Washington Managing Broker Exam — All Questions

A new environmental ordinance leaves a landowner with no economically viable use of a parcel, although the government takes no title to it. The owner's strongest constitutional claim is:

• a.The ordinance is void because zoning cannot restrict use
• b.A regulatory taking entitling the owner to payment✓
• c.Escheat has occurred and the state now owns the parcel
• d.Spot zoning, since only this parcel lost its value

Regulation that goes so far it denies an owner all economically viable use is treated as a regulatory taking, and just compensation is owed even though the government never took title. Arguing that zoning simply cannot restrict use fails, because regulating land is a valid exercise of the police power and owners have no right to the most profitable use. Escheat moves property to the state only when an owner dies with no will and no heirs, which has nothing to do with an ordinance. Spot zoning describes singling out one parcel for a different classification, not a general environmental rule applied to a class of land.

Reviewing a title report, a broker finds an old recorded covenant, written decades ago, that bars resale of the lot to members of a specified race. Its legal effect today is:

• a.It binds the buyer because it was recorded before purchase
• b.It is void, so a court will never enforce it or enjoin it✓
• c.It stays valid until the homeowners association removes it
• d.It is enforceable by the association but not by an owner

A private restriction that discriminates on a protected basis is void and unenforceable under the federal Fair Housing Act and the Civil Rights Act of 1866, so no court will order compliance or enjoin a violation, and the association has no power the courts would back. Recording rescues nothing, because an illegal restriction gains no force from sitting in the public record. No association vote is required to strip it of effect, although many states let an owner have the language formally struck. Valid CC&Rs, by contrast, are enforced privately by injunction brought by an owner or the association. A broker must never repeat or give effect to such language.

A grantor signs and notarizes a deed naming a nephew as grantee, locks it in a safe deposit box, and tells no one. The grantor later dies. What is the deed's effect?

• a.Title passed when the grantor signed the deed
• b.Title passed because the deed was acknowledged
• c.No title passed, because delivery never occurred✓
• d.Title passes when the estate later records it

A deed operates only when the grantor delivers it with the present intent to pass title and the grantee accepts, and both must happen while the grantor is alive. Signing accomplishes nothing while the instrument stays under the grantor's control in a box no one knows about. Acknowledgment before a notary serves recording, not validity, so notarizing it changes nothing here. An estate representative cannot supply the delivery the grantor failed to make, and recording an undelivered deed does not revive it. The nephew takes only through the will or the intestacy statute, which is why closings hand over the executed deed rather than merely signing it.

A deed is signed by a competent grantor and handed to a grantee who accepts it, but the grantor's signature was never notarized. As between those two parties, the deed is:

• a.Void, since notarizing is a validity requirement
• b.Valid, though it cannot be recorded as it stands✓
• c.Valid only if the grantee later pays a recording fee
• d.Voidable at the option of the grantor's creditors

Acknowledgment is a recording requirement, not an element of a valid deed. Delivered and accepted, the deed transfers title between grantor and grantee even with no notary, but the recorder will reject it, leaving the grantee exposed to later purchasers and lienholders who record first. Calling it void confuses the two ideas: validity turns on a competent grantor, an identifiable grantee, words of conveyance, an adequate legal description, the grantor's signature, and delivery and acceptance. Paying a fee cannot cure a missing acknowledgment, because the recorder cannot accept the instrument at all. Creditors of the grantor gain no power to undo a completed conveyance.

In a deed, which clause opens with the words 'to have and to hold' and defines the extent of the estate the grantee is receiving?

• a.The granting clause containing the words of conveyance
• b.The habendum clause, following the granting clause✓
• c.The acknowledgment taken before a notary public officer
• d.The legal description identifying the land conveyed

The habendum clause follows the granting clause, begins with the traditional phrase 'to have and to hold,' and spells out the estate conveyed, for example a fee simple absolute or a life estate. The granting clause holds the words of conveyance that actually transfer the interest and names the grantee. The acknowledgment is the notary's certificate that the signature is genuine, which the recorder requires but the transfer does not. The legal description identifies the land by metes and bounds, lot and block, or government survey, and it fixes what is conveyed rather than how much of an estate. Reading both clauses tells a broker exactly what the buyer is getting.

A relocation company that has owned a home for three months conveys it, warranting title only against defects that arose during its own ownership. The deed it delivers is a:

• a.Bargain and sale deed implying ownership without covenants
• b.General warranty deed covering the entire chain of title
• c.Quitclaim deed conveying only the interest actually held
• d.Special (limited) warranty deed covering the grantor's period✓

Warranting only against defects created or suffered while the grantor held title describes the special or limited warranty deed, the customary instrument for corporate, relocation, and fiduciary sellers who cannot vouch for what earlier owners did. A general warranty deed reaches back through the whole history of the property and offers the broadest protection, which is more than this seller is giving. A quitclaim carries no warranties at all and passes only whatever interest the signer happens to hold. A bargain and sale deed implies that the grantor owns the property but adds few or no covenants. A buyer taking narrower covenants should lean on an owner's title policy.

A title search shows that a seller's former spouse may still hold a possible interest in the property. What is the usual instrument used to release that interest and clear the record?

• a.A quitclaim deed from the former spouse✓
• b.A general warranty deed from the former spouse
• c.A trustee's deed issued after a foreclosure
• d.A correction deed fixing the legal description

A quitclaim releases whatever interest the signer may hold, with no warranties attached, which makes it the standard tool for removing a cloud such as a possible marital interest, a stale easement claim, or a name discrepancy. Demanding a general warranty deed asks the former spouse to guarantee title he or she may never have owned, and it is normally refused. A trustee's deed is what the trustee under a deed of trust issues to the purchaser at a foreclosure sale. A correction deed reforms a mistake in an earlier deed between the same parties and cannot release an outsider's claim.

A court-appointed personal representative sells a decedent's home during probate, and the buyer's broker asks what instrument will convey title. The answer is:

• a.A trustee's deed given after a nonjudicial foreclosure
• b.A sheriff's deed issued following a judicial sale
• c.A general warranty deed with full title covenants
• d.An executor's or personal representative's deed✓

Estate property is conveyed by an executor's deed when a will names the executor, or by a personal representative's or administrator's deed when the court makes the appointment; these deeds recite the court authority and give only limited covenants. A trustee's deed comes from the trustee under a deed of trust after a nonjudicial foreclosure sale. A sheriff's deed, called a referee's deed in some states, follows a judicial sale ordered by a court. A general warranty deed is not used, because a fiduciary will not personally guarantee title against the acts of the decedent or of owners further back in the chain.

