Washington Managing Broker Exam — All Questions

Since the 2023 amendments to RCW 18.86, when must a Washington firm enter into a written services agreement with its principal?

• a.Only when the principal asks the firm to put the arrangement into writing first
• b.Only after the principal has signed the purchase and sale agreement for the property
• c.Only where the firm intends to act as a limited dual agent in that transaction
• d.Before, or as soon as reasonably practical after, brokerage services commence✓

RCW 18.86.020(2)(a), as amended by 2023 c 318 effective January 1, 2024, provides that "a firm must enter into a services agreement with the principal before, or as soon as reasonably practical after, its appointed broker commences rendering real estate brokerage services to, or on behalf of, the principal." The trigger is therefore the start of services, and the "as soon as reasonably practical after" clause means Washington is not a pre-showing gate. Subsection (2)(b) then fixes the contents: the term of the agreement — for a buyer, a default term of sixty days with the option of a longer one, so a default and not a ceiling — the appointed broker, whether the relationship is exclusive or nonexclusive with checkbox options for a buyer, and the principal's consent to limited dual agency. The writing does not wait to be requested and does not wait for a purchase and sale agreement, and limited dual agency is one term it must address rather than the reason it exists. RCW 18.86.020(3) carves out one case: no services agreement is required where a broker acts as a buyer's agent solely for commercial real estate.

In Washington a broker may act as a limited dual agent, representing both buyer and seller in one transaction, only where:

• a.the managing broker personally approves each showing of the property first
• b.neither of the two parties has retained independent legal counsel of their own
• c.both parties consent in writing in the services agreement, separately initialed✓
• d.the property involved is commercial rather than residential real estate

Two things here are Washington-specific. The first is the vocabulary: the statutory term is limited dual agent, and the limitation is the point of the label. The second is the form of the consent. RCW 18.86.060(1) provides that "a broker may act as a limited dual agent only with the written consent of both parties to the transaction, set forth in the services agreement," and RCW 18.86.020(2)(b)(iv) requires that consent to be "separately initialed by the principal" and to include an acknowledgment that a limited dual agent may not advocate terms favorable to one principal to the detriment of the other. So an oral agreement after a spoken disclosure will not do: the consent must be written, located in the services agreement, and initialed on its own. The separate-initialing requirement arrived with 2023 c 318, so material written before 2024 does not carry it. Internal firm approval is no substitute for the parties' own consent, whether the parties have counsel is beside the point, and the requirement does not switch off because a deal is commercial.

Two brokers licensed with the same Washington firm represent the buyer and the seller in one transaction. Under RCW 18.86.060(5):

• a.each of the two appointed brokers becomes a limited dual agent of both parties at once
• b.the firm must withdraw from one side unless both parties waive the conflict in writing
• c.the firm's designated broker and any supervising managing broker are limited dual agents✓
• d.no limited dual agency arises, because two different brokers were separately appointed

RCW 18.86.060(5) provides that "in a transaction in which different brokers affiliated with the same firm represent different parties, the firm's designated broker, and any managing broker responsible for the supervision of both brokers, is a limited dual agent. In such case, each appointed broker shall solely represent the party with whom the appointed broker has an agency relationship." The dual agency therefore sits at the supervisory level while the two appointed brokers each stay on one side. That is why RCW 18.86.020(2)(b)(v) requires the services agreement to record separately whether the principal consents to the designated broker and supervising managing broker acting as limited dual agents in exactly this situation. The firm need not withdraw, and RCW 18.86.040(2)(b) and 18.86.050(2)(b) confirm that representing competing parties through different brokers in the same firm does not by itself breach loyalty. Saying no dual agency arises misses that the supervisors are agents of both principals under RCW 18.86.010(2).

RCW 18.86.030(1)(g) requires a broker to disclose in writing whom the broker represents, before the principal signs an offer or as soon as reasonably practical. That disclosure must appear:

• a.in a paragraph titled "Agency Disclosure" in the agreement or in a separate writing✓
• b.in the multiple listing service data sheet the cooperating firm downloads for its file
• c.in the pamphlet on real estate brokerage handed to the party at the first contact
• d.in the closing statement the licensee furnishes to each party at the time of closing

RCW 18.86.030(1)(g) requires disclosure in writing, before the broker's principal signs an offer or as soon as reasonably practical but before the parties reach mutual agreement, of "whether the broker represents the buyer as the buyer's agent, the seller as the seller's agent, or both parties as a limited dual agent," and provides that "the disclosure shall be set forth in a separate paragraph titled 'Agency Disclosure' in the agreement between the buyer and seller or in a separate writing titled 'Agency Disclosure.'" The named, separately titled paragraph is the point: burying the fact in a data sheet or a closing statement does not satisfy it, and a closing statement comes far too late. The pamphlet is a genuine and separate requirement under RCW 18.86.030(1)(f), but it is a general explanation of Washington brokerage rather than a statement of whom this broker represents. The same subsection (g)(ii) also requires written disclosure of any terms of compensation offered by a party or a firm to the firm representing the other party.

