Washington Real Estate Fundamentals
Lesson 17:
Real Estate Careers and
the Real Estate License Law
© 2015 Rockwell Publishing
Introduction
Topics to be covered:
 real estate as a career
 administration of license law
 licensing
 regulation of business practices
 disciplinary action
 antitrust laws
© 2015 Rockwell Publishing
Real Estate as a Career
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Working as a real estate agent
Real estate companies
Professional associations
Related careers
© 2015 Rockwell Publishing
Real Estate as a Career
Working as a real estate agent
Law requires agents to be affiliated with real
estate firm.
 In practical terms, however, agents work
for themselves.
 Generate listings, find buyers on their
own.
 Self-motivation and discipline required.
© 2015 Rockwell Publishing
Working as a Real Estate Agent
General nature of the job

Flexible schedule.
 But available evenings, weekends,
holidays.
 Part-time effort not enough for new agent.

Work closely with all kinds of people.
 Buyers and sellers often under pressure.

Need stamina, determination to tolerate
uncertainty and rejection.
© 2015 Rockwell Publishing
Working as a Real Estate Agent
Skills needed
Financial planning skills
 Income not received on regular basis.
 Marketing skills
 Need marketing plan for self as well as
for clients’ properties.
 Accounting skills
 Recordkeeping, tax planning.
 Technology skills
 Keeping up with modern tools.

© 2015 Rockwell Publishing
Real Estate as a Career
Real estate companies
Important to find company that’s a good fit.
Many choices:
 sole proprietorship vs. large, national firm

firm that offers comprehensive services
vs. one that is highly specialized

independent office vs. franchise operation
© 2015 Rockwell Publishing
Real Estate Companies
Services and support for agents
Training and guidance:
 for new agents and ongoing
 formal programs and informal mentoring
Facilities and expenses:
 Agents commonly bear all expenses:
 gas, advertising, for sale signs

But some firms pay for membership in
MLS and professional associations.
© 2015 Rockwell Publishing
Real Estate Companies
Compensation
Possible compensation arrangements:
 commission share (specified percentage)
 100% commission with desk fee
 salary
 combination
© 2015 Rockwell Publishing
Real Estate Companies
Agent’s responsibilities
Companies vary considerably in:

what duties they assign
 Floor duty: Set time when agent must
be at office to handle phone calls,
drop-in visits from buyers or sellers.

how closely they monitor productivity
 Agent may or may not have to meet
specific sales goals.
© 2015 Rockwell Publishing
Real Estate as a Career
Professional associations
Professional associations may offer:
 special training, certifications
 code of ethics
 public perception of competence and
trustworthiness
© 2015 Rockwell Publishing
Real Estate as a Career
Related careers
Licensee might choose real-estate related
career instead of selling real estate:
 property management
 title insurance
 escrow
 loan origination
 home inspection
Some of these require additional license.
© 2015 Rockwell Publishing
Summary
Real Estate as a Career
• Flexible schedule
• Working closely with people
• Financial planning, marketing, accounting,
and technology skills
• Company services and support for agents
• Compensation arrangements
• Desk fee
• Floor duty
• Sales goals
© 2015 Rockwell Publishing
Real Estate License Law
Administration of the law
License law protects public in real estate
transactions by:
 requiring education and licensing
 regulating business practices
 establishing disciplinary procedures
Law administered by Real Estate Division of
Washington State Department of Licensing
(DOL).
© 2015 Rockwell Publishing
Administration of License Law
Director of DOL
Director of Department of Licensing
appointed by state Governor. Authorized to:
 grant and deny licenses
 issue rules and regulations
 enforce license law through disciplinary
hearings and imposition of penalties
Director and Real Estate Division staff may
not own interest in real estate firm.
© 2015 Rockwell Publishing
Administration of License Law
Real Estate Commission
Commission: Director and six commissioners.
Each commissioner:
 appointed by Governor
 serves six-year term on part-time basis
 generally must have at least five years of
real estate experience
At least two commissioners must be from
east of Cascades, at least two from west.
© 2015 Rockwell Publishing
Administration of License Law
Real Estate Commission
Commission’s duties:
 advising Director
 preparing and administering license exams
 holding educational conferences to benefit
real estate industry
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Administration of License Law
Center for Real Estate Research
Commission established Center for Real Estate
Research to:
 study real estate economics, affordable
housing, other issues
 advise Commission about real estate
education and related matters
 provide real estate information to general
public
Center funded by license renewal surcharge.
© 2015 Rockwell Publishing
Administration of License Law
Attorney General
State Attorney General:
 gives Director legal advice concerning
license law
 represents Director in legal proceedings
involving Real Estate Division
© 2015 Rockwell Publishing
Real Estate Licenses
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When a real estate license is required
Exemptions from licensing requirements
Types of licenses
Licensing qualifications and application
process
License expiration and renewal
© 2015 Rockwell Publishing
Real Estate Licenses
When a license is required
Unlawful to perform (or offer to perform) real
estate brokerage services without appropriate
license:
1. on behalf of another person
2. for compensation or in expectation of
compensation
© 2015 Rockwell Publishing
When a License is Required
Real estate brokerage services
License law defines real estate brokerage
services as any of the following:

listing, selling, purchasing, exchanging,
optioning, leasing, or renting real estate

negotiating a purchase, sale, exchange,
lease, or rental of real estate
advertising oneself as engaged in real estate
brokerage services
(continued)

© 2015 Rockwell Publishing
When a License is Required
Real estate brokerage services
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advising, counseling, or consulting in
connection with a real estate transaction
issuing a broker’s price opinion (competitive
market analysis)
collecting, holding, or disbursing funds
related to real estate transactions
performing property management services
© 2015 Rockwell Publishing
When a License is Required
Licensee acting on own behalf
Definition of brokerage services applies
mainly to actions performed for another
person and for compensation.

But licensees must also comply with
license law requirements even when
buying, selling, or leasing property for
themselves.
© 2015 Rockwell Publishing
When a License is Required
Business opportunities
License law also covers business opportunity
transactions if real estate is involved.