After closing under a general warranty deed, a buyer discovers a recorded utility easement that the deed never disclosed. Which covenant did the grantor breach?

• a.Quiet enjoyment, a promise against eviction by better title
• b.Seisin, a promise that the grantor owns the estate conveyed
• c.Against encumbrances, a promise of no undisclosed burdens✓
• d.Further assurance, a promise to sign curative papers

The covenant against encumbrances promises that no liens, easements, or similar burdens exist beyond those the deed discloses, so a recorded easement left unmentioned breaches it at the moment of delivery. Seisin promises the grantor actually owns the estate being conveyed, which is not the trouble when ownership is sound but burdened. Quiet enjoyment shields the grantee from later eviction by someone holding superior title, and an easement holder's use is not an eviction. Further assurance obliges the grantor to sign additional documents needed to perfect title. A general warranty deed carries all of these along with the right to convey and warranty forever.

A neighbor has openly farmed and fenced a strip of an absentee owner's land, excluding others and never asking permission. To take title by adverse possession the neighbor must prove:

• a.Payment of the owner's property taxes for every year
• b.Open, notorious, continuous, hostile, and exclusive possession✓
• c.A written agreement signed by the record title owner
• d.A recorded deed describing the disputed strip of land

Adverse possession requires possession that is open and notorious, continuous, hostile in the sense of being without permission, and exclusive, held for the statutory period set by state law. Some states add payment of taxes or color of title, but those elements are not universal, so a broker should never assume them from another state's rule. A written agreement from the record owner would destroy the claim outright, since permission defeats hostility. Recording a deed creates no possession and cannot manufacture the required years of use. Adverse possession is one form of involuntary alienation, alongside descent, escheat, foreclosure, eminent domain, and accretion.

An owner dies leaving no will, and after a diligent search no heirs can be located. A broker asked to list the property should understand that title:

• a.Passes by devise to the beneficiaries named in a will
• b.Descends to the decedent's nearest surviving creditors
• c.Vests permanently in the administrator the court appoints
• d.Escheats to the state, an involuntary transfer of title✓

Escheat is the state's claim to property when an owner dies intestate and no heirs can be found, and it is a classic involuntary transfer rather than a voluntary one by deed or will. Devise is a gift of real property by will, so it cannot operate where there is no will and no named beneficiary. Descent carries property to heirs under the intestacy statute, but creditors are paid as claimants out of the estate and never inherit the land itself. An administrator has authority to manage and convey estate property during probate, not to own it permanently. Each state sets its own escheat procedure and waiting period.

A search reveals an old mortgage of record that was paid off but never released, and the lender no longer exists. Which step clears that cloud so title is marketable?

• a.Ordering an abstract of title with an attorney's opinion
• b.Buying an owner's title policy that insures over it
• c.Filing a quiet title action asking a court to clear it✓
• d.Recording a correction deed signed by the current seller

A quiet title action asks a court to determine ownership and extinguish a stale or unreleasable claim, which is the practical cure when the mortgagee has vanished and no release can be obtained. An abstract of title with an attorney's opinion summarizes and evaluates the recorded chain; it reports the cloud rather than removing it, and it offers no indemnity. An owner's policy may insure over a known risk, but insurance pays for loss and leaves the defect on the record for the next buyer to confront. A correction deed fixes a drafting error between the original parties and cannot release a third party's lien.

A seller deeds a parcel to one buyer and later deeds the same parcel to a second buyer, who records first. Which framework decides who owns the land?

• a.A federal recording statute applied in all fifty states
• b.The state's recording act, race, notice, or race-notice✓
• c.The order in which the two deeds were signed and dated
• d.The county recorder's discretion over competing claims

Priority between competing grantees is governed by the recording act of the state where the land lies, and the schemes differ: a pure race state protects whoever records first, a notice state protects a later purchaser who took without notice of the earlier deed, and a race-notice state protects one who took without notice and recorded first. No federal statute governs land recording. Signing dates do not decide the contest, which is precisely why a public recording system exists. Recorders act ministerially and have no power to resolve claims. Because the gap between closing and recording is the danger zone, a broker should press for prompt recording.

A buyer pays for a lender's title policy at closing and asks the broker whether it also protects the buyer's equity in the home. The correct answer is that the policy:

• a.Protects both parties equally up to the full purchase price
• b.Protects the buyer once the mortgage has been fully repaid
• c.Protects the buyer against defects arising after closing
• d.Protects only the lender, declining with the balance✓

A lender's, or mortgagee's, policy insures only the lender's security interest, and its coverage shrinks as the principal is paid down, ending altogether when the loan is satisfied. It never covers the buyer's equity, which is why a separate owner's policy is offered at closing for a one-time premium and lasts as long as the insured holds an interest. Repaying the mortgage does not convert the lender's coverage into the buyer's; it extinguishes it. And no title policy insures defects that first arise after its date. Brokers should explain this plainly before a buyer waives owner's coverage to save money.

Six months after closing, a contractor the buyer hired records a mechanic's lien against the home. The buyer files a claim under the owner's title policy. The insurer will most likely:

• a.Deny, because the defect arose after the policy was issued✓
• b.Pay, because owner's policies cover all future liens
• c.Pay, because the standard exceptions were removed
• d.Deny, because only a lender may file a title claim

Title insurance looks backward: it covers defects that already existed when the policy was issued but were not discovered or excepted, not events that happen later. A lien for work the buyer ordered after closing is a new problem the buyer must resolve directly. Buying extended coverage removes standard exceptions and broadens what is insured as of the policy date, but it does not push coverage forward in time. Owners plainly may claim under their own policies; the lender's policy is the one limited to the lender. Extended coverage typically depends on a current survey, which reveals encroachments and boundary issues a records search alone cannot.

A buyer tours a house and finds an occupant who is not the seller living there under an unrecorded lease. What kind of notice does that occupancy give the buyer?

