Designated Broker Carol at Evergreen Realty has not been actively supervising her affiliated brokers. One of her brokers, Mike, has been conducting real estate activities without Carol's knowledge, including handling earnest money deposits in his personal bank account. The DOL investigates and determines that Carol was unaware of Mike's actions. Under Washington law, which of the following best describes Carol's potential liability?
Correct Answer
B) Carol may face disciplinary action because designated brokers are responsible for supervising affiliated licensees and maintaining proper trust account procedures
Under RCW 18.85.201 and WAC 308-124E, a designated broker has an affirmative duty to supervise all affiliated licensees and to ensure that trust account procedures are followed. The designated broker's responsibility is not limited to direct participation in violations — failure to adequately supervise is itself a violation. Carol's lack of awareness of Mike's misconduct may itself be evidence of inadequate supervision, which is grounds for DOL disciplinary action.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Florida brokers are required to maintain transaction records and escrow records for a minimum of five years.
A tie-in arrangement is an illegal antitrust practice in which a seller conditions the purchase of one product or service on the buyer's agreement to purchase a separate product or service.
A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.
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