Lesson 17: Real Estate Careers and The real estate license law

Applying for a licnese

- exam results are valid for one year -if he doesn't apply before the year is up then you have to take the test again - fingerprints of every 6 yearss - If a fingerprint card is rejected by the Director, the applicant must submit a new fingerprint card within 21 days of receiving written notice.

Pass exam

- must get a 70% on each portion of the exam. you can pass the national and fail the state. have to get 85% to pass national

Broker's license requirements

-18 year old - high school diploma - 60 hours of fundamental / 30 hours of practices - pass examination completed 2 years before the license examination

Duties of the Commission

-Advising the director - approving license law regulations - preparing and administering examinations -holding educational conferences

Reinstating inactive license

-An inactive licensee may not reactivate his license when disciplinary proceedings have been started against him. -While the license is inactive, the licensee doesn't have to fulfill the education requirements for renewal. However, if a license has been inactive for more than three years, the licensee must take an approved 30 clock-hour real estate course to reactivate it. One 30 clock-hour course in advanced real estate practices or real estate law may be used to meet both a broker's first renewal requirement and reactivate an inactive license.

Exemptions - bankruptcy court

-Any person acting under court order, including: a receiver, a trustee in bankruptcy, an executor, a probate administrator, a guardian, or a trustee selling property pursuant to the power of sale clause in a deed of trust. -Employees of a city, county, or other government, involved in acquiring property. -Photos of accountant and clerical worker and a bank.List of Exemptions A secretary, bookkeeper, accountant, or other real estate office personnel performing purely clerical duties. -Certified public accountants and investment counselors who do not promote the sale of a specific property. -Title companies, escrow companies, financial institutions, or other persons or entities acting as escrow agents. - A person hired by a property owner or a designated broker who performs limited property management tasks, such as delivering lease applications or receiving rental payments, showing rental units, or carrying out administrative or maintenance tasks. -The owner or manager of a rental storage facility, when renting storage units in the facility. -A person who provides referrals to a real estate licensee who does not participate in negotiations and whose compensation is not contingent on the licensee being compensated.

List of exemptions

-Anyone who buys or leases property for herself, or sells or otherwise disposes of property she owns or co-owns; or who buys, leases, sells, or disposes of property on behalf of her employer or a group to which she belongs. -Community association managers who do not promote the purchase, listing, sale, exchange, optioning, leasing, or renting of a specific property interest.

Inputed Knowledge

-Facts the law assumes the client knows, because the agent knows them. -Principle of imputed knowledge does not apply to real estate situations. -For instance, suppose a seller didn't know his property was about to be condemned so that the state could build a new freeway on-ramp. The listing agent did know this, but kept silent about it. If the buyer sued, the seller would not be found liable for the buyer's financial losses caused by the condemnation, although the listing agent might be.

Exceptions

-Participated in or authorized the wrongful act; or -benefited from the act, if a court determines the claimant would be unable to enforce a judgment against the agent.

An application for a managing broker's or broker's license must be signed by the designated broker representing the firm the licensee's going to work for.

-So it's necessary to have a job lined up before submitting the license application. -A branch manager can sign on behalf of the designated broker for licenses issued to that branch office.

Closing Firm

-Sometimes, a firm will stop doing business altogether. If so, the designated broker must give a closing firm affidavit to the Department of Licensing within five days of closing. -If transactions are still pending, the firm must notify the parties and obtain their written permission to terminate the transactions or transfer them to another firm.

Washington state regulates the day-to-day business practices of brokers, managing brokers, and brokerage firms.- RULES

-There are rules concerning the relationships between licensees and their clients, and between brokerage firms and their affiliated licensees. -There are also rules about brokerage offices, advertising, trust accounts, recordkeeping, commissions, and sales transactions.

Agency Relationships

-This law defines when and how an agency relationship is formed, and the licensee's duties to clients and customers. -The law also determines when an agency relationship ends, and establishes the licensee's liability for harm caused while acting as an agent.

Formation

-When Licensee performs services - - Under the real estate agency law, a seller's agent forms an agency relationship with the seller when the listing agreement is signed. A buyer's agent forms an agency relationship with the buyer when he performs any real estate brokerage services for the buyer, unless there's a written agreement to the contrary.

Activities non-licensed people can't do

-answering questions or interpreting information about a property or its condition (except when providing answers from pre-printed materials written by a licensee); -filling in legal forms; -negotiating price terms.