• a.Actual notice, given by the seller's written disclosure
• b.Constructive notice, given by the public record
• c.No notice at all, since the lease was not recorded
• d.Inquiry notice, requiring the buyer to ask about it✓

Someone in possession who is not the seller puts a buyer on inquiry notice: the buyer is charged with whatever a reasonable investigation of that occupancy would have turned up, including an unrecorded lease or an option to purchase. Actual notice is what a party genuinely knows, typically from a disclosure or a conversation, and no one has told this buyer anything. Constructive notice comes from the public record, which by definition cannot reveal an unrecorded lease. Treating an unrecorded interest as invisible is the classic error, because possession is itself notice. A broker should always ask who occupies a property and on what terms.

Washington real estate licensing, including the managing broker credential, is administered under RCW 18.85 by the:

• a.Washington State Department of Licensing (DOL)✓
• b.Washington State Bar Association
• c.Washington Utilities and Transportation Commission
• d.Washington Association of Realtors

RCW 18.85.041 charges the director of the Department of Licensing with enforcing all laws and rules relating to the licensing of real estate firms, brokers, managing brokers, and designated brokers, and with granting or denying those licenses and holding hearings. The real estate commission created by RCW 18.85.021 sits alongside the director in an advisory capacity; the department is the licensing agency. The state bar association governs admission to and the practice of law rather than the licensing of real estate brokers. The commission that oversees utilities and transportation companies regulates an entirely different set of industries. The statewide association of Realtors is a private trade and membership group: it may set standards for its own members, but it cannot issue, deny, suspend, or revoke a state license.

Under the definitions in RCW 18.85.011, "commercial real estate" in Washington means any parcel of real estate in this state other than one that:

• a.lies outside the boundaries of an incorporated city
• b.is titled in the name of a corporation rather than a person
• c.contains one to four residential units✓
• d.has never previously been offered for lease or rent

RCW 18.85.011(6) defines commercial real estate as "any parcel of real estate in this state other than real estate containing one to four residential units," and the same subsection excludes a single-family residential lot or single-family units such as condominiums, townhouses, manufactured homes, or homes in a subdivision when sold or leased unit by unit, unless the property is sold or leased for a commercial purpose. The line is therefore drawn by the number of residential units and by the purpose of the deal, not by municipal boundaries, by who holds title, or by the property's rental history. The definition carries real weight: RCW 18.86.020(3) excuses a firm from having a services agreement when its broker acts as a buyer's agent solely for commercial real estate, and RCW 18.86.080(8) lets that broker give a written "Compensation Disclosure" instead.

The Washington real estate commission created by RCW 18.85.021 consists of:

• a.seven members elected by the state's licensees, who issue and revoke licenses themselves
• b.the director as chair plus six governor-appointed members who advise the director✓
• c.nine members appointed by the attorney general, who hear every license appeal de novo
• d.five members named by the state Realtor association, who set the fee schedule

RCW 18.85.021 establishes the real estate commission "consisting of the director who is the chair of the commission and six commission members who shall act in an advisory capacity to the director." The governor appoints those six for six-year terms, and the statute requires at least two from west of the Cascade mountain range and at least two from east of it; a member must have at least five years' experience performing real estate brokerage services in the state, or three years in investigative work of a similar nature. Because the members advise, the commission does not issue or revoke licenses — RCW 18.85.041 gives that to the director — and it neither hears appeals, which go to superior court under RCW 18.85.390, nor sets fees, which the director fixes under RCW 43.24.086. No private association appoints any member.

A Washington licensee wants to appeal the director's disciplinary order to superior court. RCW 18.85.390 requires the appellant to:

• a.give a $5,000 surety bond and file it with notice within 10 days of the decision
• b.give a $1,000 cash bond and file it with notice within 30 days of the decision✓
• c.post no bond at all, because the department bears the costs of every appeal
• d.obtain the real estate commission's written permission before filing a notice

RCW 18.85.390 provides that "upon instituting appeal in the superior court, the appellant shall give a cash bond to the state of Washington... in the sum of one thousand dollars," conditioned to pay costs awarded against the appellant, "the bond and notice to be filed within thirty days from the date of the director's decision." The figure is a cash bond of $1,000 and the clock is thirty days; a $5,000 surety within ten days invents both numbers. The appellant, not the department, bears cost: RCW 18.85.401 then makes the appellant pay for the certified transcript within fifteen days of notice, and failure to pay dismisses the appeal. The advisory commission has no gatekeeping role over an appeal. Note that $5,000 is a real Washington figure — it is the maximum fine per violation under RCW 18.235.110(1)(h) — but it is not an appeal bond.

RCW 18.85.361 lets the director impose on a licensee the sanctions and fines specified in RCW 18.235.110, under which a fine may not exceed:

• a.$1,000 per violation, and only after a criminal conviction has been entered
• b.$250 per violation, which is the ceiling for every profession the act covers
• c.$25,000 per violation, but only against a firm and never against a licensee
• d.$5,000 per violation, with aggravating and mitigating circumstances weighed✓

RCW 18.85.361 authorizes the director to "impose any of the sanctions and fines specified in RCW 18.235.110," and RCW 18.235.110(1)(h) permits "payment of a fine for each violation found by the disciplinary authority, not to exceed five thousand dollars per violation," adding that the disciplinary authority "must consider aggravating or mitigating circumstances in assessing any fine." The same subsection lists revocation, suspension, restriction of practice, remedial education, practice monitoring, censure or reprimand, probation, denial of an application, and other corrective action. No conviction is a precondition — discipline is administrative and runs on a preponderance of the evidence under RCW 18.85.380. The $1,000-a-day figure is real but belongs elsewhere: RCW 18.85.041(8)(e) applies it to approved real estate schools, administrators, and instructors, not to licensees. Separately, RCW 18.85.411 makes unlicensed practice a gross misdemeanor.

