1.3 Washington License Types and Supervision

The Washington License Hierarchy

Washington structures licensure as a supervision pyramid. Know what each tier may and may not do.

Broker (entry level)

A broker must affiliate with a licensed firm and may not:

• Operate independently of a firm
• Receive compensation directly from a buyer or seller
• Supervise other licensees
• Open or run a firm or branch

Managing Broker

A managing broker adds authority to supervise brokers, manage branch offices, and serve as a designated broker. The credential requires 3 years of active broker experience plus 90 additional clock hours.

Designated Broker (DB)

Each firm names exactly one designated broker who is personally accountable for the firm. The DB must hold an active managing broker license and is the person DOL holds responsible when supervision fails.

Firm License

Every brokerage entity — corporation, LLC, partnership, or sole proprietorship — must hold its own firm license, name a designated broker, register each branch, and maintain compliant trust accounts.

Designated Broker Supervisory Duties

Under WAC 308-124, the designated broker must:

1. Supervise every affiliated broker and managing broker
2. Maintain written office policies for supervision and compliance
3. Handle trust funds per WAC 308-124E (timely deposit, no commingling)
4. Review transactions and advertising for legal compliance
5. Retain records for at least 3 years
6. Cooperate with DOL audits and investigations

Exam Tip: When a broker mishandles earnest money, DOL can discipline both the broker AND the designated broker for failure to supervise — supervisory liability is a recurring state-portion theme.

Reasonable Supervision in Practice

WAC 308-124 frames supervision as "reasonable" oversight scaled to the firm's size and activity, not constant monitoring of every act. A designated broker satisfies the duty by maintaining written policies, training affiliated licensees, periodically reviewing files and advertising, and acting promptly on red flags. The exam may present a fact pattern where a broker breaks a rule the DB had no reasonable way to catch — there the DB may avoid liability — versus one where warning signs were ignored, which supports discipline.

Branch Offices

A firm operating from more than one location must, for each branch:

1. Register the branch with DOL and hold a branch license
2. Assign a managing broker responsible for on-site supervision
3. Post required signage showing the firm's licensed name
4. Provide access to transaction and trust records

Changing Firms (License Transfer)

When a broker moves between firms:

A new fingerprint check is generally not required for a timely transfer because the broker already cleared one.

Compensation: The Cardinal Rule

A broker may receive compensation only from their own firm. Money flows client → firm → broker.

A broker cannot accept payment directly from a consumer, from another firm, or from another firm's broker, and may never split a commission with an unlicensed person (a violation that can revoke a license).

Worked scenario: A buyer tries to hand broker Jordan a $1,000 thank-you for negotiating a low price. Jordan must decline — the only lawful path is for the firm to receive any compensation and pay Jordan under their independent-contractor agreement. Accepting it directly violates RCW 18.85.

Independent Contractor vs. Employee

Most Washington brokers work as independent contractors, but supervision is required either way:

Key Point: Tax/employment status never removes the designated broker's duty to supervise the broker's licensed activity.

Firm Names and Advertising

A firm must advertise under its licensed name, and an individual broker's advertising must clearly identify the firm — a broker may not advertise as though operating independently. "Team" names are permitted only if the licensed firm name appears, because consumers must always be able to identify which licensed firm stands behind the transaction. Misleading advertising that hides the firm relationship is a disciplinable violation.

Common trap: A scenario describes a broker placing a yard sign or online ad with only the broker's personal name and phone number. That is non-compliant — the licensed firm name must appear, reinforcing that the broker acts on the firm's authority, never their own.