Washington Real Estate Law (Continuing Education 2024) Questions With Verified Answers

Rookie Mistakes Quiz - Answer It is most appropriate to contact a client by text when: A) Alerting a client that an offer has been received B) Sharing general information such as a newsletter C) Telling a client about the time an inspection has been scheduled D) Presenting an offer - Answer C) Telling a client about the time an inspection has been scheduled What does the "pipeline" refer to? A) Becoming licensed and starting a real estate practice B) Communicating with clients C) Networking D) The continual nature of prospecting for business - Answer D) The continual nature of prospecting for business It is most appropriate to contact a client by phone when: A) Telling a client about the time an inspection has been scheduled B) Alerting a client that an offer has been received C) Presenting an offer D) Sharing general information such as a newsletter - Answer B) Alerting a client that an offer has been received A business plan should what? A) Cover at least 5 years B) Contain concrete goals and milestones C) Contain detailed information about available advertising platforms D) Be at least 10 pages long - Answer B) Contain concrete goals and milestones A licensee should complete at least some what every work day? A) Continuing education B) Data entry C) Marketing tasks D) Paperwork - Answer C) Marketing tasks Which of these is NOT a reason new licensees are advised to start their real estate practice with a 90-day reserve of funds? A) To cover living expenses B) Most licensees do not receive their first earned commission for several months after starting C) To afford start-up business expenses D) The first few commission checks will likely go to start-up expenses - Answer D) The first few commission checks will likely go to start-up expenses Since it is true that most licensees do not see their first commission checks for a few months, it would be unwise to delay start-up expenses such as marketing materials, professional dues, and license activation fees. It is most appropriate to contact a client in person when: A) Sharing general information such as a newsletter B) Telling a client about the time an inspection has been scheduled C) Presenting an offer D) Alerting a client that an offer has been received - Answer C) Presenting an offer Offers should be presented in person. It is most appropriate to contact a client by bulk email when: A) Sharing general information such as a newsletter B) Telling a client about the time an inspection has been scheduled C) Alerting a client that an offer has been received D) Presenting an offer - Answer A) Sharing general information such as a newsletter Email newsletters can be a good way to keep in touch with past clients. Unauthorized Practice of Law Quiz - Answer Which of the following is definitely NOT the unauthorized practice of law when performed by a licensee? A) Filling in blanks in a preprinted contract at the direction of the seller or buyer B) Filling in blanks in a preprinted contract per the needs of the seller or buyer C) Drafting a contract D) Writing an addendum to define the consequences of a contract breach - Answer A) Filling in blanks in a preprinted contract at the direction of the seller or buyer Business realities dictate that real estate licensees must be allowed to fill in forms. The key is that the licensee must do so at the direction of a party to the transaction. Which one of the following consequences is NOT a possible result when a licensee engages in the unauthorized practice of law? A) A civil suit filed by an injured party, whether or not anyone paid the licensee B) Permanent real estate license revocation C) Temporary real estate license suspension D) A criminal trial brought on by the local board of REALTORS® - Answer D) A criminal trial brought on by the local board of REALTORS® A licensee can be sued for unauthorized practice of law by anyone injured by the conduct, whether or not anyone paid the licensee for the advice or counsel. A licensee may also have their real estate license revoked or suspended. The local REALTOR association does not have the authority to bring criminal charges against a licensee, but they do have the authority to revoke the licensee's membership with the organization. When is a licensee's preparation of a non-standard document definitely NOT the unauthorized practice of law? A) When the document is a contract for the deed B) When the document addresses only a detail of the transaction at hand C) When done at the direction of a principal to the transaction D) When the licensee is a principal to the transaction - Answer D) When the licensee is a principal to the transaction A licensee is free to draft documents for transactions in which he/she is acting as a principal, because actions taken on one's own behalf are not legal advice or counsel. Contract addenda can be a gray area for licensees. Under which of the following circumstances can a licensee feel most comfortable that he/she is NOT engaging in the unauthorized practice of law? A) When the terms of the addendum are normally addressed on standardized forms B) When the terms of the addendum are not normally addressed on standardized forms C) When explaining the terms of the addendum to the buyer or seller D) When the terms of the addendum were dictated by the buyer or seller - Answer A) When the terms of the addendum are normally addressed on standardized forms A licensee should keep contract modifications as close to the standardized forms as possible to avoid the unauthorized practice of law. When a court interprets a document, provisions are interpreted in the following order of precedence (from most controlling to least controlling): A) Preprinted clauses, handwritten changes, typed changes B) Handwritten