Washington Statutes and Rules Governing Licensee Activity
Area III is the largest block on the managing broker exam — 18 of the 44 state items, against 13 on the entry broker exam. It runs from the firm's relationship with its licensees through prohibited conduct, compensation, trust accounts, records, offices, property management, supervision, and advertising.
Cite the right WAC chapter
Chapter 308-124 WAC is titled 'Real estate—Definitions and brief adjudicative proceedings' and has four sections; it contains none of the operating rules. The rules that matter here are chapter 308-124A WAC (licensing and examination), 308-124B (firms and branch offices, including advertising), 308-124C (records and responsibilities), 308-124D (operational procedures), 308-124E (trust account procedures), 308-124H (course, school and instructor approval), and 308-124I (audit and investigation procedures). A study aid that cites bare 'WAC 308-124' for a trust account or supervision rule is citing the wrong chapter.
The firm, its licensees, and departure
RCW 18.85.275(2) makes listings, transactions, management agreements, and other brokerage service contracts the property of the firm, and sets the chain of custody: the broker delivers funds and records to the appointed managing broker, who delivers to the designated broker, each becoming responsible only on receipt. Subsection (3) lets the designated broker delegate safe handling of client funds, trust accounts, records, and supervision to a managing broker licensed to the firm by signed written agreement, and requires a record of every delegation. RCW 18.85.291 keeps the licenses with the firm and ends their force when the broker stops representing it. WAC 308-124A-730 requires written notice of termination, notice to the department without delay, and — importantly — forbids the designated broker to condition surrender of the license on the broker performing any act.
Prohibited conduct
RCW 18.85.361 lists twenty-five grounds for discipline on top of the unprofessional conduct in RCW 18.235.130. Frequently tested: advertising without the firm's licensed name clearly and conspicuously (8), accepting other than cash or its equivalent as earnest money unless the owner is told before acceptance and the fact is shown in the purchase and sale agreement (9), taking compensation from more than one party without prior full written disclosure to all parties (10), failing to keep trust or transaction records three years (16 and 17), a broker accepting compensation from anyone but her own firm (19), buying or leasing property directly or through a third party without disclosing in writing that the person is a licensee (21), failing to exercise adequate supervision (22), and any conduct showing bad faith, dishonesty, untrustworthiness, or incompetence (23).
Compensation
RCW 18.85.301 makes it unlawful to pay an unlicensed person for brokerage services, unlawful for a firm to pay a broker not licensed to it, and unlawful for a broker to be paid other than through her own firm's designated broker; the only carve-out is sharing with a manufactured housing retailer licensed under chapter 46.70 RCW. On the agency side, RCW 18.86.080 allows compensation from the seller, the buyer, a third party, or shared between firms, states that paying compensation does not by itself create an agency relationship, and requires a services agreement containing the terms of compensation before a firm may be paid — with one substitute for a buyer of commercial real estate, a written 'Compensation Disclosure' delivered before the buyer signs an offer, and a narrow exception for a broker's price opinion or a bare referral.
Trust accounts and the deadlines that go with them
RCW 18.85.285 requires client funds to be physically segregated from the licensee's own money, requires deposit into the firm's trust account in a recognized Washington depository by the next banking day unless the agreement provides for deferred deposit, and requires a pooled interest-bearing account for client funds other than property management. Two rule deadlines run alongside and are easy to confuse: WAC 308-124E-100 gives the broker two business days from the client's signature to physically deliver funds to the managing broker, branch manager, or designated broker; WAC 308-124E-105(6) gives the firm until the next banking day after receipt to deposit them. Trust money may not be disbursed before closing without a written release from both parties (WAC 308-124E-110(3)), the firm's own commission check may be drawn on the account only after final closing (110(2)), and commissions to the firm's own licensees and firm business expenses must come from the business account (105(16)(c)).