The $20 fee assessed on every original and renewal broker and managing broker license by RCW 18.85.451 is deposited into the:

• a.Washington real estate research account, used only for the research center✓
• b.real estate education program account, spendable only on licensee discipline
• c.state general fund, spendable on whatever purpose the legislature appropriates
• d.state housing trust fund, spendable only on affordable-housing construction

RCW 18.85.451 creates a fee of twenty dollars "assessed on each real estate broker and managing broker's original license and upon each renewal of a license," including renewals of inactive licenses. RCW 18.85.461 then creates the Washington real estate research account, provides that all receipts from that fee are deposited into it, and limits expenditures to "the purposes of RCW 18.85.471" — the real estate research center, which the director establishes by memorandum of understanding with an institution of higher learning. All three sections carry an expiration date of September 30, 2035, extended there by 2025 c 362. Each distractor names a real Washington fund with the wrong money: fines imposed under the chapter go to the real estate education program account (RCW 18.85.061 and 18.85.321), and the interest on pooled trust accounts is split under RCW 18.85.311, seventy-five percent to the housing trust fund and twenty-five percent to the education account.

In Washington's license structure, which credential identifies the licensee a firm must designate as legally responsible for the firm's operations, records, and trust accounts?

• a.Designated broker✓
• b.Managing broker
• c.Broker
• d.Affiliated licensee

RCW 18.85.091(1)(a) makes it a minimum requirement of a firm license that the firm "designates a managing broker as the 'designated broker' who has authority to act for the firm." RCW 18.85.201 then places responsibility for the conduct of the firm's brokers and managing brokers on that designated broker, and RCW 18.85.285 makes the designated broker keep the firm's transaction records and administer its trust accounts. A Broker holds the entry credential and is the licensee being supervised. A Managing Broker has met additional experience and education and may supervise others, but a firm may have several, and holding the credential alone does not make a licensee answerable for the firm. "Affiliated licensee" is defined in WAC 308-124-300(2) as any broker or managing broker licensed to represent the firm; it describes a position, not a separate license.

To qualify to sit for the Washington managing broker examination, an applicant must generally have:

• a.ten years of licensed brokerage experience, with no further coursework of any kind required
• b.three years of full-time Washington broker experience in the prior five years plus 90 clock hours✓
• c.a four-year college degree in any field, which substitutes for both experience and coursework
• d.a passing score on the entry broker examination and nothing beyond the application fee

RCW 18.85.111(1) sets the minimum requirements: eighteen years of age, a high school diploma or equivalent, "a minimum of three years of licensed experience as a full-time real estate broker in this state or in another jurisdiction having comparable requirements within the five years previous to applying," and ninety hours of instruction that must include real estate brokerage management, business management, and advanced real estate law. WAC 308-124A-750 adds that each of those courses must be at least thirty clock hours, carry a comprehensive examination, and be completed within three years before applying. Experience alone therefore never suffices, however long, and no academic degree waives the licensed-brokerage requirement. Passing the entry broker examination is where the path begins. WAC 308-124A-713 provides the only alternative routes, for practical experience in an allied business.

A person who was unlicensed when he negotiated a sale later sues for the commission he was promised. Under RCW 18.85.331 the suit fails because the plaintiff must allege and prove he held a license:

• a.before offering to perform the transaction or procuring the promise of compensation✓
• b.at some point during the calendar year in which that transaction eventually closed at escrow
• c.by the date of closing, which is when the right to a brokerage commission finally vests
• d.within thirty days after the parties reached mutual acceptance of the agreement

RCW 18.85.331 does two things. It makes it unlawful "for any person to act as a real estate broker, managing broker, or real estate firm without first obtaining a license," and it then bars any suit for compensation "without alleging and proving that the plaintiff was a duly licensed real estate broker, managing broker, or real estate firm before the time of offering to perform any real estate transaction or procuring any promise or contract for the payment of compensation." The statute fixes the moment of licensure at the front of the deal, not at closing and not within the year, so licensing up later cannot cure the defect. Each wrong option moves the test to a later moment the statute does not use. RCW 18.85.411 separately makes acting without a license a gross misdemeanor.

Which task may an unlicensed employee of a Washington firm's property management department lawfully perform?

• a.Negotiating the rent and the lease term with a prospective tenant on the owner's behalf
• b.Signing a listing agreement for the owner's building whenever the broker is unavailable
• c.Showing a rental unit under the direct instruction of the designated or managing broker✓
• d.Accepting a share of the firm's leasing commission for each tenant she personally places

RCW 18.85.151(13) exempts a person employed or retained on behalf of the owner or the designated or managing broker whose property management work is limited to a closed list: delivering or receiving a lease application, lease, amendment, security deposit or rental payment made payable to the firm or owner; "showing a rental unit to any person, or executing leases or rental agreements," while "acting under the direct instruction of the owner or designated or managing broker"; providing information about a unit, lease, application, deposit, or rent amount; and assisting with administrative, clerical, financial, or maintenance tasks. Negotiating terms is not on that list, and signing a listing agreement is brokerage requiring a license. Paying an unlicensed person for brokerage services is separately unlawful under RCW 18.85.301(1).

WAC 308-124A-713 lets an applicant who lacks three years of broker experience qualify for the managing broker examination by showing, among other routes:

• a.five years of full-time licensed appraiser experience in good standing✓
• b.three years of unlicensed assistant work certified by a Washington firm
• c.any two years of work in a real-estate-adjacent field, licensed or not
• d.a passing score on the national portion taken in another state last year

RCW 18.85.111(1)(c) allows an applicant to be "otherwise qualified by reason of practical experience in a business allied with or related to real estate as prescribed by rule," and WAC 308-124A-713 is that rule. Its list is specific: postsecondary education with a major in real estate plus one year as an actively licensed broker; one year of full-time practice as a licensed attorney in real estate transactions; five years as a licensed mortgage broker or loan originator; five years as a licensed limited practice officer or escrow agent; five years as a licensed or certified real property appraiser; or five years managing, leasing, selling, or buying real property for a third-party corporation, limited liability company, or partnership. Each route is defined by a stated number of years in a named, usually licensed, occupation, which is why unlicensed assistant time, a loose two years in an adjacent field, and an out-of-state examination score all fall outside it.

Which statement about Washington's designated broker registration is correct?