changes, typed changes, preprinted clauses C) Typed changes, handwritten changes, preprinted clauses D) Preprinted clauses, typed changes, handwritten changes - Answer B) Handwritten changes, typed changes, preprinted clauses Documents are interpreted in a way thought to give the most importance to the wishes of the parties, so changes made directly by the parties receive elevated importance: handwritten changes are prioritized over typed changes, and changes made by the parties are prioritized over preprinted forms. Expert Advice Quiz - Answer Under normal circumstances, who should choose the buyer's title insurance company? A) The seller's agent B) The buyer's agent C) The seller D) The buyer - Answer D) The buyer RESPA, the federal law that governs residential real estate closings, forbids the seller or a broker from mandating the use of a particular title insurance company. The only exception is if a seller is paying for the buyer's title insurance policy in full. RCW 18.235.130(4) and (10) requires a broker, in the exercising of their duty of reasonable care and skill, to refer matters outside of the broker's expertise to experts. Which two selections are considered "outside of the broker's expertise" as referenced in this RCW? Check all that apply ... A) Practice or operation of a business or profession beyond the scope of practice or operation as defined by law or rule B) Failure to adequately supervise or oversee auxiliary staff to the extent that consumers may be harmed or damaged C) The commission of any act involving moral turpitude, dishonesty, or corruption relating to the practice of the person's profession or operation of the person's business D) Incompetence, negligence, or malpractice that results in harm or damage to another or that creates an unreasonable risk of harm or damage to another - Answer A) Practice or operation of a business or profession beyond the scope of practice or operation as defined by law or rule D) Incompetence, negligence, or malpractice that results in harm or damage to another or that creates an unreasonable risk of harm or damage to another RCW 18.235.130(4 and 10) further requires a broker, in the exercising of his or her duty of reasonable care and skill, to refer matters outside of the broker's expertise to experts. The following two sections of RCW 18.235.130, which are a basis for disciplinary action, require this: (4) Incompetence, negligence, or malpractice that results in harm or damage to another or that creates an unreasonable risk of harm or damage to another; (10) Practice or operation of a business or profession beyond the scope of practice or operation as defined by law or rule Referring a client to an expert for advice on matters relating to the transaction that are beyond the agent's expertise is part of the broker's duty of A) Disclosure B) Loyalty C) Skill and care D) Confidentiality - Answer C) Skill and care A broker ensuring that he/she does not overstep the bounds of his/her own expertise is part of acting with reasonable skill and care. Which of these is NOT a best practice to follow when giving referrals for services? A) Refer only licensed individuals or companies where applicable B) Refer several service providers C) Disclose any relationship that could be perceived as a conflict of interest D) Recommend only service providers that the broker does not know personally - Answer D) Recommend only service providers that the broker does not know personally Although this would avoid many conflicts of interest, referring only unknown providers puts the broker at risk of client anger if the provider turns out to be incompetent or unreliable. The better practice is to refer service providers that the broker or the broker's colleagues know to be trustworthy. RESPA Section 8 forbids unearned fees and fees or kickbacks in exchange for referrals of settlement services in transactions involving what? A) A federally related mortgage loan B) A mortgage loan C) A service provider D) A lender - Answer A) A federally related mortgage loan RESPA applies to transactions involving a federally related mortgage loan, which includes all federally-backed loans. Ethical Conduct Quiz - Answer Which one of the following would be a violation of the National Association of REALTORS® Code of Ethics? A) A licensee included the name of the licensee's employing brokerage when advertising a home for sale. B) A licensee contacted the client of another licensee in an attempt to get the client to cancel his/her current listing and list with the licensee. C) A licensee disclosed his or her licensee status in a newspaper ad for a property for sale. D) A licensee included properties listed by another brokerage on a general mail flyer that advertises the services of the licensee's brokerage. - Answer B) A licensee contacted the client of another licensee in an attempt to get the client to cancel his/her current listing and list with the licensee. A REALTOR® cannot contact the client of another licensee for the purpose of offering to provide the same real estate services currently being provided by that licensee. A REALTOR® can contact the client to offer non-related services, or to learn what the listing agreement expiration date is if the other licensee refuses to give it. Spencer is holding an open house for one of his listings. Presley comes into the house and identifies herself as an interested potential buyer. She asks Spencer if the seller is open to seller financing. What is the first step that Spencer should take before answering any of Presley's questions? A) Spencer should tell Presley that he will call the seller and ask if they are open to seller financing. B) Spencer should tell Presley he represents the seller, explain dual agency, and have Presley sign the consent for dual agency representation. C) Spencer should