Business opportunity: Sale or acquisition
of a business.
 Inventory
 Equipment
 Goodwill
 Real property?
© 2015 Rockwell Publishing
When a License is Required
Manufactured homes
License law covers mobile or manufactured
home transaction if home:
 attached to land (part of real property), or
 sold or leased at same time as land
where it has been or will be placed.
© 2015 Rockwell Publishing
Real Estate Licenses
Licensing exemptions
Exempt from licensing requirement even if
activities meet brokerage services definition:
 person buying, leasing, or disposing of
property for self or on behalf of group he
belongs to
 attorney in fact (person appointed in power
of attorney) acting without compensation
 attorney at law in performance of duties
(continued)
© 2015 Rockwell Publishing
Real Estate Licenses
Licensing exemptions
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receiver, bankruptcy trustee, executor,
administrator, or guardian
anyone acting under court order
trustee selling property under deed of trust
secretary, assistant, bookkeeper,
accountant, or other real estate firm staff
performing clerical duties
(continued)
© 2015 Rockwell Publishing
Real Estate Licenses
Licensing exemptions
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government employee involved in acquiring
property
owner/manager of rental storage facility
person who makes referrals to licensee but
is not involved in negotiation or execution of
documents and whose compensation is not
contingent on licensee’s
(continued)
© 2015 Rockwell Publishing
Real Estate Licenses
Licensing exemptions
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CPA or investment counselor who does not
promote sale of specific property
community association manager who doesn’t
promote purchase, listing, sale, or leasing of
specific property interest
company or entity acting as escrow agent
person who performs only limited property
management tasks for property owner, or for
designated or managing broker
© 2015 Rockwell Publishing
Licensing Exemptions
Unlicensed assistants
Some licensees hire unlicensed assistants.
 Real Estate Commission guidelines
describe activities unlicensed assistants
can and can’t perform.
 Unlicensed assistant may provide
information about property only as written
and approved by a real estate licensee.
© 2015 Rockwell Publishing
Licensing Exemptions
Out-of-state licensees
Agent licensed in another state may handle
commercial transactions here without
Washington real estate license, if:
 written agreement with licensed
Washington firm
 consents to service of process
 Washington firm has copy of license and
custody of records
 Washington firm’s name on all advertising
© 2015 Rockwell Publishing
Real Estate Licenses
Types of licenses
Three types of real estate licenses in
Washington:
 firm license
 managing broker’s license
 broker’s license
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Types of Licenses
Firm license
Washington requires every real estate firm to
be licensed.
 Real estate firm: Business entity that
conducts real estate activities.
 Corporation, partnership, sole
proprietorship, etc.
© 2015 Rockwell Publishing
Types of Licenses
Firm license
To be licensed, firm must name designated
broker, who has authority to act for firm.

Firm must also provide Director of DOL
with names of:
 firm’s owner(s)
 anyone else with ability to control
operational and/or financial decisions
of firm
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Firm License
Designated broker
Designated broker has ultimate responsibility
for all firm’s legal duties.

Must have managing broker’s license.

May delegate some duties to other
managing brokers in the firm.
 Written delegation agreement required.
© 2015 Rockwell Publishing
Firm License
Affiliated licensees
Firm authorized to hire affiliated licensees.
 Affiliated licensee: Individual real estate
licensee who performs brokerage
services under firm’s authority.
 Licensed either as broker or as
managing broker.

Broker or managing broker may be
compensated only by designated broker
acting on behalf of firm.
© 2015 Rockwell Publishing
Types of Licenses
Managing broker’s license
Managing broker’s license issued only to an
individual (not to a business).

Affiliated with only one firm at a time.

May perform brokerage services, and/or
may be authorized to:
 manage other licensees
 act as branch manager
 serve as firm’s designated broker
© 2015 Rockwell Publishing
Types of Licenses
Broker’s license
Broker’s license issued only to an individual.

Affiliated with only one firm at a time.

Must work under supervision of
designated broker or a managing broker.

If less than two years of experience,
heightened supervision.
 Includes review of all transaction
documents within five days of signature.
© 2015 Rockwell Publishing
Types of Licenses
Designated broker’s endorsement
Designated broker:

must have ability to control firm’s
operational and financial decisions

must obtain designated broker’s
endorsement for managing broker’s
license

may serve as designated broker for more
than one firm at a time
© 2015 Rockwell Publishing
Types of Licenses
Change of designated broker
When firm appoints new designated broker:
 outgoing and incoming designated brokers
must submit statement to DOL with:
 pending transactions
 trust fund liabilities
 certification that sufficient funds held in
trust to cover all liabilities
© 2015 Rockwell Publishing
Types of Licenses
Closing firm
If firm goes out of business, designated broker
responsible for submitting a closing firm
affidavit to Director of DOL.
© 2015 Rockwell Publishing
Summary
Real Estate Licenses
• License law
• Director of Dept. of
Licensing
• Real Estate Commission
• Center for Real Estate
Research
• Brokerage services
definition
• Exemptions
• Real estate firm
license
• Designated broker
• Affiliated licensee
• Managing broker’s
license
• Broker’s license
© 2015 Rockwell Publishing
Real Estate Licenses
Qualifications and application
To obtain broker’s or managing broker’s
license, individual must pass exam.
 Before applying to take exam, applicant
must meet:
 age requirements
 educational requirements

Applicant for managing broker’s license
must also meet experience requirements.
© 2015 Rockwell Publishing
Licensing Qualifications
Managing broker’s license
1. At least 18 years old.
2. High school diploma or equivalency certificate.
3. At least three years’ experience within last five
years as full-time real estate broker.
 Other experience may be substituted.
4. 90 hours of courses within last three years.
 Details on next frame.
5. Pass managing broker’s license exam.
© 2015 Rockwell Publishing
Managing Broker’s License
Course requirements
Successful completion of 90 clock hours of
approved courses within last three years:
 30-hour advanced real estate law course
 30-hour brokerage management course
 30-hour business management course
Can’t reuse courses taken to meet continuing
education requirements.
Director may waive course requirements based
on college course work.
© 2015 Rockwell Publishing
Licensing Qualifications
Broker’s license
1. At least 18 years old.
2. High school diploma or equivalency certificate.
3. Within two years before applying for exam:
 60 clock hours in real estate fundamentals
 30 clock hours in real estate practices.
 Director may waive course requirements
based on college course work.
4. Pass broker’s license examination.
© 2015 Rockwell Publishing
Licensing Qualifications
Licensing exam
Must make reservation for exam at least one
business day in advance – no “walk-in” exams.
Bring to exam:
 a valid government-issued photo ID
Applicant who misses exam without giving
adequate notice forfeits exam fee.
© 2015 Rockwell Publishing
Licensing Exam
Tested topics

Real estate conveyances (deeds, finance
contracts, leases)

Real estate investments and appraisals

Real estate agency relationships

Real estate practices and business ethics

Real estate license law

Must also demonstrate knowledge of
English language and arithmetic.
© 2015 Rockwell Publishing
Licensing Exam
National and state portions
Managing broker’s exam and broker’s exam
both have two sections:
1. national portion covering general real
estate practices, and
2. state portion covering Washington
license law.
State portion of managing broker’s exam also
includes section on closing process.
© 2015 Rockwell Publishing
Licensing Exam
Passing the exam
Minimum passing scores:
 broker’s exam: 70 on each portion
 managing broker’s exam: 75 on each
portion
So it’s possible to pass national portion, but
fail state portion—or vice versa.
© 2015 Rockwell Publishing
Licensing Exam
Retaking the exam
Applicant who fails exam may pay fee again
and retake it, more than once if necessary.
If applicant passes one portion but fails other,
passing score valid for six months.
 If applicant passes other portion within
six months, can then apply for license.
© 2015 Rockwell Publishing
Licensing Exam
Out-of-state licensees
Active licensee from another state eligible to
take just Washington state portion of exam.

Doesn’t have to take national portion.

Submits application, evidence of
licensure to DOL.