The pamphlet prescribed by RCW 18.86.120 must be given, with an acknowledgment of receipt, to a party to whom the broker renders brokerage services:

• a.at any point before that party's transaction closes, the pamphlet being informational
• b.only where that party is unrepresented, since a represented party has an agreement
• c.within twenty days after the parties have reached mutual acceptance of an agreement
• d.as soon as reasonably practical, but before that party signs a services agreement✓

RCW 18.86.030(1)(f) makes it a non-waivable duty owed to all parties "to provide a pamphlet in the form prescribed by RCW 18.86.120 and obtain an acknowledgment of receipt by the party," and sets two different deadlines. For any party to whom the broker renders brokerage services, the pamphlet goes out "as soon as reasonably practical but before the party signs a services agreement." For any party not represented by a broker in the transaction, it goes out "before the party signs an offer or as soon as reasonably practical." Both groups are covered, so limiting it to the unrepresented is wrong, and no version of the duty tolerates delivery at any time before closing or twenty days after mutual acceptance. RCW 18.86.120 sets out the pamphlet's text in full, and 2026 c 57 added a section to it headed "Property Must Be Marketed Publicly."

RCW 18.86.130 provides that a broker may not market residential real estate for sale or lease to a limited or exclusive group of buyers or brokers unless:

• a.the seller signs a written waiver of public marketing in the services agreement
• b.the listing firm records the private marketing period in the multiple listing service
• c.the property is concurrently marketed to the general public and all other brokers✓
• d.the exclusive group consists entirely of brokers licensed with the listing firm

RCW 18.86.130 provides that "a broker may not market the sale or lease of residential real estate to a limited or exclusive group of prospective buyers or brokers, or any combination thereof, unless the real estate is concurrently marketed to the general public and all other brokers, except as reasonably necessary to protect the health or safety of the owner or occupant," and adds that marketing to the general public does not require the owner to allow anyone onto the property or into the residence. Concurrent public marketing is therefore the condition; the only escape is the narrow health-or-safety exception, which is not a waiver the seller can simply sign and not something an entry in a listing service can supply. Nor may the exclusive group be the listing firm's own brokers, which is precisely the office-exclusive practice the section reaches. The section was added by 2026 c 57, which also amended RCW 18.86.031 so that a violation of RCW 18.86.130 is a violation of RCW 18.85.361, and added the pamphlet heading "Property Must Be Marketed Publicly."

A Washington firm manages a 40-unit building under a written management agreement signed by the owner and the designated broker. Tenant security deposits totaling $34,000 sit in the firm's property management trust account, and every tenancy is continuing. The owner needs cash for a roof repair and emails the managing broker: "Move the deposit money to the operating side this month — I'll put it back before anyone moves out." What should the managing broker do?

• a.Comply, because the signed management agreement authorizes the firm to collect and to disburse owner funds
• b.Comply as to month-to-month tenants only, since those tenancies may be ended on the statutory notice
• c.Move the deposits into the firm's business account and write the owner a check drawn on that account
• d.Refuse: security deposits stay in trust until the end of each tenancy absent the tenant's written agreement✓

WAC 308-124E-115(5) is the controlling sentence: no disbursement may be made from the trust account of funds received as a damage or security deposit "to the owner or any other person without the written agreement of the tenant, until the end of the tenancy when the funds are to be disbursed to the person or persons entitled to the funds as provided by the terms of the rental or lease agreement." Two conditions, and neither is met while the tenancies continue and no tenant has agreed. The second option is right about one rule and wrong about this one: WAC 308-124D-215(1)(c) and (d) do require the management agreement to say whether the firm may collect and disburse funds and whether it may hold deposits, but an owner's authority over his own money does not reach the tenants'. Whether a tenancy could be terminated is not the test; the tenancy must actually have ended. And routing the money through the firm's own account adds the commingling that RCW 18.85.285(5) and WAC 308-124E-105(15) forbid. WAC 308-124E-115(6) completes the picture: when the management agreement ends, deposits go to the owner or the successor manager and the tenants are notified.

A broker licensed for eight months hands his managing broker a purchase and sale agreement that reached mutual acceptance nine days ago, together with the buyer's $10,000 earnest money check, which he has been carrying in his car. The firm's designated broker has delegated contract review and trust accounting to this managing broker under a signed written delegation. What should the managing broker do?