Records, offices, and property management
WAC 308-124C-105 puts the required records on the designated broker: duplicate receipts, sequentially numbered checks and registers, validated deposit slips, a client ledger for every transaction and management account, separate ledger sheets for each tenant and vendee, reconciled statements with canceled checks, a log of brokerage service contracts, and a transaction folder for each deal, all kept at one licensed location. WAC 308-124C-110 requires three years' retention and inspection availability and permits electronic storage where retrieval is immediate. WAC 308-124C-115 requires notice to the real estate program within twenty days of service or knowledge of a criminal charge, a civil judgment involving real estate or business activity, or discipline against another professional license. Every managed property needs a written management agreement signed by the owner and the designated broker, stating compensation, unit type and count, authority to collect and disburse, authority over security deposits, and how often owner summary statements are furnished (WAC 308-124D-215).
Supervision, teams, and advertising
RCW 18.85.275(1) requires the designated or managing broker to supervise brokers for compliance with chapters 18.85 and 18.235 RCW and RCW 18.86.030, and subsection (6) requires heightened supervision through a broker's first two years. WAC 308-124C-125(9) puts on the designated broker the duty of maintaining, implementing, and following a written policy covering home inspector referrals, levels of supervision, and review of every brokerage service contract involving a broker licensed under two years within five business days of mutual acceptance; WAC 308-124C-137 carries those duties to a managing broker who has been delegated them. Note that WAC 308-124C-125(1) and 308-124C-135(1) are word for word identical, so 'whose duty is this?' is not a fair question about that clause. Teams are governed by the advertising rule: WAC 308-124B-210(2) lets a team use an unlicensed name only with the firm's licensed name displayed clearly and conspicuously alongside it, with advance written approval from the designated broker, and without any word implying a separate entity ('Inc.', 'LLC', 'Corp.', 'company') or a firm ('realty', 'realtors', 'real estate').
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State-specific details
State exam facts
- State regulator
- Washington State Department of Licensing (DOL)
- Exam vendor
- PSI
- Prelicensing education
- 90 clock hours beyond the broker license — advanced real estate law, brokerage management and business management, each at least 30 hours — plus 3 years of full-time Washington broker experience
- Passing score
- Scaled score of 75 on each portion (the entry Broker exam passes at 70)
- Scored questions
- 134
- Time limit
- 240 minutes
Who regulates real estate brokers in Washington?
The Washington State Department of Licensing (DOL) regulates real estate licensees under chapter 18.85 RCW; the real estate commission created by RCW 18.85.021 is the director plus six governor-appointed members who act in an advisory capacity. Note Washington's tiered naming: the entry-level license is called 'broker,' while the supervisory tier is 'managing broker.' DOL contracts with PSI to deliver both exams.
What experience do I need before the Washington managing broker exam?
RCW 18.85.111 requires three years of licensed experience as a full-time real estate broker in Washington or a comparable jurisdiction, obtained within the five years before you apply, plus 90 clock hours of instruction that must include advanced real estate law, real estate brokerage management and business management. WAC 308-124A-750 requires each of those courses to run at least 30 hours, carry a comprehensive examination and be completed within three years of applying; WAC 308-124A-713 sets out alternative routes for applicants qualifying by practical experience in an allied business.
How is the Washington managing broker exam structured?
PSI bulletin 4658 gives the managing broker exam a national portion of 90 scored items worth 100 points in 150 minutes and a Washington state portion of 44 scored items worth 48 points in 90 minutes — 134 scored items in 240 minutes together, plus 5 to 10 unscored experimental questions. The state items are not all worth one point: the four 'Scenarios in Real Estate Practice' items are worth two points each, which is why 44 items carry 48 points, and that block appears only on the managing broker exam. The portions are scored separately, you must attain a scaled score of 75 on each, and a passing portion is valid for six months while you complete the other. The entry Broker exam is 100 national plus 30 state items and passes at 70.
Sources: https://test-takers.psiexams.com/api/content/bulletin/4658, https://dol.wa.gov/professional-licenses/real-estate-managing-brokers, https://app.leg.wa.gov/RCW/default.aspx?cite=18.85, https://app.leg.wa.gov/RCW/default.aspx?cite=18.86
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