DOL will waive other requirements
(education, experience).
© 2015 Rockwell Publishing
Obtaining a License
Submitting license application
Exam results valid for one year.
 If not licensed within one year after exam
date, must pass exam again to get license.
License application must be signed by:
 designated broker of firm applicant will be
working for, or
 branch manager of branch where
applicant will be working.
© 2015 Rockwell Publishing
Obtaining a License
Fingerprints
Applicant for first broker’s license must
submit fingerprint card.

Fingerprinting also required every six
years for all licensees, in renewal
process.
© 2015 Rockwell Publishing
Obtaining a License
Interim license
Broker’s license applicant may start working
as soon as completed application form and
license fee mailed or hand delivered to DOL.

Form serves as interim license for up to
45 days after postmark or hand delivery
date.

No interim licenses for managing broker
applicants.
© 2015 Rockwell Publishing
Real Estate Licenses
License expiration and renewal
Individual’s license must be renewed every
two years or it will expire.

Renewal deadline (expiration date) is
same date license was originally issued.
 Submit renewal application and fee.
 For late renewal, also pay penalty.
© 2015 Rockwell Publishing
License Expiration and Renewal
Firm’s license
Real estate firm’s license must also be
renewed every two years.

Expiration date same as expiration date
for firm’s registration or certificate of
authority filed with Secretary of State’s
office.
© 2015 Rockwell Publishing
License Expiration and Renewal
Continuing education
Continuing ed required for standard renewals:
 30 clock hours of approved courses
 including three-hour core curriculum
course on current issues in real estate
 Must complete 15 hours (including core)
within 24 months before renewal date.
 Other 15 hours within 36 months before.
Courses used to meet other requirements can’t
be used for continuing education.
© 2015 Rockwell Publishing
Continuing Education
Broker’s first renewal
To renew license for first time, broker must
complete:
 30 clock hours in advanced real estate
practices
 30 clock hours in real estate law
 30 elective clock hours, including core
curriculum course
© 2015 Rockwell Publishing
License Expiration and Renewal
Cancellation and reinstatement
If renewal deadline missed, license expires.
 Can pay penalty to renew after deadline.
But if not renewed within one year after
expiration, license canceled.
 After cancellation, former licensee must
apply to have license reinstated.
© 2015 Rockwell Publishing
License Reinstatement
Within two years after cancellation
Requirements for reinstating license within two
years after cancellation:

complete 60 clock hours of real estate
courses within one year before applying
for reinstatement
 including 30-hour real estate law course

pay all back renewal fees and penalties,
plus reinstatement fee
© 2015 Rockwell Publishing
License Reinstatement
More than two years after cancellation
Once two years have passed since
cancellation:
 all initial licensing requirements must be
fulfilled again
 including passing exam again
(Even if less than two years have passed,
starting over may be less expensive than
paying back renewal fees, penalties, etc.)
© 2015 Rockwell Publishing
Real Estate Licenses
Inactive licenses
Inactive license: License that has been
temporarily returned to Director, for any of
various reasons.
 Holder of inactive license deemed to be
unlicensed.
 May not engage in any activities
requiring license.

But still subject to disciplinary action for
any license law violations.
© 2015 Rockwell Publishing
Inactive Licenses
Renewal
Inactive license must be renewed, just like
active license.
 But continuing education requirement
doesn’t have to be fulfilled for inactive
renewal.
 Can’t use inactive status just to avoid
continuing ed requirement, however.
© 2015 Rockwell Publishing
Inactive Licenses
Reactivation
Generally can reactivate inactive license at
any time. Exceptions:

To reactivate license that’s been inactive
for more than three years, must take 30hour course.

Can’t reactivate if proceedings to
suspend or revoke license have been
started.
© 2015 Rockwell Publishing
Real Estate Licenses
License fees
All real estate license fees are placed in Real
Estate Commission Account in state treasury.
© 2015 Rockwell Publishing
Summary
Licensing Requirements
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Qualifications
Examination – national and state portions
Interim license
Renewal
Expiration
Cancellation
Reinstatement
Continuing education requirement
Core curriculum
Inactive license
© 2015 Rockwell Publishing
Regulation of Business Practices
Agency relationships
 Licensee’s responsibilities
 Affiliations and terminations
 Office requirements
 Advertising
 Trust accounts
 Records
 Commissions
 Handling transactions

© 2015 Rockwell Publishing
Regulation of Business Practices
Agency relationships
Washington statute regulates real estate
agency relationships by determining:
 when and how agency relationship
formed

licensee’s duties to clients and
customers

when agency relationship terminates

liability for harm while acting as agent
© 2015 Rockwell Publishing
Agency Relationships
Creating agency relationships
Seller agency formed when listing signed.
Buyer agency formed:
 when licensee performs any brokerage
services for buyer
 unless written agreement to contrary
 Example:
Licensee working with buyer
is buyer’s agent, unless she already
has listing agreement with seller.
© 2015 Rockwell Publishing
Creating Agency Relationships
Dual agency
If seller’s agent and buyer’s agent in same
transaction work for same real estate firm,
firm is dual agent.
 Dual agency unlawful without written
consent of both parties.
 Must have agency agreement with both
parties.
© 2015 Rockwell Publishing
Creating Agency Relationships
Not affected by compensation
Payment of compensation does not create or
affect agency relationships.
 Buyer’s agent may accept compensation
from seller:
 without creating agency relationship
with seller
 without breaching duties to buyer
© 2015 Rockwell Publishing
Agency Relationships
Licensee’s duties
Under Washington’s real estate agency
statute, licensee owes certain duties to any
party in real estate transaction.
 Same duties whether licensee is buyer’s
agent, seller’s agent, dual agent, or
nonagent.
© 2015 Rockwell Publishing
Licensee’s Duties
Duties owed to any party
Licensee must:
 exercise reasonable skill and care
 deal honestly and in good faith
 present all written communications to
and from either party in timely manner
 disclose all material facts known to
licensee that would not be readily
apparent to a party
(continued)
© 2015 Rockwell Publishing
Licensee’s Duties
Duties owed to any party
account in timely manner for money or
property received from or on behalf of
either party
 provide a pamphlet on real estate agency
law to all parties

© 2015 Rockwell Publishing
Duties Owed to Any Party
Agency disclosure
Licensee must also disclose in writing to
anyone he renders services to whether he is
representing buyer, seller, both, or neither.

Agency disclosure must occur before
party signs offer.

Separate paragraph in purchase and sale
agreement, or separate document.
© 2015 Rockwell Publishing
Duties Owed to Any Party
No duty to investigate or verify
Licensee doesn’t owe anyone a duty of
independent:
 inspection of property
 investigation of either party’s financial
condition
 verification of accuracy of any statement
reasonably believed to be reliable
© 2015 Rockwell Publishing
Licensee’s Duties
Duties owed to principal
Licensee owes other duties only to party she
represents (her principal or client).
Licensee must:
 be loyal to principal, taking no action
detrimental to his interest
 disclose any conflicts of interest to
principal
(continued)
© 2015 Rockwell Publishing
Licensee’s Duties
Duties owed to principal
advise principal to seek expert advice on
matters outside licensee’s knowledge
 refrain from disclosing confidential
information from or about principal
 make good faith and continuous effort to
complete transaction

© 2015 Rockwell Publishing
Duties Owed to Principal
Dual agent
Dual agent owes duties just listed to both
parties.