ask Presley if she is working with another real estate agent. D) Spencer should tell Presley the seller wants to be cashed out, either by way of a cash offer or loan and recommend a lender that "knows how to get the job done no matter what." - Answer C) Spencer should ask Presley if she is working with another real estate agent. Prior to entering into an agency relationship, either express or implied, a Realtor® must take affirmative steps to ensure that the individual is not already working with another licensee. Licensee Edger has an active listing with seller Joe and licensee Sabin wants the listing when it expires if no sale has occurred. What can Sabin do if Edger refuses to give the expiration date of the listing contract? A) There is nothing Sabin can do. B) Buy the property listing from Edger. C) Report Edger's ethical conduct violation to the local board of Realtors®. D) Sabin can contact the seller directly to ask about the contract expiration date. - Answer D) Sabin can contact the seller directly to ask about the contract expiration date. When is it permissible to make or repeat a false statement about another licensee in order to gain an advantage over him or her? A) On a personal real estate website. B) Licensees may never make or repeat false or misleading statements about another licensee. C) While attending a NAR convention. D) In a general announcement advertisement sent to neighborhood homeowners. - Answer B) Licensees may never make or repeat false or misleading statements about another licensee. What method of dispute resolution is encouraged by the National Association of Realtors®? A) Litigation B) Arbitration and Mediation C) Conciliation D) Jury Trial - Answer B) Arbitration and Mediation The purpose of the Code of Ethics, Article 17 is to require and encourage mediation and arbitration. Arbitration is an alternative dispute resolution method that typically involves less time and expense to reach a result than traditional litigation. You are scouting for properties your buyer might like when you come across a for-sale-by-owner. What is the first thing you should do when contacting the property's owner to learn more? A) Ask the seller why he chose to sell it himself instead of listing the property with a brokerage. B) Identify yourself as the agent representing a buyer who may be interested in the property. C) Hide the fact that you're a real estate agent to avoid intimidating the seller. D) Don't contact the seller because a for-sale-by-owner requires too much paperwork. - Answer B) Identify yourself as the agent representing a buyer who may be interested in the property. On unlisted properties, an agent must disclose their status as a buyer's agent to the seller at first contact and disclose that relationship in writing no later than the execution of any purchase and sale agreement. While touring a property, Colby is asked by her buyer if she knows anything about the rumor that the listing agent, Marcia Brown, is impossible to do business with. Colby has never had a transaction with Marcia, but has heard from those who have that she is arrogant and difficult to work with. Colby should tell her buyer: A) "I take the fifth." B) "I really don't know anything negative about Marcia as I've never had a transaction with her." C) "I really don't know anything specific but I do know she has a bad reputation for being difficult." D) "I have heard that Marcia is arrogant and difficult to work with." - Answer B) "I really don't know anything negative about Marcia as I've never had a transaction with her." A licensee should never make or repeat false or misleading statements about any competitors' business or business practices. Which of the following would be considered an unethical method of soliciting business? A) A radio advertisement that airs on the local jazz station. B) Contact all dental offices within 10 miles of your brokerage. C) Contact the owner of a commercial building that has another licensee's "for lease" sign posted. D) A bulk letter campaign targeting all homeowners within a specific zip code. - Answer C) Contact the owner of a commercial building that has another licensee's "for lease" sign posted. Which of the following is ethical conduct for Realtors® regarding their relationships with other Realtors®? A) Checking to make sure a prospect is not in an existing agency relationship with another Realtor®. B) Soliciting the client of another licensee at a cocktail party C) Sharing ugly rumors about competitors in the name of protecting unsuspecting homeowners. D) Making a buyer client require a greater commission from the listing agent on your behalf as a contingency to purchase. - Answer A) Checking to make sure a prospect is not in an existing agency relationship with another Realtor®. Prior to entering into an agency relationship with an individual seeking real estate services, a Realtor® must take affirmative steps to be assured that the individual is not currently subject to an existing agency relationship When can a licensee make or repeat false or misleading statements about another licensee? A) A licensee can never make misleading statements about another licensee. B) When the statement is made directly to a client or other member of the public. C) If the statement is made in writing. D) After the information is added to a blog discussing that licensee. - Answer A) A licensee can never make misleading statements about another licensee. License Categories Quiz - Answer An unlicensed assistant may NOT legally perform the following: A) Show and answer questions regarding a property B) Order repairs and or maintenance on a property C) Gather public information from title companies D) Transport clients to properties - Answer A) Show and answer questions regarding a property Which of the following is an unacceptable