Washington Managing Broker Exam — All Questions

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.

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."