Exception:
 Dual agent can’t be loyal to both
parties at same time.
 Instead, must refrain from taking action
that is detrimental to either party’s
interest.
© 2015 Rockwell Publishing
Agency Relationships
Termination
Agency may terminate in one of four ways:
 full performance by licensee
 expiration of agreed-upon term
 mutual agreement
 unilateral action
Duties of confidentiality and accounting
continue even after agency terminates.
© 2015 Rockwell Publishing
Agency Relationships
Vicarious liability
Vicarious liability: When principal is held
responsible for harm caused by acts or
omissions of agent or subagent.

Under Washington real estate agency
statute, principal (seller or buyer) is
generally not vicariously liable.
© 2015 Rockwell Publishing
Agency Relationships
Vicarious liability
Exceptions:
Principal is vicariously liable for harm caused
by real estate agent if principal:
1. participated in or authorized wrongful
act, or
2. benefited from act and court
determines claimant couldn’t enforce
judgment against agent.
© 2015 Rockwell Publishing
Agency Relationships
Imputed knowledge
Imputed knowledge: When the law assumes
that one person automatically has knowledge
of facts known to someone else.
 Under Washington statute, imputed
knowledge rule generally doesn’t apply in
real estate context.
 Buyer or seller does not have imputed
knowledge of facts known by agent
unless otherwise agreed in writing.
© 2015 Rockwell Publishing
Regulation of Business Practices
Licensee responsibilities
Next, we’ll look at how Washington’s license
law regulates:
 relationship between firm’s designated
broker and affiliated licensees
 duties of licensees to firm
© 2015 Rockwell Publishing
Licensee Responsibilities
Supervisory duties
Designated broker always responsible for
supervising work of all affiliated licensees:
 brokers
 managing brokers
 branch managers
Branch manager shares responsibility with
designated broker for affiliated licensees
working at branch.
© 2015 Rockwell Publishing
Supervisory Duties
Delegation
Supervisory duties can be delegated to
managing broker.

Designated broker and/or branch
manager still share responsibility, though.
Supervisory duties can’t be delegated to
broker.

Example: Licensee who leads “team”
within firm must be managing broker.
© 2015 Rockwell Publishing
Supervisory Duties
Fee brokerage
Fee broker: Designated broker who allows
someone else to run firm under designated
broker’s name and doesn’t participate in firm.
 Arrangement illegal, even if designated
broker receives no compensation.
 Designated broker:
 must actively supervise firm
 can’t avoid responsibilities through
contract with another person
© 2015 Rockwell Publishing
Supervisory Duties
Failure to supervise
If affiliated licensee violates license law,
designated broker may be subject to
disciplinary action for failure to supervise
properly.
© 2015 Rockwell Publishing
Licensee Responsibilities
Brokers
Assuring brokerage service contracts in which
broker participated comply with law.
 Cooperating with DOL investigation or audit.
 Being knowledgeable about license law.
 Informing DOL of current mailing address.
 Following firm’s written policy regarding
referral of home inspectors.
 Being appropriately licensed.
(continued)

© 2015 Rockwell Publishing
Licensee Responsibilities
Brokers

Complying with laws regarding:
 handling of client funds
 advertising
 modifying or terminating contracts on
behalf of firm
 acting under supervision of managing
broker
© 2015 Rockwell Publishing
Licensee Responsibilities
Supervision of new brokers
New brokers (licensed for less than two
years) subject to heightened supervision.
New brokers must:
 obtain supervisor assistance or advice in
matters beyond their expertise
 submit evidence of completion of required
coursework to managing broker
(continued)
© 2015 Rockwell Publishing
Licensee Responsibilities
Supervision of new brokers
participate in review of all agreements by
managing broker
 submit brokerage service contracts for
review, which supervising broker must
complete within five business days

© 2015 Rockwell Publishing
Licensee Responsibilities
Managing brokers
Managing broker has same duties as broker,
and may also be delegated these duties:
 ensuring that trial balance and reconciliation
show trust accounts are in balance
 setting policies and procedures for safely
handling client funds or property
(continued)
© 2015 Rockwell Publishing
Licensee Responsibilities
Managing brokers
maintaining records
 reviewing advertisements
 ensuring that licensees submit transaction
documents in timely fashion
 making firm’s offices and records available
to Director’s representatives
 implementing firm policies on referral of
home inspectors and supervision of
licensees

© 2015 Rockwell Publishing
Licensee Responsibilities
Branch managers
Branch manager responsible for all activity in
branch office, including:
 supervision of all brokers and managing
brokers
 hiring, releasing, and transferring branch’s
affiliated licensees
© 2015 Rockwell Publishing
Licensee Responsibilities
Designated broker
Designated broker responsible for ultimate
oversight of firm, including:
 maintaining written delegations of duties
to branch managers
 maintaining written policies regarding:
 referral of home inspectors
 level of supervision of licensees
 review of documents involving brokers
with less than two years of experience
© 2015 Rockwell Publishing
Regulation of Business Practices
Affiliations and termination
Broker or managing broker must be affiliated
with firm for license to be active.
 Can only engage in real estate activities:
 as representative of firm
 under supervision of designated broker
Designated broker has custody of licenses of
affiliated licensees.
© 2015 Rockwell Publishing
Affiliations and Termination
Surrender of license
Relationship between designated broker and
affiliated licensee may be terminated:
 at any time
 by either party
Designated broker must:
 notify Director (not Real Estate
Commission) of termination
 surrender licensee’s license without delay
© 2015 Rockwell Publishing
Affiliations and Termination
Surrender of license
To notify Director and surrender license:
 designated broker signs license
 either designated broker or affiliated
licensee mails or hand delivers it to DOL
Affiliation formally terminated as of postmark
date or hand delivery date.
License inactive while in Director’s custody.
 New license issued when licensee finds
new firm to work for.
© 2015 Rockwell Publishing
Affiliations and Termination
Failure to surrender license
Designated broker must surrender license
promptly and unconditionally.
 Failure is grounds for disciplinary action.
 If designated broker delays or imposes
conditions, licensee should notify DOL in
writing.
If license lost, designated broker and licensee
must submit letter of release to DOL.
© 2015 Rockwell Publishing
Affiliations and Termination
License law violation
If licensee’s affiliation terminated based on
conduct that is grounds for disciplinary action,
designated broker must submit written
statement of facts to Director.
© 2015 Rockwell Publishing
Summary
Agency and Responsibilities
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Washington’s real estate agency statute
Creating and terminating agency relationships
Duties to any party
Duties to principal
Licensees’ responsibilities under license law
Supervisory responsibilities and delegation
Fee broker
Termination of affiliation
Surrender of license
© 2015 Rockwell Publishing
Regulation of Business Practices
Office requirements
Real estate firm licensed in Washington must
have office or records repository:
 in this state
 at location accessible to DOL
Office must be identified by a sign displaying
name of firm or assumed name.
© 2015 Rockwell Publishing
Office Requirements
Display of licenses
Licenses of firm and all affiliated licensees:
 must be prominently displayed
 at address appearing on license
If firm has branch offices:
 firm’s license and designated broker’s
license at main office
 licenses of affiliated licensees at office
where they work
© 2015 Rockwell Publishing
Office Requirements
Change of location
If firm’s location changes, designated broker
must promptly:
 submit change of address application to
Director
 surrender all licenses
 pay fee
Department will issue new licenses for new
address.
© 2015 Rockwell Publishing
Office Requirements
Two businesses in one office
Firm may run another business out of same
office as brokerage, as long as it’s compatible.

