licensing requirements and standards.

Update: This legislation has passed both the State House and Senate, and has been signed into law by the Governor.