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TexLaw
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In Washington State can a real estate broker (not Managing

Resolved Question:

In Washington State can a real estate broker (not Managing or Designated Broker) be a LLC? If so, what would the the steps? Is there restrictions on the LLC? If so what are they?

Thank you for your time

Garret
Submitted: 1 year ago.
Category: Business Law
Expert:  TexLaw replied 1 year ago.
Hi,

My name is XXXXX XXXXX I will be assisting you with your legal question.


Will the broker who is incorporating be working with a Managing or Designated Broker in providing services?
Customer: replied 1 year ago.

Yes

Expert:  TexLaw replied 1 year ago.
Thank you. I will be researching your answer and will respond back shortly.
Expert:  TexLaw replied 1 year ago.
Thank you for your patience.

A real estate broker is defined under the licensing statute as a natural person, implying that the broker itself cannot be an LLC.

When a real estate broker files an LLC to operate his/her real estate business, this creates a real estate firm, as defined under the licensing statute. A firm must be licensed under RCW 18.895.091, which provides the following:

RCW 18.85.091
Firm license — Requirements.

(1) The minimum requirements for a firm to receive a license are that the firm:

(a) Designates a managing broker as the "designated broker" who has authority to act for the firm, and provides the director with the name of the owner or owners or any others with a controlling interest in the firm;

(b) Assures that no person with controlling interest in the firm is the subject of a final departmental order, as provided in chapter 34.05 RCW, suspending or revoking any type of real estate license; and

(c) Does not adopt a name that is the same or similar to currently issued licenses or that implies the real estate firm is a nonprofit or research organization, or is a public bureau or group.

(2) An applicant for a real estate firm's license shall provide the director with:

(a) The firm name and unified business identifier number;

(b) Washington business mailing and street address, contact telephone number, if any, and a mailing and physical address for either the firm's trust account or business records location, or both;

(c) Internet home page site and business e-mail address, if any;

(d) Application fee prescribed by the director; and

(e) Any other information the director may require.

(3) The firm must provide the following to the department for renewal of the firm's license:

(a) Renewal fee;

(b) Notice of any change in controlling interest for the firm; and

(c) Notice of any change in the firm's registration or certificate of authority filed with the secretary of state.

Essentially, what this statute means, when read in conjunction with the rest of the Act, is that a broker who forms a firm must give the Designated broker a controlling interest in the LLC. In other words, you would form the LLC, but then give the designated broker "the ability to control either the operational or financial, or both, decisions of a firm.

My understanding of your situation is that you simply want to file an LLC for your broker practice, and thus be able to take advantage of the limited liability and tax benefits involved in this (i.e., receiving commissions paid into your LLC rather than personally).

This is not strictly allowed by Washington State law, as any sort of business entity acting as a real estate broker is designated as a firm and thus must acquire a firm license and must have a managing broker controlling the firm.

Please let me know if you have any further questions. Please also kindly consider rating my answer positively so that I am credited by the website for my work on your question. Rating positively does not cause an additional charge and does not prevent us from further discussing your questions.

Kind regards,
Zachary
TexLaw, Attorney
Category: Business Law
Satisfied Customers: 4164
Experience: Internationational Commercial Attorney
TexLaw and 3 other Business Law Specialists are ready to help you

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