For example, escrow, appraisal.

Brokerage business must be carried out
separate and apart from other business,
with completely separate records.
© 2015 Rockwell Publishing
Office Requirements
Branch offices
No limit on number of branch offices real
estate firm may have.
 Each branch office must:
 be issued duplicate of firm license
 have branch manager who is licensed
managing broker
Branch license not required for subdivision
office within 35 miles of licensed office.
© 2015 Rockwell Publishing
Office Requirements
Dual-state licensees
Dual-state licensee: Actively licensed in
another state as well as in Washington.
 Not required to have Washington office if
office in other state.
 Is required to:
 maintain trust account here
 keep records of Washington transactions
at registered location here
 display license at that location
© 2015 Rockwell Publishing
Office Requirements
Dual-state licensees
Dual-state licensee must:
 notify DOL of records location
 allow DOL access to all records
 allow parties access to records for their
transaction
© 2015 Rockwell Publishing
Regulation of Business Practices
Advertising
License law regulates real estate advertising
to protect consumers.
 All advertising must be truthful and not
misleading.
© 2015 Rockwell Publishing
Advertising
Blind ads
Ads placed by licensee must include name of
real estate firm, as it appears on license.
 Blind ad: Ad placed by licensee that fails
to fulfill this requirement.
Exception to rule:
 Licensee advertising property she owns
need not state firm’s name in ad.
 But ad must disclose that seller (or
landlord) is real estate licensee.
© 2015 Rockwell Publishing
Advertising
Referral fees for unlicensed persons
Legal for real estate firm to advertise that it
can pay referral fees to unlicensed persons.
© 2015 Rockwell Publishing
Advertising
Assumed names
With DOL approval, firm can do business
under one or more assumed names.
 Can’t be deceptively similar to name of
another licensee.
 Can’t give impression that firm is
nonprofit organization, research
organization, or public group.
© 2015 Rockwell Publishing
Advertising
Advertising and the Internet
Licensee should fully disclose licensed status
in all online communications.
 Disclose name as licensed, firm name,
and for non-Washington firm, city and
state of location.
 Full disclosure on each viewable web
page (banner ad may have link).
 Also guidelines for emails, bulletin boards,
chat rooms, instant messages, etc.
© 2015 Rockwell Publishing
Advertising
Advertising and the Internet
Once licensee is communicating directly with
member of public over Internet:
 not necessary to include full disclosure
in every message
 as long as initial message had full
disclosure
© 2015 Rockwell Publishing
Advertising
Advertising and the Internet
Other Commission suggestions regarding
Internet use:
 Listings on website should be removed in
timely manner when expired.
 If listings posted on third-party site,
promptly notify publisher of change in a
listing’s status or needed corrections.
(continued)
© 2015 Rockwell Publishing
Advertising
Advertising and the Internet
Don’t advertise listings of other licensees
without written permission.
 Don’t use names of competitors in
website metatags to increase traffic
(trademark infringement).
 Periodically review website to ensure
information is current and not misleading.

© 2015 Rockwell Publishing
Advertising
Unsolicited marketing
Federal and state laws regulate advertising
methods.
 FTC maintains “Do Not Call” registry
 Fines for cold calling registered
numbers: $16,000 per incident.

Unsolicited emails violate:
 federal CAN-SPAM Act
 Washington Consumer Protection Act
© 2015 Rockwell Publishing
Advertising
Unsolicited marketing
Unsolicited emails must contain instructions
for opting out of receiving future emails from
sender.
© 2015 Rockwell Publishing
Summary
Offices and Advertising
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Office requirements
Display of licenses
Two businesses in one office
Branch offices
Dual-state licensees
Blind ad
Licensee selling own property
Assumed business name
Commission’s Internet advertising guidelines
Unsolicited marketing laws
© 2015 Rockwell Publishing
Regulation of Business Practices
Trust accounts
Trust funds: Money a licensee temporarily
holds on behalf of client or customer.
 Examples: earnest money deposits,
tenant security deposits, collected rents,
advance fees.
 Advance fee: Money paid to licensee
before services provided.
© 2015 Rockwell Publishing
Trust Accounts
Basic account requirements
Trust funds must be kept in trust account.
 Prevents illegal commingling of trust funds
with firm’s general business funds or
personal funds of licensee.
Real estate firm’s trust account(s) must be:
 in recognized financial institution in
Washington
 opened in firm’s name as licensed
 specifically designated as trust account(s)
© 2015 Rockwell Publishing
Trust Accounts
Deadline for deposit
Trust funds generally must be deposited in
trust account no later than first banking day
after receipt.
 A few exceptions to rule, discussed later.
 Saturday does not count as banking day
for this rule.
© 2015 Rockwell Publishing
Trust Accounts
Interest-bearing accounts
Firm’s trust account must be interest-bearing.
 Exception: property management trust
account.
Must also be demand account, so funds can
be withdrawn without delay.
© 2015 Rockwell Publishing
Trust Accounts
Deposits of $10,000 or less
Deposits of $10,000 or less must be kept in
firm’s pooled account.
 Interest on pooled account paid to state
Treasurer:
 75% for housing trust fund
 25% for real estate education account
© 2015 Rockwell Publishing
Trust Accounts
Deposits over $10,000
For deposit over $10,000, client or customer
decides how funds should be handled.
 Designated broker must explain in writing
that money can be placed in:
 pooled account (interest paid to state)
 separate trust account (interest paid to
client or customer)
 Written consent needed to put deposit of
over $10,000 into pooled account.
© 2015 Rockwell Publishing
Trust Accounts
Property management accounts
Property management trust funds do NOT
have to be kept in:
 pooled account with interest paid to state
 interest-bearing accounts (but may be)
 separate account for each property
management client
Firm’s management fees must be withdrawn
from trust account at least monthly.
© 2015 Rockwell Publishing
Trust Accounts
Procedures
Designated broker must:
 follow trust fund procedures in Director’s
regulations, or
 submit alternative system to DOL for
approval.
System must provide audit trail for all funds
received and disbursed for each client.
 May be either manual or computerized.
© 2015 Rockwell Publishing
Trust Accounts
For trust funds only
Only trust funds should be in trust account.
 Except for “minimal amount” to maintain
minimum balance, licensee should never
put own money or firm’s money into trust
account.
 This would be commingling, just like
putting trust funds into general account.

