Chapter 17: real estate careers and the real estate license law

Blind ad

A blind ad is an advertisement placed by a real estate licensee that does not state the name of the brokerage firm as licensed. Blind ads violate the license law.

Real estate firm

A business entity that conducts real estate brokerage services must have a firm license and a designated broker. Individuals licensed as brokers or managing brokers may provide real estate services only while affiliated with a licensed firm.

Business opportunity

A business opportunity is the sale of a business. If the transaction includes real property (along with the inventory, equipment, and goodwill), an agent representing the seller or a buyer is required to have a real estate license.

Designated brokers

A designated broker is a corporate officer or general partner who is authorized to act as the legal representative for a licensed real estate brokerage firm.

Fee broker

A fee broker is a designated broker who allows another person to use his endorsement to operate a brokerage. This arrangement violates the real estate license law.

Compensation

A firm may compensate its agents using a percentage split of the commissions earned by each agent. A firm that offers a lot of agent support may compensate for the associated costs by retaining a larger percentage of the commissions earned by its affiliated licensees. Other firms may simply charge its agents a flat monthly desk fee.

Designated broker

A firm's designated broker must have a managing broker's license and have the ability to control the firm's operational and financial decisions. The designated broker has ultimate authority over and responsibility for all of the firm's transactions and affiliated licensees, although she may delegate some of her authority to other managing brokers in a written delegation agreement.

Group boycott

A group boycott is an agreement between two or more competing businesses to exclude another business from fair participation in the market. Antitrust laws prohibit group boycotts.

Reinstatement

A license can be reinstated within two years after cancellation if the former licensee pays all back renewal fees and penalties, plus a reinstatement fee. The licensee must also complete the education requirement.

Appeal

A licensee may file an appeal of a disciplinary action within 30 days after the date of the Director's order. Any sanctions imposed by the Director go into effect immediately, regardless of the appeal.

Termination of affiliation

A licensee's affiliation with a brokerage firm may be terminated by either party at any time. When an affiliation is terminated, the designated broker must surrender the broker's or managing broker's license to the Director of the Department of Licensing immediately

Managing broker

A managing broker may be authorized to represent the firm, manage other licensees, act as a designated broker or branch manager. Alternatively, he may simply perform traditional broker duties

Professional associations

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

Renewal

A real estate license must be renewed every two years. To renew, a licensee must submit proof that she has completed 30 hours of approved real estate courses. A broker renewing her license for the first time must complete 60 additional hours of prescribed coursework.

Grounds for Disciplinary Action

A real estate licensee is subject to disciplinary action if she engages in any act listed as unprofessional conduct in the Uniform Regulation of Business and Professions Act (URBPA). engages in any act listed as unprofessional conduct in the Uniform Regulation of Business and Professions Act (URBPA). Uniform Regulation of Business and Professions Act (URBPA).

Summary Statement

A summary statement is a brief report a property manager prepares for a client, showing the managed property's financial status over a certain time period.

Tie in arrangement

A tie-in arrangement is an agreement to sell one product only on the condition that the buyer also purchases a different product. Tie-in arrangements violate antitrust laws.

Transaction Folder

A transaction folder includes all of the contracts and other documents connected with a particular transaction. Brokerage firms must keep all transaction folders for at least three years after the transaction closes.

Trust Account

A trust account is a specially designated bank account in a brokerage firm's name, for depositing funds that the firm is holding on behalf of its clients or customers. The purpose of a trust account is to keep trust funds segregated from other money, such as the brokerage firm's general business funds.

Sanctions

After taking disciplinary action against a licensee, the Director of the Department of Licensing may impose any of the following sanctions : license suspension, license revocation, denial of a license application or renewal, restriction of real estate activities, remedial education, monitoring of real estate activities, censure or reprimand, a fine of up to $5,000 for each violation, or other corrective action.

Real estate companies

Agents may, depending on their preferences, choose to work for large or small real estate firms. They may also choose between firms that offer extensive training and other services, or firms that offer less support.

Inactive license

An inactive license is one that is in the possession of the Director of the Department of Licensing. An inactive licensee may not perform any activities that require licensure.

Broker

An individual licensed as a broker may provide real estate services only under the supervision of the firm's designated broker or another managing broker. A broker with less than two years of experience is subject to a heightened level of supervision.

Interim license

An interim license consists of the completed application form for a broker's license. It serves as a temporary license for up to 45 days, until the applicant's permanent license is issued.

Antitrust laws

Antitrust laws, including the federal statute known as the Sherman Act, are intended to promote business competition for the public good. They prohibit agreements (called conspiracies in the Sherman Act) that have the effect of an unreasonable restraint of trade. Practices that violate antitrust laws include price fixing, group boycotts, tie-in arrangements, and market allocation.

Commingling

Commingling refers to illegally mixing trust funds together with other funds (such as a licensee's own money, or money in the firm's general business account).

Cancellation

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.

Dual agency

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

Cease and desist order

In connection with a disciplinary action, the Director may issue a cease and desist order. The purpose of a cease and desist order is to stop an ongoing violation of the license law.

Market allocation

Market allocation occurs when competing businesses agree to divide up their market in some way, allocating certain products or customers or locations between them as their exclusive domains. This also violates antitrust laws.

Price fixing

Price fixing is the cooperative setting of prices by competing firms, in violation of antitrust laws. In the real estate context, examples include agreements between competing brokerage firms to set commission rates, and the establishment of uniform commission rates by a multiple listing service. Both of these would be illegal price fixing.

Skills

Real estate agents must be self-motivated and disciplined, as they will be setting their own schedule and finding their own clients. They must also be flexible and able to tolerate uncertainty and setbacks.

Real Estate Commission

The Real Estate Commission is made up of the Director of the Department of Licensing and six commissioners who advise the Director.

Imputed knowledge

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

Vicarious liability

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

License law

The license law consists of the state statute that governs the licensing and business practices of real estate agents and real estate firms. It also includes the regulations issued by the Director of the Department of Licensing to implement that statute.

Trust Funds

Trust funds are money or other things of value received by an agent and held by the agent on behalf of clients or customers. Trust funds received by a real estate firm must be deposited into a trust account within one business day of receipt, unless a written agreement provides otherwise.

Agency relationship

Under Washington real estate agency law, a licensee is presumed to represent the person she is working with, unless there is a written agreement to the contrary. An agency relationship is formed with the seller when the listing agreement is signed, but an agency relationship may be formed with the buyer as soon as the licensee starts performing brokerage services for the buyer.

Gross misdemeanor

violation of the license law is a gross misdemeanor, and criminal charges may be filed against a licensee along with any disciplinary action.