A licensee also owes certain duties only to the party she represents. The licensee must:

-be loyal and do nothing to harm the client; -disclose any conflicts of interest; -advise the client to seek expert advice on matters beyond the licensee's scope; -refrain from disclosing confidential information from or about the client; and -make a good faith, continuous effort to complete the transaction.

Types of licenses

-brokerage firm licensed - broker licensed managing broker license

The licensee must:

-exercise reasonable skill and care; -deal honestly and in good faith; -present written communications to or from either party in a timely manner; -disclose known material facts that aren't readily apparent; -account for money or property received from or on behalf of either party; -give all parties an agency law pamphlet.

Firm

-is a business entity - A licensed firm is authorized to hire brokers and managing brokers to perform brokerage services under the firm's authority.

MUST know

-licensening requirement -types of licenses -qualifications -exa and application -expiration and renewal

'real estate brokerage services" as any of the following services, for compensation or the promise of compensation by a licensee

-listing, selling, purchasing, exchanging, optioning, leasing, renting of real estate or any real property interest (including mobile homes if in conjunction with land purchase, and including floating homes and floating on-water residences), -negotiating or offering to negotiate the purchase, sale, exchange, lease, or rental of real estate, -advertising or holding oneself out to the public as being engaged in real estate brokerage services, -issuing a broker's price opinion (value report of property that is not an appraisal), -collecting, holding, or disbursing funds related to real property transactions, and -performing property management services.

Broker's Duties

-making sure all brokerage services that he provides comply with the license law, the agency statute, and the Uniform Regulation of Business and Professions Act (URBPA); -cooperating with the Department in an investigation or audit; -being knowledgeable of the license law, agency statute, and URBPA; -informing the Department of his current mailing address; -following the brokerage firm's written policy on the referral of home inspectors; -being appropriately licensed; -delivering contracts and other documents to the designated broker or appropriate managing broker within two days of mutual acceptance by the parties; and -following all the laws regulating the handling of trust funds, advertising, and modifying contracts.

Broker Licnse

-only issued to an individual - A broker must be supervised either by her firm's designated broker or by another managing broker affiliated with the firm. -A broker with less than two years of experience is subject to a heightened level of supervision, including the review of all of her transaction documents within five days of signing.

unlicensed assistant allowed activiites

-providing information about a listing or transaction, but only based on material written by a real estate licensee; -writing and placing advertising; -gathering market analysis information; -greeting people at open houses; and -making keys, -installing keyboxes, -placing signs on properties.

The Center for Real Estate Research

-studies statewide real estate concerns such as affordable housing - recommend changes -preforms economic studies -provides scholarly information about real estaet - $10 surcharge imposed on renewals funds it

Both the broker's exam and the managing broker's exam have two parts.

1.The first part is the national portion, covering general real estate laws and practices. 2.The second part is the state portion, covering the Washington license law.

managing broker's license

18 years old high school diploma - 3 years of experience - military experience can satisfy - 90 clock hours approved real estate courses within the last three years (ncluding one 30-hour course in advanced real estate law, one 30-hour course in brokerage management, and one 30-hour course in business management.) -Pass managing broker's exam

interim license

45 days after the postmark or hand delivery date -An applicant for a broker's license is allowed to start working as soon as he mails or hand delivers the completed application form (signed by the designated broker) and license fee to the Department of Licensing. - non for managing brokers

Special Rules for New Brokers

A broker who has been licensed for less than two years is subject to one additional responsibility: working under a heightened degree of supervision. This means the broker must participate in required reviews of all contracts by a designated broker or managing broker. The supervisor must review the documents within five business days of mutual acceptance by the parties, and keep proof of the review in the firm's records. New brokers must also submit evidence of completion of their required education courses to the designated or managing broker.

No duty of independent inspection

A licensee doesn't owe anyone a duty of: independent inspection of the property; independent investigation of either party's financial condition; or independent verification of the accuracy of any statement believed to be reliable.

Termination of an agency relationship

A licensee owes agency duties to the client until the agency relationship terminates. This can occur in one of four ways: - full performance by the licensee, - expiration of the agreed-upon term, - termination by mutual agreement, or - termination by unilateral action.

assoiations

A real estate agent may join a professional association, such as NAR, for training and networking opportunities. Such organizations often have their own ethical codes to guide members.-

Managing Broker's duties

Additional Duties: -reviewing transactions -maintaining records -reviewing advertising -implementing firm policies -ensuring accurate accounting for trust funds - supervising other licensees -authority in conjunction with the designated broker. -responsible for hiring, releasing, and transferring licensees to and from the branch. -responsible for all brokerage activity in that branch office

License fees

All license fees (including exam fees, application fees, renewal fees, and so on) are placed in the Real Estate Commission Account in the state treasury.