• a.A designated broker holds a managing broker license and may serve more than one firm✓
• b.A designated broker holds a broker license and may serve only one firm at any time
• c.A designated broker is elected each year by the firm's affiliated licensees by ballot
• d.A designated broker is a separate examination-based license above managing broker

RCW 18.85.121(1) is explicit: "A designated broker must hold a license as a managing broker in accordance with RCW 18.85.111, and may act as a designated broker for more than one firm." The department registers designated brokers, and a managing broker who accepts endorsements from other firms receives a printed endorsement naming every firm served. Contrast RCW 18.85.111(3), which says a managing broker "can be licensed to one firm only at any one time" — one-firm exclusivity is a real Washington rule, but it attaches to the managing broker license, not to the designated broker role. The role is not an election; RCW 18.85.091(1)(a) has the firm designate the person and give the director the names of those with a controlling interest, and RCW 18.85.011(10) requires the designated broker to own or have a controlling interest in the firm. There is no separate designated broker examination — the credential is an endorsement on the managing broker's license.

A Washington individual license expires two years from its issuance date. If the renewal fee is never received, RCW 18.85.191 provides that the license is:

• a.canceled the day after expiration, with no route back except a fresh examination
• b.placed on inactive status indefinitely until the licensee decides to reinstate it
• c.canceled one year after expiration, after which a new license must be obtained✓
• d.renewed automatically for one year if the licensee owes no outstanding fines

RCW 18.85.191 provides that a license "expires two years from the issuance date," that it must be renewed every two years with the biennial fee, that a penalty fee applies if the application arrives after the renewal date, and that "the license of a person whose license renewal fee is not received within one year from the date of expiration is canceled," after which the person "may obtain a new license by satisfying the procedures and requirements as prescribed by the director by rule." So expiry and cancellation are different events a year apart, and WAC 308-124A-780 governs reinstating a license canceled for nonpayment. Firm licenses run on a different clock — they expire when the entity's registration or certificate of authority with the secretary of state expires. Inactive status is a separate thing entirely: under RCW 18.85.265 a licensee chooses it by delivering the license to the director.

A managing broker's license has been inactive for four years. Before it may be returned to active status, RCW 18.85.265 requires the holder to:

• a.retake and pass both portions of the managing broker licensing examination
• b.obtain a written waiver from the director, granted for good cause shown
• c.work six months under heightened supervision by the firm's designated broker
• d.take a thirty clock hour real estate course within the preceding year✓

RCW 18.85.265(3) allows an inactive license to be placed on active status on application and compliance with the chapter, and adds that "if a holder has an inactive license for more than three years, the holder must show proof of successfully completing a thirty clock hour course in real estate within one year before the application for active status." WAC 308-124A-788 lets a broker use a thirty-hour course in advanced real estate practices or real estate law for both that activation and the first active renewal. No re-examination is required, and there is no waiver mechanism. Heightened supervision is a real Washington duty but attaches elsewhere: RCW 18.85.275(6) and WAC 308-124C-145 apply it to brokers during their first two years of licensure. Note too that an inactive license renews on the same terms as an active one except that continuing education is not required while it stays inactive.

To renew an active Washington license, a broker or managing broker must complete thirty clock hours every two years, of which:

• a.all thirty hours must be taken in a live classroom, since distance courses cannot be counted
• b.three hours must be the prescribed core curriculum and three the fair housing curriculum✓
• c.fifteen hours must be a department-written examination sat at an approved PSI testing center
• d.ten hours must be a course in advanced real estate law approved by the commission

RCW 18.85.211(1) requires at least thirty clock hours of approved instruction every two years to renew, and expressly says examinations "shall not be required to fulfill any part of the education requirement." Subsection (2) carves three of those hours out for fair housing education under RCW 49.60.222. WAC 308-124A-790 adds the detail: at least fifteen of the thirty must be completed within twenty-four months of the renewal date, a portion of that fifteen being the three-hour prescribed core curriculum of WAC 308-124A-800 and the prescribed Washington real estate fair housing curriculum of WAC 308-124A-802, with failure to attest to either resulting in denial of renewal. Up to fifteen surplus hours carry forward to the next renewal. The director may limit, but does not forbid, distance education. The advanced real estate law course is a real requirement — of managing broker qualification under WAC 308-124A-750, not of ordinary renewal.

A broker leaves a Washington firm and wants to take her listings with her. Under RCW 18.85.275(2), listings and other brokerage service contracts are:

• a.property of the broker who signed them, subject to a fee payable to the firm
• b.property of the real estate firm, so they do not go with a departing broker✓
• c.property of the principal, who alone chooses which broker keeps servicing them
• d.property of the managing broker who reviewed them, absent a written objection

RCW 18.85.275(2) states that "listings, transactions, management agreements, and other contracts relating to providing brokerage services are property of the real estate firm." The same subsection sets up the chain of custody that follows from that ownership: brokers must timely deliver to their appointed managing broker all funds and records the firm must hold, the managing broker becomes responsible for them only on receipt, and the designated broker likewise only once they reach him. So the contracts belong to the firm from the outset, and no fee arrangement, principal's preference, or reviewing manager's involvement changes the ownership. RCW 18.85.291 completes the picture at departure: the firm holds the licenses, they cease to be in force when the broker stops representing the firm, and the designated broker must notify the director and surrender the license.

When a Washington broker terminates his affiliation with a firm, WAC 308-124A-730 provides that the designated broker:

• a.may hold the license until the broker's pending transactions have all closed
• b.may not condition surrender of the license on the broker performing any act✓
• c.may hold the license until the broker repays advances the firm has made
• d.may release the license only once the department approves a transfer request

WAC 308-124A-730(1) lets either side end the relationship unilaterally, requires the termination to be in writing, and requires notice to the real estate program "without delay" accompanied by the surrendered license. Subsection (1)(c) is the operative sentence here: the managing broker, branch manager, or designated broker "may not condition his or her surrender of license to the real estate program upon performance of any act by the broker or managing broker." If the surrender is being conditioned anyway, the licensee tells the department in writing and the program processes the release or transfer. Neither an open transaction nor an unpaid advance is a lawful hold, and no departmental pre-approval stands between the broker and release. The termination date is the postmark, fax, or hand-delivery date. RCW 18.85.291 makes a designated broker's failure to notify promptly, after demand, a ground for discipline against the firm and that broker.

