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AGO 1954 No. 326 - September 30, 1954
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Don Eastvold | 1953-1956 | Attorney General of Washington

REAL ESTATE BROKERS ‑- TRUSTEE ACCOUNT ‑- COLLECTIONS

All moneys received or collected by a real estate broker for a client are required to be kept in a special trust account.

Where a person acts only as a collection agency it is not necessary that he be licensed under the real estate laws of Washington.

Employees of real estate management firms and other individuals who engage in or who negotiate for rentals, leases, contracts, mortgages or any other interest described in RCW 18.85.010 (1) must be licensed in accordance with the real estate laws of the State of Washington.

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                                                              September 30, 1954

Honorable Della Urquhart
Director of Licenses
Olympia, Washington                                                                                                              Cite as:  AGO 53-55 No. 326

Dear Mrs. Urquhart:

            By letter dated September 10, 1954, you have requested our opinion on the following questions:

            (1) Are rental, lease, contract and mortgage collections real estate funds required to be kept by a broker in a trustee account within the meaning of RCW 18.85.310?

            (2) Are persons who make the aforementioned collections required to be licensed under the real estate laws of the State of Washington?

            (3) Are employees of real estate management firms and other individuals engaged in the management of commercial buildings and apartments required to maintain a real estate license?

            Our answer to the first and third questions is "Yes."

            Our answer to the second question is "No."

             [[Orig. Op. Page 2]]

                                                                     ANALYSIS

            RCW 18.85.310 provides in part:

            "Every real estate broker shall also keep separate real estate fund accounts in a recognized Washington state depositary authorized to receive funds in which shall be kept separate and apart and physically segregated from licensee broker's own funds, all funds or moneys of clients which are being held by such licensee broker pending the closing of a real estate sale or transaction, or which have been collected for said client and are being held for disbursement for or to said client and such funds shall be deposited not later than the first banking day following receipt thereof."

            By the express provisions of the statute, when a real estate broker receives funds or moneys of any client which are either being held pending the closing of a real estate sale or transaction or which have been collected for a client and are being held for disbursement to or for said client, such funds shall be deposited in the broker's trustee account on the first banking day following receipt thereof. The intention of the legislature was clearly to require the separation of all moneys received by a broker in the conduct of his business from private funds and if collections are made, to require these funds, as well, to be deposited in a separate trust account.

            However, it does not follow that all persons who collect rentals, lease payments, contract payments and mortgage payments must be licensed as real estate brokers.  A real estate broker means:

            "* * * a natural or artificial person, acting independently, who for commissions or other compensation, engages in the purchase, sale, exchange, rental, or negotiation therefor, of real estate, or interests therein, and for business opportunities or interest therein, belonging to others, or holds himself out to the public as being so engaged;" [RCW 18.85.010 (1)]

            This act is to be strictly construed.  National Bank of Tacoma v. Globe Indemnity Company, 164 Wash. 222, 2 P. (2d) 706.  Engaging in or negotiating for a rental, lease, contract or mortgage for compensation is action forbidden to those not  [[Orig. Op. Page 3]] licensed.  Certain exceptions relating to attorneys exist.  But, the mere collection of rentals, lease payments, contract payments and mortgage payments for compensation is not engaging in or negotiating for a rental, lease, etc.  As was stated inNational Bank of Tacoma v. Globe Indemnity Company, supra, to hold that one who

            "* * * collects rents on real estate is within the provisions of the act of this state, it would be necessary for the court to read into the act something which the legislature did not place there, and this, we think should not be done."

            One who does nothing more than act as a collection agency is, therefore, not within the statute.

            Employees of real estate management firms and other individuals engaged in the management of commercial buildings and apartments who engage in or negotiate for rentals, leases, contracts and mortgages or any other interest described in RCW 18.85.010 (1), for compensation, are required to maintain real estate licenses.

            In conclusion, all moneys received or collected by a real estate broker for a client are required to be kept in a special trust account.  Where a person acts only as a collection agency it is not necessary that he be licensed under the real estate laws of Washington.  Employees of real estate management firms and other individuals who engage in or who negotiate for rentals, leases, contracts, mortgages or any other interest described in RCW 18.85.010 (1) must be licensed in accordance with the real estate laws of the State of Washington.

Very truly yours,

DON EASTVOLD
Attorney General


E. ALBERT MORRISON
Assistant Attorney General

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