Affiliation termination

An affiliation may be terminated by either party—the brokerage firm or the affiliated licensee—at any time. When an affiliation is terminated, the designated broker is required to surrender the broker's or managing broker's license to the Director of the Department of Licensing immediately. -To surrender the license, the designated broker signs it, and either the designated broker or the affiliated licensee mails or hand delivers it to the Department of Licensing. The affiliation is formally terminated as of the postmark date or hand delivery date.

Exemptions - general power of attorney

An attorney in fact acting without compensation. (An attorney in fact is someone authorized by a power of attorney to act as another person's agent.) An attorney at law, in the performance of his duties as a lawyer.

expire of license

An individual's initial real estate license will expire two years after it was issued. -The licensee must apply for renewal and pay a renewal fee. -If the renewal's late, the licensee must pay a penalty. -keep information updated -The renewal date for this type of license is the expiration date for the firm's registration or certificate of authority with the Secretary of State.

Vicarious Liability

Client is generally not liable for harm caused by agent. -Liability for harm caused by another person is called vicarious liability. In Washington, vicarious liability usually doesn't apply in the real estate context. -In other words, under Washington's real estate agency law, a principal (the client) generally isn't liable for harm caused by an act or omission of an agent or subagent

Qualifications

Examination age education expericence

An individual who sells business opportunities, including good will, real property, inventory, and other business assets, is required to obtain a business opportunity endorsement to his real estate license.

FALSE - To legally sell business opportunities on behalf of others, an individual is required to have a real estate license if the transaction includes real estate. There is no business opportunity endorsement in Washington.

The Director of the Department of Licensing is an elected public official who serves a four-year term.

FALSE - six years

A real estate commissioner is required to be a licensed real estate agent with at least three years of experience in real estate sales or property management.

FALSE -five years

A licensee owes a duty of independent inspection of property he has listed, regardless of the claims made by the property owner in the property disclosure statement.

Falase

A license applicant doesn't have to submit fingerprint identification if he hasn't committed a crime for more than ten years.

False

There are additional education and experience requirements for a managing broker to become a designated broker.

False

According to Washington real estate agency law, a buyer or seller is assumed to have imputed knowledge of facts known by his agent, unless he and his agent agreed otherwise in writing.

False It is the opposite. The buyer and seller are NOT assumed to have imputed knowledge of facts known by their agents, unless there is an agreement otherwise in writing.

If a licensee fails to renew the license by its renewal date, the license is automatically canceled.

False-The license expires on the renewal date, but the individual has one year after the expiration date to pay the renewal fee and late payment penalty, which will reinstate the license. After one year, the license is canceled.

Canceled license

However, if a license hasn't been renewed within one year after it expired, it is canceled. Once the license has been canceled, if the former licensee wants to engage in real estate activities again, she will have to apply to have the license reinstated, not just renewed. -In certain situations, starting over could cost less than paying the back renewal fees and penalties.

Late renewal and cancellation

If a licensee misses his renewal deadline, the license expires. - For a late renewal, the licensee will simply be charged a penalty in addition to the renewal fee.

Lost License

If the affiliated licensee's license has been lost, the designated broker and the licensee are required to submit a letter of release. Transfer of the license is not allowed until the letter is filed with the Department.

Dual agency possible (unlawful without consent)

If the seller's agent and the buyer's agent in the same transaction are affiliated with the same brokerage firm, that brokerage firm is a dual agent. Dual agency is unlawful without the written consent of both parties.

Inactive License

In certain circumstances, a license is temporarily returned to the Director of the Department of Licensing. -For example, when a broker's affiliation with a brokerage firm is terminated, the broker's license must be returned to the Director. -When a license is temporarily returned to the Director, it becomes inactive. -While the license is inactive, the licensee isn't allowed to engage in any activities for which a license is required. -However, the licensee is still subject to disciplinary action for any violation of the license law.

REnewal of license

In order to renew his license for the first time, a broker has to complete a 30 clock-hour course in advanced real estate practices and 30 clock-hours in real estate law. -This is in addition to fulfilling the usual 30-hour continuing education requirement that includes a core course.