If clients assign interest to firm, bank
must credit it to firm’s general account.
© 2015 Rockwell Publishing
Trust Accounts
Disbursements
Trust funds generally must remain in trust
account until:
 transaction closes, or
 condition in purchase and sale
agreement fulfilled.
© 2015 Rockwell Publishing
Trust Accounts
Disbursements
Exceptions:
1. All parties give written consent to
disbursement.
2. Transaction fails to close, and purchase
agreement calls for disbursement without
release in that situation.
3. Funds are disbursed to closing agent so
checks will clear by closing date.
© 2015 Rockwell Publishing
Disbursements
Payment of firm’s business expenses
Firm’s business expenses can’t be paid
directly out of trust account, even if client
owes firm money.

Funds owed to firm must first be
transferred from trust account to firm’s
general account.
© 2015 Rockwell Publishing
Disbursements
Paying commissions
When transaction closes, designated broker
can write checks directly on trust account for:
 firm’s own commission
 commission owed to cooperating firm
But affiliated licensee’s share can’t be paid
directly out of trust account.
 Licensee’s check drawn on general
account after firm’s commission
transferred from trust account.
© 2015 Rockwell Publishing
Summary
Trust Accounts
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Trust funds
Advance fees
Commingling
Pooled account requirement
Property management trust accounts
Disbursement rules
Payment of business expenses
Payment of commissions
© 2015 Rockwell Publishing
Regulation of Business Practices
Records
License law requires designated broker to
keep records of each transaction for at least
three years:
 after closing, or
 after termination, if fails to close.
Other state laws/regulations may require
records to be kept even longer.
© 2015 Rockwell Publishing
Regulation of Business Practices
Records
Records must be made available to DOL
auditors, and copies provided to Director on
request.
© 2015 Rockwell Publishing
Records
Brokerage contracts
Designated broker must:
 maintain log of all brokerage service
contracts involving firm’s affiliated
licensees
 keep copy of each contract on file
 keep proof of review of documents
prepared by brokers with less than two
years of experience
© 2015 Rockwell Publishing
Records
Transaction folder
Must also maintain transaction folder for each
transaction, with all relevant documents:
 correspondence
 listing agreement
 purchase and sale agreement
 lease/rental agreement
 any addenda to agreements
 any modifications to agreements
 settlement statements
© 2015 Rockwell Publishing
Records
Trust account records
And must keep detailed trust account records,
such as:
 receipts
 check register
 deposit slips
 ledger summarizing all receipts and
disbursements for each transaction
 reconciled bank statements
 canceled checks
© 2015 Rockwell Publishing
Records
Storage
Records for recent transactions:
 must be kept at one of firm’s offices
Records for transactions closed for more than
a year:
 may be stored at another location
(remote storage facility) in Washington
Electronic records allowed but must be
nonerasable.
© 2015 Rockwell Publishing
Regulation of Business Practices
Commissions
Licensee can sue for commission only if
properly licensed before:
 offering to perform service for which
license required, or
 procuring promise or contract for
compensation for such a service.
Applies to lawsuits filed by:
 licensee against client
 one licensee against another
© 2015 Rockwell Publishing
Commissions
Sharing compensation
Firm may share commission with:
 any real estate firm licensed in U.S. or
Canada
 licensed manufactured home dealer in
transaction that involved land
 firm’s own affiliated licensees
But can’t pay licensee affiliated with another
real estate firm.
© 2015 Rockwell Publishing
Commissions
Sharing compensation
Affiliated licensee can receive compensation
only from own firm.
 May not be compensated by:
 client
 other firm
 other licensee
Commission split between licensees working
for same firm must be handled by designated
broker.
© 2015 Rockwell Publishing
Commissions
Ownership of agreements
Listing agreements and management
agreements are property of firm.
 Affiliated licensee transferring to another
firm can’t take pending transactions to
new firm.
© 2015 Rockwell Publishing
Regulation of Business Practices
Referral fees
Licensee or firm may pay another licensee or
firm a fee for referring potential customer or
client.
 Agent-to-agent referral fee doesn’t
violate RESPA’s prohibition of kickbacks
and referral fees.
 Licensee or firm may also pay a referral
fee to unlicensed person in exchange for
referring a potential customer or client.
© 2015 Rockwell Publishing
Regulation of Business Practices
Handling transactions
License law has regulations concerning:
 providing document copies
 handling earnest money appropriately
 expeditious performance of all acts required
by purchase and sale agreement
 closings and settlement statements
 property management documents
© 2015 Rockwell Publishing
Handling Transactions
Providing document copies
Licensee required to provide copy of
document within reasonable time after
execution.
 Also, all licensees involved in sales
transaction must keep copy of signed
purchase and sale agreement in
transaction folder.
© 2015 Rockwell Publishing
Handling Transactions
Earnest money
Trust funds usually must be deposited by end
of first banking day after receipt.
Exception for earnest money deposit:
 Purchase and sale agreement may direct
designated broker to hold buyer’s check:
 for certain amount of time, or
 until specified event occurs
(for example, seller accepts or rejects
offer).
© 2015 Rockwell Publishing
Earnest Money
Transferred to escrow agent
Purchase and sale agreement may provide for
escrow agent instead of brokerage firm to keep
earnest money until closing.
 Unless parties instruct otherwise, licensee
must give buyer’s check to escrow agent
within one banking day after purchase
contract signed.
 Licensee should obtain signed receipt from
escrow agent for transaction folder.
© 2015 Rockwell Publishing
Earnest Money
Selling firm’s responsibility
In transactions involving more than one firm,
firm of licensee who first receives check from
buyer is responsible for handling deposit
properly.
 Usually selling agent’s firm.
 If earnest money to be deposited into
real estate firm’s trust account, buyer’s
check made payable to firm as licensed.
© 2015 Rockwell Publishing
Earnest Money
Promissory note
If buyer’s earnest money deposit is promissory
note or some other form not equivalent to
cash:
 licensee must disclose that to seller when
offer presented
 must also be expressly stated in purchase
and sale agreement
© 2015 Rockwell Publishing
Handling Transactions
Expeditious performance
Sometimes purchase and sale agreement
specifies that certain acts are to be performed
by a licensee involved in transaction.
 Licensee required to perform any such
obligation as expeditiously as possible.
 Intentional or negligent delay may be
grounds for disciplinary action.
 Rule also applies to performance of acts
required by other contracts.
© 2015 Rockwell Publishing
Handling Transactions
Closings and settlement statements
Licensee has responsibility of ensuring that
each party receives detailed settlement
statement at closing.
 Even if closing handled by someone else.
 Must also keep copy of each settlement
statement in transaction folder.
© 2015 Rockwell Publishing
Handling Transactions
Closings and settlement statements
If closing to be handled by real estate
licensee who already represents one party in
transaction, licensee:
 should be named as closing agent in
purchase and sale agreement
 can’t charge separate fee for closing
services unless also licensed escrow
agent
© 2015 Rockwell Publishing
Handling Transactions
Property management documents
Firm acting as property manager must have
written management agreement with owner that
includes:
 property manager’s compensation
 type of property to be managed
 number of units or square footage
 manager’s authority to collect and disburse
funds and/or tenant security deposits
 how often summary statements provided
© 2015 Rockwell Publishing
Property Management Documents
Records and written leases
Firm’s records must include copy of
management agreement and all summary
statements.
 Summary statement: Report on property’s
financial status during certain period.
For any rental property managed by real
estate firm, leases/rental agreements must be
in writing, with copies included in firm’s
records.
© 2015 Rockwell Publishing
Property Management Documents
Written disclosures
With owner’s consent, firm may provide other
services, such as maintenance services, for
managed property.
 If firm uses another company to provide
these services, it must:
 give owner written disclosure
describing relationship with company
 disclose fees charged
© 2015 Rockwell Publishing
Summary
Records, Commissions & Transactions
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Log of brokerage contracts
Transaction folder
Trust account records
Record storage
Sharing commissions
Document copies
Earnest money rules
Expeditious performance
Property management agreement
Summary statement
© 2015 Rockwell Publishing
Disciplinary Action
Licensee who violates license law is subject to
disciplinary action by Director of DOL.
 Director authorized to:
 investigate
 impose sanctions, including license
suspension or revocation