• a.Complete and document the file review now, but leave the check with the broker until the buyer's funds have cleared
• b.Deposit the check at once and skip the file review, because the five business day review window has already lapsed
• c.Get the check deposited at once, complete and document the file review, and retrain the broker on both deadlines✓
• d.Report the broker to the department and take no further step, because the designated broker holds the trust account duty

Two deadlines have already been missed and both are the delegated managing broker's to enforce. WAC 308-124E-100 required the broker to deliver the funds within two business days of the client's signature, and WAC 308-124E-105(6) requires deposit not later than the next banking day after receipt. WAC 308-124C-125(9)(c), carried to the delegate by WAC 308-124C-137(13)(c), required review of a contract involving a broker licensed under two years within five business days of mutual acceptance, with documented proof retained. A lapsed window is a reason to review now and record the lapse, not a reason to skip the review, so the third option is right that the window has run and wrong about what follows. Leaving the check with the broker repeats the violation, whatever the review shows. And RCW 18.85.275(2) does make the designated broker responsible for funds and records once received, but WAC 308-124C-137 has placed this duty on the delegate, and RCW 18.85.361(22) makes failure to supervise adequately its own ground for discipline. WAC 308-124C-145 requires heightened supervision throughout the broker's first two years.

Ten days before closing, a broker at your firm tells you the seller mentioned in passing that the crawlspace floods every spring. The seller does not want it disclosed, and the buyer's inspector never reached the crawlspace. The broker asks whether the firm's loyalty to its seller-client means he should stay quiet. As the supervising managing broker, what do you tell him?

• a.He may stay quiet, because the seller's completed disclosure statement fixes what the buyer is entitled to
• b.He must disclose it: the duty to disclose known material facts runs to all parties and cannot be waived✓
• c.He must disclose it only if the buyer's agent puts the question to him directly and in a written request
• d.He may stay quiet until closing and disclose it afterwards, because some duties survive the relationship

RCW 18.86.030(1) lists the duties a broker owes "to their principal and to all parties in a transaction, which may not be waived," and (1)(d) is the disclosure of "all existing material facts known by the broker and not apparent or readily ascertainable to a party." Recurring seasonal flooding of the crawlspace substantially affects value and is not apparent, so it is a material fact under RCW 18.86.010(11), and the broker knows it. Loyalty under RCW 18.86.040(1)(a) is owed to the seller, but it never licenses concealment from the other side, and the client cannot waive a duty the statute says may not be waived. The second option is right that a seller disclosure statement exists but wrong that it caps the broker's own duty. Nothing conditions the duty on a written inquiry from the other agent. And the fourth is right that duties survive termination — RCW 18.86.070(2) preserves the duty to account and the duty of confidentiality — but disclosure after closing is not disclosure at all, since the point is to inform the buyer while the decision is still his. RCW 18.86.031 makes a violation of RCW 18.86.030 a violation of RCW 18.85.361.

A transaction your firm brokered collapses three days before closing. The buyer demands the $15,000 earnest money back and the seller claims it. Your affiliated broker asks you to release $7,500 to each side to keep the peace, and to draw the firm's earned share of the commission from the trust account at the same time. What is the correct response?

• a.Both: the designated broker has delegated trust authority to you, and a delegated managing broker may disburse trust funds at will
• b.The split only: a supervising broker may settle a dispute over funds the firm itself holds, but never touch the firm's own commission
• c.Neither: disputed funds need a written release signed by both parties, and a commission check may be drawn only after closing✓
• d.The commission only: the firm plainly earned it, and commissions owed to another firm may lawfully be paid out of the trust account

WAC 308-124E-110(3) forbids any disbursement from the trust account before closing, or before a condition in the purchase and sale agreement occurs, "to any person or for any reason, without a written release from both the purchaser and seller," with two exceptions that do not help here: an agreement that terminates by its own terms disburses as the agreement provides, and funds may go to the escrow agent the parties designate in writing. A broker's even-handed split is not a written release, so the third option is wrong even though its instinct about the commission is sound. WAC 308-124E-110(2) allows a commission check payable to the firm to be drawn on the trust account only "after the final closing," and WAC 308-124E-105(16)(c) bars trust disbursements for commissions to persons licensed to the firm or for firm business expenses at any time. The fourth option is right about one rule — WAC 308-124E-105(14) does let commissions owed to another firm be paid from trust — and wrong about this one, since nothing was earned in a deal that never closed. A written delegation under RCW 18.85.275(3) transfers the work, not a discretion to ignore the rules.