Duties of Dual Agent

In the context of a dual agency, the dual agent owes these duties to both parties. There's one key exception: since a dual agent can't be completely loyal to both parties at the same time, the agent must instead refrain from taking action that's detrimental to either party's interest in the transaction.

Affiliated Licensees

Individuals working for a firm - can only preform while affiliated with a firm -Affiliated licensees may be compensated only through their firm, and not directly by a client. Listings belong to the firm, not to the individual licensee who obtained them.

Licensing Requirement

It is unlawful to perform real estate brokerage services without an appropriate license. Selling real estate without a license is a gross misdemeanor.

Duties of confidentiality and accounting outlast relationships

Note that the duties of confidentiality and accounting do not end when the agency relationship terminates. They continue indefinitely.

Statement of misconduct

Occasionally a brokerage firm terminates an affiliation because the licensee engaged in conduct that would be grounds for disciplinary action under the license law. -When this happens, the designated broker must submit a written statement of the relevant facts to the Director.

Fee Brokerage

Occasionally a designated broker allows someone else to run a brokerage business under his name, but doesn't play an active part in the business. -The person who's actually running the business isn't a licensed broker, and therefore needs to 'rent' the firm's license in order to run the firm. -This arrangement is called fee brokerage, and it's illegal.

Support for agents

One of the key factors an agent will want to consider is the kind of support and services a brokerage firm provides its affiliated licensees. Some agents will want a firm that provides extensive training, marketing, technology support, and other services. Other agents may prefer a more "bare bones" operation, which allows them to decide whether the expenses associated with these activities are cost-effective.

State Exam

Pass state exam reserve day of exam one day before at least -bring two pieces of identifiation

Renewal

Photo of calendar with pushpin. Inactive LicensesRenewal Like an active license, an inactive license must be renewed on its renewal date. It will be canceled if not renewed within one year of the renewal date.

The Real Estate license Law

Real Estate Division of the Washington State Department of Licensing. -The Director of the Department of Licensing has authority over the Real Estate Division.

Types of companies

Real estate brokerages range from sole proprietorships to very large companies with hundreds of agents and dozens of branch offices. Brokerages may be independent or part of a local or national franchise. Some companies work with all types of property; for example, residential, rental, vacation homes, and commercial property. -Some firms offer both traditional and nontraditional real estate services, such as sales, property management, escrow, and investment counseling. -Other companies are very specialized, handling only certain types of property, or certain types of transactions.

Payment of money doesn't create relationshps

Remember that agency relationships aren't affected by the payment of compensation. A buyer's agent may receive compensation from the seller; the compensation won't create an agency relationship between that licensee and the seller.

Penalties for Agency Law Violations:

Sanctions are handled through the license law disciplinary process, which we'll discuss towards the end of the lesson.

Agent selling business opportunity must have real estate license if building included

Since the sale involves real property, an agent representing the seller or a buyer must have a real estate license, unless she qualifies for one of the license exemptions

-Licensee who works with buyer is buyer's agent

So as a general rule, a licensee who helps a buyer look for houses is automatically that buyer's agent. But if the buyer asks to see one of the licensee's own listings, the licensee's prior contract with the seller (the listing agreement) means the licensee isn't the buyer's agent for that property

An individual can sell another's real estate without holding a valid real estate license if she is that other person's attorney in fact and acting without compensation.

TRUE

Anyone who engages in the practice of negotiating the purchase, sale or exchange of a mobile home, in conjunction with the purchase or lease of land where the mobile home will be located, must hold a real estate license.

TRUE

Someone who performs minor property management tasks for a landlord does not need a real estate license.

TRUE

The Attorney General is the legal advisor for the Director of the Department of Licensing.

TRUE

The Director

The Director of the Department of Licensing is appointed by the state Governor. Neither the Director nor any member of the Real Estate Division staff is allowed to hold any interest in a real estate firm while employed by the state.

Attorney General

The Director of the Department of Licensing receives legal advice concerning the real estate license law from the state Attorney General. - represents the director

Real Estate Commission

The Real Estate Commission consists of six commissioners, each appointed by the Governor to serve a six-year term on a part-time basis. -The Director of the Department of Licensing is also considered a member of the Commission. -five years experience -managing brokers -There must be at least two commissioners from east of the Cascades, and at least two from west of the Cascades.

Imputed Knowledge

The assumption that a principal has notice of facts known to an agent or subagent is called imputed knowledge.