RCW 18.85.361 treats a firm's or managing broker's failure to exercise adequate supervision over its brokers as:

• a.a defense for a firm whose broker acted outside the scope of his employment
• b.a matter of internal firm policy the department has no authority to reach
• c.an independent ground for discipline against the firm and its managing brokers✓
• d.a ground for discipline only where the supervised broker was disciplined too

RCW 18.85.361(22) makes it a ground for disciplinary action, "in the case of real estate firms, and managing and designated brokers, failing to exercise adequate supervision over the activities of their brokers and managing brokers within the scope of this chapter." It stands on its own: the department need not first discipline the supervised broker, and the failure is the firm's own violation rather than a defense to anything. Supervision is a statutory duty, not house policy — RCW 18.85.275(1) requires the designated or managing broker to "supervise the conduct of brokers and managing brokers for compliance with this chapter, chapter 18.235 RCW, and RCW 18.86.030," and RCW 18.85.201 places responsibility for their conduct on the designated broker, with a branch manager also answerable for those working under him at a branch. RCW 18.85.275(3) allows supervisory tasks to be delegated in writing to a managing broker licensed to the firm; the accountability does not disappear.

A buyer offers a promissory note rather than cash as earnest money. Under RCW 18.85.361(9), the licensee may accept it only if that fact is:

• a.communicated to the owner at closing and shown in the seller's final settlement statement
• b.communicated to the designated broker, who then decides whether the seller must be told
• c.communicated to the escrow agent and shown in the firm's own transaction folder records
• d.communicated to the owner before acceptance and shown in the purchase and sale agreement✓

RCW 18.85.361(9) makes it a ground for discipline to accept "other than cash or its equivalent as earnest money unless that fact is communicated to the owner before the owner's acceptance of the offer to purchase, and such fact is shown in the purchase and sale agreement." Two things are required and both must happen before the seller accepts: the owner is told, and the agreement itself records it. Telling anyone else instead — the designated broker, the escrow agent — leaves the owner deciding on an offer he does not understand, and a note recorded only in the firm's own file or on a settlement statement produced at closing arrives long after the moment the statute protects. Related handling rules sit nearby: WAC 308-124D-200 requires earnest money checks to be payable to the firm as licensed unless the principals agree in writing that they go to the seller or a named escrow agent.

A Washington managing broker buys a rental house for her own account through a limited liability company she controls. RCW 18.85.361(21) requires her to:

• a.route the purchase through her firm and hold her funds in its trust account
• b.obtain the department's written consent before any licensee may buy property
• c.surrender her managing broker endorsement for the period of her ownership
• d.disclose in writing that she is a real estate licensee, even buying for herself✓

RCW 18.85.361(21) makes it a ground for discipline to be "buying, selling, or leasing directly, or through a third party, any interest in real property without disclosing in writing that the person is a real estate licensee." The phrase "or through a third party" is what catches the entity here: interposing a company she controls does not remove the duty. The disclosure is of licensee status, so nothing requires the deal to run through her firm, and a licensee's own money is not client money — RCW 18.85.285(5) and WAC 308-124E-105(15)(a) actually forbid depositing the broker's or firm's own funds in the trust account beyond the minimum needed to keep it open. No departmental consent or surrender of a credential is involved. The advertising rule bends the same way: RCW 18.85.361(8) requires the firm's licensed name in advertising generally, but a licensee advertising personally owned property need only disclose that she holds a license.

An affiliated broker closes a cooperative sale and asks the other firm to pay her share directly. RCW 18.85.301 makes that unlawful, because a Washington broker may be paid:

• a.only through the designated broker of the firm she is licensed with✓
• b.only after the department has approved a written compensation agreement
• c.only by the party the broker actually represented in that transaction
• d.only in the calendar quarter in which the transaction finally closed

RCW 18.85.301(3) makes it unlawful for brokers or managing brokers "to pay any part of their commission from brokerage services or other compensation to any person, whether licensed or not, except through the firm's designated broker," and subsection (2) makes it unlawful for a firm to pay a broker not licensed to that firm. RCW 18.85.361(19) states the same rule from the receiving side: a broker may accept compensation for licensed acts only from the licensed firm she is licensed with. Subsection (1) bars paying anyone unlicensed who performed brokerage services, and subsection (4) carves out the single exception, sharing with a manufactured housing retailer licensed under chapter 46.70 RCW. Nothing turns on departmental approval, on which party the broker represented — RCW 18.86.080(2) says paying compensation does not by itself create an agency relationship — or on the timing of the payment.

RCW 18.86.080(7) lets a firm receive compensation for brokerage services only under a services agreement stating the terms of compensation, except that a firm may:

• a.give any buyer an oral summary of its fees before that buyer signs a purchase and sale agreement
• b.give a buyer of commercial real estate a written "Compensation Disclosure" before that buyer signs an offer✓
• c.rely on the offer of cooperating compensation the listing firm published in the multiple listing service
• d.collect the fee from the seller at closing, since a seller-paid commission needs no written agreement

RCW 18.86.080(7) requires a services agreement containing the amount the principal agrees to pay, the principal's consent to sharing compensation between firms, the principal's consent to being compensated by more than one party, and — in a buyer agreement — whether the appointed broker will show properties when no party has offered to pay the firm. Subsection (8) supplies the one substitute: for a buyer of commercial real estate the broker may instead disclose in writing, before the buyer signs an offer, the sources and amounts of any compensation expected, in a separate paragraph titled "Compensation Disclosure." Subsection (9) adds a narrow exception for a broker's price opinion or a pure referral where the referring firm rendered no brokerage services. Nothing lets an oral summary stand in for the writing, and who pays is not the test: subsection (1) allows compensation from the seller, the buyer, a third party, or shared between firms, but the writing is still needed.

Client funds such as earnest money received by a Washington firm must be:

• a.deposited into the firm's trust account, apart from the firm's own money✓
• b.wired at once into the listing broker's own individual bank account at closing
• c.held in cash by the affiliated broker until the transaction has actually closed
• d.deposited into the designated broker's personal savings account

RCW 18.85.285(5) requires every licensee to keep "separate and apart and physically segregated from the licensees' own funds" all client money held pending closing, and WAC 308-124E-105 requires the money to be held in trust, deposited in a federally insured institution able to accept service in Washington, and never used for the benefit of the broker, the firm, or anyone not entitled to it. Whose personal account receives the money is beside the point — a listing broker's or the designated broker's own account breaks the same separation. Holding cash leaves no audit trail and misses the deposit deadline in WAC 308-124E-105(6). Cite the trust rules to the right chapter: chapter 308-124 WAC is only "Real estate—Definitions and brief adjudicative proceedings" and contains no trust-account rule; trust procedures are chapter 308-124E WAC and records are chapter 308-124C WAC.