form of payment to an unlicensed assistant? A) Monthly salary B) Commission C) Hourly rate D) Flat fee basis - Answer B) Commission An unlicensed assistant may NOT legally perform which of the following tasks? A) Assemble paperwork for closings B) Negotiate with clients and customers C) Follow up on completion of contingency requirements D) Install signs and lock boxes on listed property - Answer B) Negotiate with clients and customers To conduct commercial real estate activity in Washington, an out-of-state licensee must first do what? A) Cooperate with an active Washington designated broker B) Obtain a Washington real estate license endorsement C) Take Washington-specific real estate courses D) Be physically present in Washington - Answer A) Cooperate with an active Washington designated broker A company licensed as "Mark Bowen and Associates" wants to use the company name "Bowmark Real Estate." What must be done to use this name? A) Submit a company name change form to the Department of Licensing B) Contact the director and request permission to use the name C) Register the additional name with the Department of Licensing D) Obtain a separate license for the additional company name - Answer D) Obtain a separate license for the additional company name Which requirement must be met by a broker who supervises or controls other brokers? A) Must be authorized by the designated broker B) Must hold a managing broker's license C) Must have completed approved management courses D) Cannot hold an active contractor's license - Answer B) Must hold a managing broker's license If a broker employed by a firm quits the firm, what must the designated broker do? A) Keep the inactive license until it is requested B) Notify the Director and return the license C) File a written statement of the facts with the Director D) Return the license to the broker - Answer B) Notify the Director and return the license When does a designated broker become responsible for funds and records that are required to be held by the real estate firm? A) After receiving them from a broker B) After the records are entered in the database C) As soon as they are recorded by a broker D) The designated broker is always responsible - Answer A) After receiving them from a broker An unlicensed assistant may NOT legally perform the following: A) Schedule appointments to show listings B) Negotiate prices and terms C) Deliver documents D) Gather information for a CMA - Answer B) Negotiate prices and terms Enforcement Quiz - Answer What is a stipulation? A) A disciplinary finding and action imposed by the Department of Licensing B) A condition to a disciplinary order C) A disciplinary finding and action agreed upon by the licensee and the Department of Licensing D) An official reprimand - Answer C) A disciplinary finding and action agreed upon by the licensee and the Department of Licensing A stipulation is somewhat like a plea bargain in criminal court. The licensee foregoes a hearing and agrees to accept the Department's finding that the licensee engaged in unprofessional conduct, or at least agrees that the evidence is sufficient to justify such a finding. An advertisement for real estate owned by a licensed broker must state what? A) The firm's d/b/a name B) The licensee's full name C) The firm's licensed name D) The fact that the owner is a real estate licensee - Answer D) The fact that the owner is a real estate licensee While ads for real estate owned by others or for real estate services must contain broker names and firm names, ads for a licensee's own property must only disclose that the owner is a licensee. Besides the real estate law, the Department of Licensing may enforce the provisions of the what? A) Uniform Regulation of Business and Professions Act B) Municipal tax codes C) Washington Penal Code D) Washington Association of REALTORS® - Answer A) Uniform Regulation of Business and Professions Act The Department of Licensing can sanction real estate licensees found to have violated this state law governing professional standards across a number of industries. How many years should brokers, designated brokers, and firms keep the records required by the Department of Licensing? A) 1 B) 3 C) 4 D) 10 - Answer B) 3 Required records should be maintained for at least three years after the close or other conclusion of a transaction. Remember that all licensees must maintain copies of trust account and escrow account records. Additionally, designated brokers and firms must keep copies of transaction records. Which entity enforces and administers Washington state real estate law? A) The Attorney General B) The Department of Licensing C) The Real Estate Commission D) The Washington Association of REALTORS® - Answer B) The Department of Licensing The State of Washington Department of Licensing has the responsibility of administering and enforcing the real estate law. The Real Estate Commission is a body that advises the Department of Licensing. The state attorney general would only be involved in certain violations of real estate law, such as suits brought by the state for violations of the Consumer Protection Act. The Washington Association of REALTORS® is a professional entity, not an agent of the state capable of enforcing state laws. How long does a complainant have to file a written accusation with the Department of Licensing? A) Five years from the discovery of the alleged unlawful act B) Three years from the discovery of the alleged unlawful act C) Five years from the alleged unlawful act D) Three years from the alleged unlawful act - Answer D) Three years from the alleged unlawful act The correct answer here is also the shortest amount of time - three years from the alleged wrongdoing, not from its discovery. Can the Department of Licensing require reimbursement for the costs of investigating