Affiliated surrender

The designated broker is required to surrender the affiliated licensee's license promptly, to allow the licensee to go to work for someone else. -The designated broker may not place any conditions on the surrender of the license. -Failing to surrender a license promptly and unconditionally is grounds for disciplinary action. -Remember that the affiliated licensee can't take any listings with him, even if he starts working for another firm right away. -Listings belong to the firm, not the individual licensee.

Disclose which party the licensee represents before party signs on offer

The licensee must also disclose in writing to all parties whether the licensee represents the buyer, the seller, both, or neither. This must occur before a party signs an offer in a transaction handled by the licensee. The disclosure may be made in an "Agency Disclosure" paragraph in the purchase and sale agreement, or in separate document entitled "Agency Disclosure."

Duties owed to any party

These duties apply to any party regardless of which party the licensee represents -Under Washington's real estate agency law, a licensee owes a number of duties to any party in a real estate transaction. -These duties apply whether the licensee is acting as a buyer's agent, a seller's agent, a dual agent, or a non-agent.

A designated broker must have the ability to control the operational and financial decisions of the firm.

True

A licensee whose license is inactive is deemed to be unlicensed.

True

If an applicant doesn't become licensed within one year after the exam date, he will have to pass the exam again in order to obtain a license.

True

If an individual's license has been inactive for more than three years, she must take any approved 30-hour course before she can activate the license.

True

In Washington, the general rule is that a licensee who works with a buyer becomes the agent of that buyer.

True

The holder of a managing broker's license is authorized to act as a branch manager on behalf of a real estate firm.

True

To be eligible for a real estate license, a broker applicant must be at least 18 years of age, have a high school diploma or its equivalent, complete a 60-hour real estate fundamentals course and a 30-hour real estate practices course, and also pass the state examination.

True

When a brokerage terminates a licensee's employment, the affiliation is formally terminated as of the postmark date on the envelope in which the license is mailed to the Department of Licensing, or when the license is hand delivered to the Department of Licensing.

True

In Washington, a property owner generally doesn't have vicarious liability for the harm caused by an act or omission of her real estate agent.

True, Liability for harm caused by another is called vicarious liability. The only time a client will be responsible for the acts of her agent is if she (1) participated in the wrongful act or (2) benefited from the act and the injured party cannot collect from the agent.

The liability of a principal for a harm caused by the act or omission of an agent or subagent is called vicarious liability.

Vicarious Liability

Designated Broker

a real estate firm must have one -authority over the firm - lennox -must have a managing broker's license -Designated broker status technically isn't a level of licensure, but rather an endorsement on a managing broker's license. As we said, every real estate firm must have a designated broker. If a firm is a sole proprietorship, the owner is the designated broker. An individual may serve as the designated broker for more than one firm at the same time. -A designated broker may delegate some of this authority to another managing broker, but she must do so in a written delegation agreement.

The licensees who work for a real estate brokerage are referred to as associated licensees.

affiliated licensees.

Real estate commissioners are appointed to their positions by the Director of the Department of Licensing.

false - Real estate commissioners are appointed by the Governor of the state of Washington.

The Director of the Department of Licensing is authorized to:

grant and deny licenses, issue rules and regulations, enforce the license law, and hold disciplinary hearings on license law violations.

The fundamental purpose of the license law

is to protect members of the public who are involved in real estate transactions. -The license law is an exercise of the state's police power. -It regulates the professional activities of real estate agents and real estate firms. -It also establishes disciplinary procedures to penalize agents and firms who engage in dishonest practices or otherwise break the rules.

Designated Broker's Duties

maintaining current written documentation of all delegation agreements (to other managing brokers), and implementation of firm policies on referral of home inspectors, appropriate supervision of all licensees, accurate recordkeeping and retention of records, and review of all contracts involving brokers licensed for less than two years.

Managing Broker's

may only be issued to an individual, not to a business entity. -A managing broker may supervise other licensees, and serve as a branch manager or as the firm's designated broker. Alternatively, he may simply perform traditional broker duties. -A managing broker must have significant experience working as a broker before obtaining a managing broker's license.

A broker's application for a license can serve as an interim license for up to 45 days.

true

The first license issued to an individual expires on the licensee's next birthday after it was issued.

two years after - False

Failure/ retake

you can take it again if you fail - passing score stays for six months -the other portion of the exam within that six-month period, she can then apply for a license.