WAC 308-124E-105(6) requires funds received in a real estate transaction to be deposited into the firm's trust bank account:

• a.not later than the next banking day after receipt, unless the agreement holds the check✓
• b.not later than three business days after receipt, counting Saturdays but not holidays
• c.not later than the date of mutual acceptance, whichever of the two happens first
• d.not later than closing, provided the broker keeps the instrument in the transaction file

WAC 308-124E-105(6) requires all funds received for the sale, renting, leasing, or optioning of real estate, or for contract or mortgage collections or advance fees, to be deposited "not later than the next banking day following receipt thereof," with cash always on that schedule. The single exception in (6)(b) is a check received as an earnest money deposit "when the earnest money agreement states that a check is to be held for a specified length of time or until the occurrence of a specific event" — which is why the exception is written into the agreement, not decided by the broker. Subsection (6)(c) confirms that Saturdays, Sundays, and legal holidays under RCW 1.16.050 are not banking days. Nothing in the rule counts Saturdays, nothing keys the deadline to mutual acceptance, and holding an instrument in the file until closing is the practice the deposit rule exists to prevent.

A broker takes an earnest money check at a Saturday signing. WAC 308-124E-100 requires him to deliver it to his managing broker, branch manager, or designated broker within:

• a.two calendar days of the client's signature, with both weekend days counted in the period
• b.five business days of the client's signature, or sooner if the buyer should ask for it
• c.one banking day of the client's signature, the same as the deposit deadline
• d.two business days of the client's signature, or sooner if the contract requires it✓

WAC 308-124E-100 requires brokers and managing brokers to physically deliver all funds, negotiable instruments, or items of value to the appropriate managing broker, branch manager, or designated broker within the shorter of two business days of the client's signature, or sooner if the terms of the client contract require faster delivery; the rule states in terms that business days are not Saturdays, Sundays, or the legal holidays defined in RCW 1.16.050. So the clock here starts on Monday. Keep the two rules distinct: this one governs delivery from the broker to the supervisor, while the next-banking-day rule in WAC 308-124E-105(6) governs the firm's deposit of the money into the trust account. RCW 18.85.275(2) supplies the same order — the broker delivers to the managing broker, who delivers to the designated broker, each becoming responsible only on receipt.

Washington's required-records rule obliges a firm to keep trust-account records that:

• a.summarize only annual totals, with no per-transaction detail at all
• b.are optional whenever a title company closes the firm's transactions
• c.support a full accounting of client funds and a department audit✓
• d.may be destroyed as soon as each individual transaction has closed

WAC 308-124C-105 is captioned "Required records" and opens by naming the responsible person: "the designated broker is required to keep the following on behalf of the firm." The list is built for tracing money — a duplicate receipt book or cash receipts journal, sequentially numbered nonduplicative checks with register or stubs, validated duplicate deposit slips, a client's accounting ledger for each transaction or management account, separate ledger sheets for each tenant, lessee, vendee, or mortgagor, and reconciled bank statements with canceled checks. It also fixes location: all required records are maintained at one location where the firm is licensed, main office or branch. Annual totals could never show what became of one client's money. Using a title company to close moves nothing, because the firm received and handled the funds. And destroying files at closing would defeat the three-year retention in WAC 308-124C-110(2) and RCW 18.85.361(16) and (17).

WAC 308-124C-110 requires a Washington firm's real estate records to be:

• a.retained and available for the director's inspection for a minimum of ten years
• b.retained and available for the director's inspection for a minimum of three years✓
• c.retained only until the department has completed its next scheduled audit of the firm
• d.retained only on paper, because electronic storage is not an approved method of keeping them

WAC 308-124C-110(2) requires records to be kept at an address where the firm is licensed and provides that "all records shall be retained and available for inspection by the director or the director's authorized representative for a minimum of three years." RCW 18.85.361(16) and (17) run in parallel, making it a disciplinary ground to fail to keep trust records for three years or, for a firm and its designated broker, to fail to preserve transaction records for three years after they reach the firm. Transactions closed at least a year may move to one central Washington facility, provided a list of them stays at the licensed office and they are produced on demand. Electronic storage is expressly allowed by subsection (3) so long as retrieval is immediate at the licensed office and every document can be viewed and printed. An audit does not end the retention period; WAC 308-124I-020 repeats the three years and adds that licensees have no privacy interest in records they must keep.

A Washington licensee is named as the defendant in a criminal information. WAC 308-124C-115 requires him to notify the real estate program within:

• a.twenty days after conviction, since an unproven charge need not be reported
• b.ten days after service, but only where the charge involves a real estate deal
• c.twenty days after service or knowledge of it, whether or not he is convicted✓
• d.thirty days after the appeal period runs and the judgment has become final

WAC 308-124C-115 requires every licensee, "within twenty days after service or knowledge thereof," to notify the real estate program of any criminal complaint, information, indictment, or conviction in which the licensee is named as a defendant, including a plea of guilty or nolo contendere. The trigger is service or knowledge of the charge, so waiting for a conviction, for a final judgment, or for an appeal period to expire all miss the deadline. The same rule requires notice of a civil order, verdict, or judgment involving any real estate or business-related activity — expressly "regardless of any pending appeal" — and of any other professional license fined, suspended, revoked, or refused by a government agency. Only the civil branch is limited to real estate or business subject matter; the criminal branch is not.

A Washington firm opens a second office with its own street address. RCW 18.85.241 requires that the branch:

• a.be licensed under a separate firm name and keep its own trust account records
• b.operate with no license of its own, since a branch shares the firm's credential
• c.be supervised only by the designated broker, because a branch has no manager
• d.be licensed under the firm's name and have a branch manager who is a managing broker✓

RCW 18.85.241 lets the designated broker apply for authority to establish branch offices "under the same name as the real estate firm" on payment of the fee, has the director issue a duplicate license for each branch showing the firm and the particular branch, requires that license to be prominently displayed at the branch, and requires "each branch office... to have a branch manager who shall be a managing broker authorized by the designated broker to perform the duties of a branch manager." WAC 308-124-300(4) defines a branch office as a separate physical office with a different mailing address that uses the firm's own unified business identifier number — so a branch never carries a separate firm name. RCW 18.85.201 makes the branch manager answerable, in addition to the designated broker, for the licensees working under him. There is one narrow exemption in the statute: no branch license is needed for sales activity confined to a single subdivision or tract lying within thirty-five miles of a licensed office.