a disciplinary matter? A) Yes, from the licensee B) No C) Yes, from the firm to which the broker is licensed D) Yes, from the licensee, but only if the disciplinary authority ordered a disciplinary sanction - Answer D) Yes, from the licensee, but only if the disciplinary authority ordered a disciplinary sanction The Department of Licensing can require a licensee to reimburse the agency's investigative costs, but only if the licensee was sanctioned for a finding of unprofessional conduct. All costs of complying with a disciplinary order are the responsibility of the licensee/applicant. Trust Account Quiz - Answer Trust funds can be used for only very specific purposes. Of the following, which can be paid by trust funds? A) Bank services B) Transaction disbursements C) Commissions for firm employees D) Business expenses - Answer B) Transaction disbursements Disbursements can me made from the trust accounts so long as they pertain to the transaction and are not in excess of the amount held in the trust account. Any bank fees or services associated with the account are considered business overhead for the real estate firm. For how long must all trust fund records must be retained? A) 1 year B) 2 years C) 7 years D) 3 years - Answer D) 3 years Failing to keep escrow and trust account records available upon request to the director or an authorized representative for at least three years is a basis for disciplinary action under Washington real estate law. All real estate transaction funds controlled by a licensee must be kept separate from: A) the pooled interest-bearing account. B) any Washington state depository. C) the licensee's own funds. D) funds controlled by the firm. - Answer C) the licensee's own funds. Licensees must keep all trust funds separate from their own funds. Which of the following is the exception to the next banking day deposit of trust funds requirement? A) When the broker has been given a post dated check B) When the earnest money deposit is less than $10,000 C) When the next banking day falls on a Saturday, Sunday, or legal holiday D) When instructed by a buyer to hold the check until a specific time or event - Answer D) When instructed by a buyer to hold the check until a specific time or event If the earnest money agreement states that a check is to be held for a specific period of time or until a specific event occurs, then it should be deposited according to the agreement. Which of the following identifies a minimum amount of funds used to keep open a trust account? A) "Starting funds" B) "Opening account" C) "Item covered" D) "Opening funds" - Answer B) "Opening account" The firm will maintain a minimum amount in the trust account to keep the account from being closed. These funds should be identified in the ledger as "opening account." Who is responsible for depositing and disbursing trust funds? A) The transaction broker B) The designated broker C) The managing broker D) The escrow agent - Answer B) The designated broker The designated broker is responsible for the depositing, holding, disbursing, and accounting for trust funds. Interest from trust accounts held by the firm are payable to which of the following? A) The collecting firm's managing broker B) State Treasurer's Washington Housing Fund C) The Director's Investigatory Fund D) The buyer or seller - Answer B) State Treasurer's Washington Housing Fund The interest income from this account will be paid to the state treasurer's Washington housing fund. What is a trust fund best defined as A) good faith or earnest money deposits B) anything of value to be held for a client C) money given to a broker for safekeeping D) donations to be given to a charitable trust - Answer B) anything of value to be held for a client Trust funds, simply defined, are anything of value given to a licensee to hold on behalf of another or until a certain event occurs. What kind of account must be maintained by the firm for depositing trust funds when a broker receives trust funds for a real estate transaction? A) A certificate of deposit account B) A money market deposit account C) A pooled interest-bearing account D) An interest-bearing checking account - Answer C) A pooled interest-bearing account If a broker receives trust funds, the firm must maintain a pooled interest-bearing account for depositing client funds, except for property management trust accounts. Recordkeeping and License Law Quiz - Answer What are delegated responsibilities? A) Responsibilities that are transferred by agreement to another B) A designated broker's responsibilities under the real estate law C) A broker's responsibilities under the real estate law D) A managing broker's responsibilities under the real estate law - Answer A) Responsibilities that are transferred by agreement to another A designated broker can transfer some, but not all, of his/her responsibilities to a managing broker. The managing broker must agree to accept the delegated responsibilities. A real estate brokerage must have policies and/or procedures in place on all of the following except A) Referring home inspectors B) Safe handling of client funds and property C) Review of newer brokers' brokerage service contracts D) Brokers' office hours - Answer D) Brokers' office hours The Department of Licensing rules demand that policies must be in place for handling of client funds and property and that written policies be in place for home inspection referrals and the review of brokerage service contracts involving brokers licensed for less than two years. A managing/designated broker's review of which of these is NOT an example of heightened supervision? A) Subject's brokerage service contracts B) Subject's timely submission of documents and trust funds C) Subject's completed educational courses D) Subject's schedule - Answer D) Subject's schedule