Applies even when:
 license inactive, or
 licensee buying or selling own property.
© 2015 Rockwell Publishing
Disciplinary Action
Grounds for disciplinary action
State statutes contain lists of specific actions
considered grounds for disciplinary action.
 Uniform Regulation of Business and
Professions Act (URBPA)
 Real estate license law
© 2015 Rockwell Publishing
Grounds for Disciplinary Action
Unprofessional conduct
Grounds include unprofessional conduct, as
defined in URBPA:
1. Any act involving moral turpitude, dishonesty,
or corruption relating to real estate activities,
regardless of whether act constitutes crime.
2. Misrepresentation or concealment of material
fact in obtaining or reinstating license.
3. False, deceptive, or misleading advertising.
© 2015 Rockwell Publishing
Grounds for Disciplinary Action
Unprofessional conduct
4. Incompetence, negligence, or malpractice
that harms another or creates an unrealistic
risk of harm.
5. Having any business or professional license
suspended, revoked, or restricted by any
government entity.
6. Failure to cooperate with the Director in an
investigation, audit, or inspection.
© 2015 Rockwell Publishing
Grounds for Disciplinary Action
Unprofessional conduct
7. Failure to comply with an order issued by
the Director.
8. Violating any license law provision or rule
made by the Director.
9. Aiding or abetting unlicensed person to
perform real estate activities requiring a
license.
© 2015 Rockwell Publishing
Grounds for Disciplinary Action
Unprofessional conduct
10. Practice or operation of business or
profession beyond scope of practice or
operation as defined by law.
11. Any type of misrepresentation in conduct
of real estate activities.
12. Failure to adequately supervise or
oversee staff, to extent that consumers
may be harmed or damaged.
© 2015 Rockwell Publishing
Grounds for Disciplinary Action
Unprofessional conduct
13. Conviction of any gross misdemeanor or
felony relating to real estate activities.
14. Interference with investigation or disciplinary
action by willfully misrepresenting facts, or
by threatening, harassing, or bribing
customers or witnesses to prevent them
from providing evidence.
15. Engaging in unlicensed real estate activities.
© 2015 Rockwell Publishing
Grounds for Disciplinary Action
License law list
In RCW 18.85.361, license law includes list of
specific grounds for disciplinary action.

List includes “Violating any provision of
[the real estate license law] or any lawful
regulations made by the director....”

Following frames summarize other
grounds from list that we haven’t
mentioned elsewhere.
© 2015 Rockwell Publishing
Grounds for Disciplinary Action
License law list

Being convicted of forgery, embezzlement,
extortion, fraud, or similar offenses.

Making or authorizing statements that
licensee knew (or could have known by the
exercise of reasonable care) were false.

Converting trust funds (misappropriating
them for licensee’s own use).
© 2015 Rockwell Publishing
Grounds for Disciplinary Action
License law list

Failing to disclose information or to produce
records for inspection upon request by the
Director.

Selling real estate according to plan that
endangers public interest, after the Director
has objected in writing.

Accepting money from more than one party
in a transaction without first disclosing this
to all interested parties in writing.
© 2015 Rockwell Publishing
Grounds for Disciplinary Action
License law list

Accepting profit on expenditures made for
principal without disclosing it to principal.

Accepting compensation for appraisal
contingent on reporting predetermined
value.

Issuing appraisal for property in which
licensee has interest without disclosing that
interest in appraisal report.
© 2015 Rockwell Publishing
Grounds for Disciplinary Action
License law list

Falsely claiming to be member of state or
national real estate association.

Directing client or customer to lending
institution or escrow company in
expectation of kickback or rebate, without
disclosing expectation to party represented.

Buying, selling, or leasing property (directly
or through a third party) without disclosing
that licensee holds a real estate license.
© 2015 Rockwell Publishing
Grounds for Disciplinary Action
License law list

Any conduct in a real estate transaction
which demonstrates bad faith, dishonesty,
untrustworthiness, or incompetency.

Discriminating against any person in hiring
or in the provision of real estate brokerage
services, in violation of antidiscrimination
laws.
© 2015 Rockwell Publishing
Grounds for Disciplinary Action
Title insurance kickbacks
Also prohibited by license law:
 Licensees may not solicit or accept anything
from a title company that it cannot legally give.

Licensee with financial interest in a title
company may not:
 pay a kickback to another licensee for
referring business to that company
 require client or customer to obtain title
insurance from that company
© 2015 Rockwell Publishing
Grounds for Disciplinary Action
School loans or child support
Director can suspend license of licensee:
 certified by lending agency for nonpayment or default on guaranteed
educational loan or service-conditioned
scholarship
 certified by DSHS as not in compliance
with child support or visitation order
Reinstatement automatic upon payment of
delinquency or compliance with order.
© 2015 Rockwell Publishing
Disciplinary Action
Disciplinary procedures
Constitutional right to due process of law
applies to disciplinary action under license law.

Procedures give licensee notice of
charges, opportunity to present defense.
 Investigation
 Hearing
 Right to appeal
© 2015 Rockwell Publishing
Disciplinary Procedures
Statement of charges
If investigation gives Director reason to
believe license law violation has occurred:
 Statement of charges drawn up and
served on licensee.
 Licensee also given notice explaining
right to request hearing to contest
charges.
© 2015 Rockwell Publishing
Disciplinary Procedures
Request for hearing
Licensee must file request for hearing within
20 days after receiving statement of charges.
 Otherwise licensee will be considered in
default.
 Director may enter decision based on
facts available at that time.
© 2015 Rockwell Publishing
Disciplinary Procedures
Scheduling hearing
If licensee requests hearing, Director will set
time for it.
 Must take place as soon as convenient,
but at least 30 days after statement of
charges served on licensee.
 Exception: if Director issued a
summary (immediate) suspension or
restriction, hearing may be held earlier.
© 2015 Rockwell Publishing
Disciplinary Procedures
Hearing
Hearing ordinarily conducted by administrative
law judge.