WAC 308-124D-215 requires every property a Washington firm manages to be supported by a written management agreement signed by:

• a.the owner and the tenant, and stating the security deposit and the rent due monthly
• b.the owner and the designated broker, and stating the firm's compensation and authority✓
• c.the owner alone, whose signature binds the firm without any broker signing at all
• d.the managing broker alone, who signs for the owner under the firm's written policy

WAC 308-124D-215(1) requires all properties managed by the firm to be "supported by a written management agreement signed by the owner and designated broker and retained," and to state at minimum the firm's compensation; the type and number of units or square footage; whether the firm may collect and disburse funds and for what purposes; any authority to hold security deposits and how they may be disbursed; and how often summary statements go to the owner. Subsection (5) requires any amendment to be written and signed by the same two people. The tenant is a party to the separate rental or lease agreement required by subsection (2), not to the management agreement. No one may sign in the owner's place. Subsection (3) then prescribes what each owner's summary statement must show, from the balance carried forward through total rent receipts and itemized expenses to the ending balance.

Under Washington's rules on brokerage supervision, a managing broker who supervises other licensees is required to:

• a.assure the brokerage services in which he takes part comply with the licensing law✓
• b.delegate all recordkeeping to the affiliated brokers and conduct no review of their work
• c.let affiliated brokers hold client funds in their own personal bank accounts instead
• d.avoid reviewing transaction files so as to reduce his own personal liability

WAC 308-124C-135(1) states the managing broker's duty as "assuring all real estate brokerage services in which he/she participated are in accordance with chapters 18.85, 18.86, 18.235 RCW and the rules promulgated thereunder," and the rest of that section adds cooperating with departmental investigations and audits, knowing those chapters, following the designated broker's home-inspector policy, delivering transaction documents within two business days of mutual acceptance, and following the rules on safe handling of client funds and on proper advertising. Handing recordkeeping over with no review inverts the duty, since RCW 18.85.275(3) lets tasks be delegated but never the accountability. Letting brokers hold client money personally is the commingling RCW 18.85.285(5) forbids. And staying away from files creates exposure rather than removing it: RCW 18.85.361(22) makes failure to supervise adequately its own ground for discipline.

A firm's written office policy must provide for review of every brokerage service contract involving a broker licensed less than two years. That review must be completed within:

• a.five business days of the listing being taken, with proof kept in the broker's own file
• b.thirty days of mutual acceptance, with proof produced only when the department asks
• c.two business days of mutual acceptance, which is also the document delivery deadline
• d.five business days of mutual acceptance, with documented proof kept at the record location✓

WAC 308-124C-125(9) puts on the designated broker the duty of "maintaining, implementing and following a written policy" addressing home-inspector referrals, levels of supervision for all brokers, managing brokers and branch managers, and, at (9)(c), "review of all brokerage service contracts involving any broker of the firm licensed for less than two years," which "must be completed by the designated broker or their delegated managing broker within five business days of mutual acceptance," with documented proof kept at the firm's record locations. WAC 308-124C-137(13)(c) repeats the five-day window for a managing broker who has been delegated the duty. The two-business-day figure in the last option is real but measures something else — WAC 308-124C-125(11), -135(7) and -140(7) give affiliated licensees two business days from mutual acceptance to submit their transaction documents. Mutual acceptance, not the listing date, starts the review clock.

A team inside a Washington firm advertises under a team name it has not licensed as an assumed name. Which name complies with WAC 308-124B-210?

• a."Cascade Realty," shown with the firm's licensed name and approved in writing by the designated broker
• b."The Cascade Group," shown with the firm's licensed name and approved in writing by the designated broker✓
• c."Cascade Group LLC," shown with the firm's licensed name and approved in writing by the designated broker
• d."The Cascade Group," shown on its own and approved in writing by the designated broker and branch manager

WAC 308-124B-210(2) allows brokers and managing brokers to advertise using an unlicensed name, title, or brand only on four conditions: they must always display the firm's licensed name or licensed assumed name clearly and conspicuously alongside it; they must not use a name suggesting a legal entity separate from the firm, "such as 'Inc.,' 'LLC,' 'LLP,' 'Corp.,' 'firm,' or 'company'"; they must not use a name commonly understood to reference a firm or office, "such as 'realty,' 'realtors,' 'firm,' or 'real estate'"; and they must have advance written approval from the firm's designated broker. "Cascade Realty" fails on the third condition and "Cascade Group LLC" on the second, however correct the display and approval around them; the fourth option has the approvals but drops the firm's name, which subsection (1) requires in all advertising including web pages and email. RCW 18.85.361(8) makes advertising without the firm's licensed name a disciplinary ground in its own right.

Agency relationships between real estate licensees and the public in Washington are governed primarily by:

• a.common-law fiduciary rules alone, with no statute addressing the subject
• b.the Uniform Commercial Code as adopted in Washington, Title 62A RCW
• c.the federal Real Estate Settlement Procedures Act and its implementing rule
• d.the Washington real estate brokerage relationships act, chapter 18.86 RCW✓

Chapter 18.86 RCW defines the duties a licensee owes buyers and sellers, states how agency relationships arise, and governs limited dual agency. RCW 18.86.110 settles its relationship with the older law in terms: "the duties under this chapter are statutory duties and not fiduciary duties. This chapter supersedes the fiduciary duties of an agent to a principal under the common law," while the common law continues to apply to the parties in all other respects, and the chapter is to be construed broadly. So the area is not left to judge-made fiduciary law. The Uniform Commercial Code governs transactions in goods, not representation in real estate. The federal settlement procedures statute addresses closing costs and referral practices in federally related mortgage loans and says nothing about whom a licensee represents. RCW 18.86.031 ties the two chapters together: a violation of RCW 18.86.030 or 18.86.130 is a violation of RCW 18.85.361.