Licensee and Department of Licensing
may each:
 be represented by attorneys
 present evidence, call and crossexamine witnesses, present arguments

Court reporter makes hearing transcript.
© 2015 Rockwell Publishing
Disciplinary Procedures
Standard of proof
Accusation must be proved by preponderance
of the evidence.
 Otherwise, case dismissed.
 Department may appeal dismissal.
If accusation proved, Director may impose
sanctions.
 Order immediately mailed to licensee.
 Sanctions take effect as soon as licensee
receives Director’s order.
© 2015 Rockwell Publishing
Disciplinary Procedures
Appeal
Within 30 days of Director’s order, licensee
may file appeal in superior court.

Licensee must:
 post $1,000 appeal bond to cover court
costs
 pay for copy of hearing transcript

Filing appeal does not prevent Director's
sanctions from taking effect.
© 2015 Rockwell Publishing
Disciplinary Action
Possible sanctions
Director may impose any of these sanctions
against licensee guilty of license law violation:
 revocation of license for period of time
 suspension of license for fixed or indefinite
period
 restriction or limitation of real estate
activities
 satisfactory completion of specific program
of remedial education or treatment
© 2015 Rockwell Publishing
Disciplinary Action
Possible sanctions
monitoring of real estate activities
according to Director’s order
 censure or reprimand
 compliance with conditions of probation
for period of time
 fine of up to $5,000 for each violation
 denial of initial or renewal license
application for period of time
 other corrective action

© 2015 Rockwell Publishing
Sanctions
Fines
Collected fines are placed in real estate
education account, to be used for education
for benefit of licensees.

If fine unpaid, Director may enforce order
for payment in superior court.
© 2015 Rockwell Publishing
Sanctions
Cease and desist orders
Cease and desist order: Order directing
someone to stop violating law.
 After hearing, Director may issue cease
and desist order to prevent ongoing
violation of law.
 Even before hearing, Director has power to
issue temporary cease and desist order.
 Used if delay would result in irreparable
harm to public interest.
© 2015 Rockwell Publishing
Sanctions
Cease and desist orders
When temporary cease and desist order
issued:
 Licensee has right to hearing to
determine if order should be canceled,
modified, or made permanent.
 If licensee requests hearing, it must be
held within 30 days, unless licensee
wants more time.
© 2015 Rockwell Publishing
Sanctions
Injunctions
Director also authorized to seek court
injunction to stop ongoing violation of license
law.
 May ask court to appoint receiver to take
over or close real estate office that is
operating in violation of law, until hearing
can be held.
© 2015 Rockwell Publishing
Disciplinary Action
Criminal prosecution
Any license law violation is gross
misdemeanor.
 In certain cases, Director may decide
that criminal charges should be filed
against licensee.
 Case would usually be prosecuted by
prosecuting attorney in county where
violation occurred.
© 2015 Rockwell Publishing
Disciplinary Action
Civil liability
If license law violation results in financial
injury to client or customer, injured party may
sue licensee for civil damages.
 Civil lawsuit would be handled through
court system—not by Department of
Licensing.
 Director has no authority to order
licensee to pay damages to injured party.
© 2015 Rockwell Publishing
Disciplinary Action
Notification requirement
Licensee must inform DOL’s real estate
program manager within 20 days after
learning of:
 criminal complaint, information,
indictment, or conviction in which
licensee named as defendant; or
 civil court order, verdict, or judgment
entered against licensee, if case involves
real estate or business activities.
© 2015 Rockwell Publishing
Summary
Disciplinary Action
• Uniform Regulation of Business and
Professions Act
• URBPA list of unprofessional conduct
• License law list of grounds for disciplinary
action
• Statement of charges
• Hearing
• Possible sanctions
• Appeal
• Cease and desist order
© 2015 Rockwell Publishing
Antitrust Laws
Antitrust laws affect a real estate agent’s
relationships with clients, customers, and
other agents by regulating anticompetitive
behavior.
 Business competition considered
important for economy and society.
© 2015 Rockwell Publishing
Antitrust Laws
Sherman Antitrust Act
Sherman Antitrust Act: Federal law (1890) that
prohibits unreasonable restraints of trade.

Conspiracy: Two or more business entities
participate in common scheme that has
effect of an unreasonable restraint of trade.

Sherman Act applies to real estate industry.
 Supreme Court ruled (1950) that real
estate board’s mandatory fee schedule
violated act.
© 2015 Rockwell Publishing
Antitrust Laws
Penalties
Both criminal and civil penalties for violation
of Sherman Act.

Individual can be:
 fined up to one million dollars, and/or
 sentenced to ten years’ imprisonment.

Corporation can be:
 fined up to one hundred million dollars.
© 2015 Rockwell Publishing
Antitrust Laws
Types of violations
Four main categories of activities prohibited
by antitrust laws:
 price fixing
 group boycotts
 tie-in arrangements
 market allocation
© 2015 Rockwell Publishing
Types of Violations
Price fixing
Price fixing: Cooperative setting of prices or
price ranges by two or more competing firms.

Licensees from different firms should
never discuss commission rates.

Printed materials appearing to fix prices
by publishing “recommended” or “going”
commission rates also prohibited.
© 2015 Rockwell Publishing
Types of Violations
Price fixing
Even casual announcement that real estate
firm intends to raise commission rates could
violate antitrust laws.

But firm may discuss commission rates
with its own affiliated licensees.

And two competing firms may discuss
their commission split in a transaction.
© 2015 Rockwell Publishing
Types of Violations
Group boycotts
Group boycott: Agreement between two or
more firms to exclude other firms from fair
participation in real estate activities.

Licensee may choose not to do business
with particular licensee or firm.

But it’s illegal to suggest others should
follow suit.
© 2015 Rockwell Publishing
Types of Violations
Tie-in arrangements
Tie-in arrangement: Agreement to sell one
product only on condition that buyer also
purchases another (tied) product.

Buyer may choose to purchase both
products.

But it’s illegal for seller to condition sale
of one on purchase of the other.
© 2015 Rockwell Publishing
Types of Violations
Market allocation
Market allocation: When competing firms
agree not to sell certain products or services
in certain areas or to certain customers.
 Firm may choose to limit its business by
product or area, or to target certain types
of customers.
 But agreement between competing firms
to allocate territory or customers is
illegal.
© 2015 Rockwell Publishing
Antitrust Laws
Avoiding antitrust violations

Establish fees and other listing policies
independently, without consulting
competing firms.

Don’t use listing forms with preprinted
commission rates.

Don’t imply to clients or customers that
rates are fixed or nonnegotiable.
© 2015 Rockwell Publishing
Antitrust Laws
Avoiding antitrust violations

Don’t discuss business plans with
competitors.

Don’t tell clients or competitors that you
won’t do business with a competing firm.

Train licensees in your firm to recognize
potential antitrust violations.
© 2015 Rockwell Publishing
Summary
Antitrust Laws
•
•
•
•
•
•
•
Sherman Antitrust Act
Unreasonable restraint of trade
Conspiracy
Price fixing
Group boycott
Tie-in arrangement
Market allocation
© 2015 Rockwell Publishing