What background knowledge is needed for this Practice Of Real Estate question?

Prior to comprehensive licensing statutes like RCW 18.85, states had limited tools to remove dishonest licensees who committed crimes in other jurisdictions, creating a loophole where a fraudster could lose a license in one state and simply continue practicing in another. Washington's legislature closed this gap by explicitly listing criminal convictions — without geographic limitation — as grounds for discipline, a reform that accelerated nationally after high-profile mortgage fraud scandals in the 2000s exposed how easily bad actors moved between state licensing systems. The federal wire fraud statute itself was designed to reach schemes that cross state lines, and pairing it with state licensing discipline creates a layered enforcement system that protects consumers at both levels.

What is a good way to remember the answer to this Practice Of Real Estate question?

Remember the phrase 'A Felon Has No Borders' — if a Washington licensee is convicted of a felony anywhere in the country, that conviction follows their Washington license home like a shadow. Visualize a passport with a large red 'CONVICTED' stamp: it doesn't matter which country stamped it, every customs officer at every border can see it. The DOL is that customs officer, and the conviction is the stamp that triggers scrutiny of Carl's fitness to hold a Washington license.

What exam tip applies to this Practice Of Real Estate question?

On exam questions involving out-of-state or federal criminal conduct, the key phrase to look for in the correct answer is 'regardless of where it occurred' — Washington's RCW 18.85 grounds for discipline focus on the nature of the conduct and the licensee's fitness, not on geography. Eliminate any answer that requires a geographic nexus to Washington or that requires another jurisdiction to act first, because Washington's DOL has independent statutory authority to discipline based on a conviction alone, making Answer B the structurally correct choice whenever a felony conviction is the triggering fact.

How does this Practice Of Real Estate concept apply in real world practice?

Carl, licensed in both Washington and Oregon, operated a scheme where he submitted false loan applications for Oregon properties, inflating incomes and asset values to obtain larger mortgages, netting himself undisclosed kickbacks from lenders. Federal prosecutors charged and convicted him of wire fraud because the false documents were transmitted electronically across state lines. Even though every property, every lender, and every victim was in Oregon, the Washington DOL immediately opens a disciplinary file upon learning of the conviction, citing RCW 18.85.361, because Carl's Washington clients deserve to know their broker has been federally convicted of financial fraud — a fact that speaks directly to his fitness regardless of which state the scheme occurred in.

Practice Of Real EstateLicense_lawHARD

Broker Carl is licensed in Washington and also holds a real estate license in Oregon. Carl is convicted of wire fraud in federal court in connection with a mortgage scheme he operated in Oregon. Carl did not conduct any transactions in Washington related to the fraud. The Washington DOL initiates disciplinary proceedings against Carl's Washington license. Carl argues that because the fraud occurred entirely in Oregon and did not involve Washington clients or properties, the Washington DOL lacks authority to discipline him. Under RCW 18.85, which statement most accurately describes the DOL's authority?

Correct Answer

B) The DOL may discipline Carl because a felony conviction, regardless of where it occurred, is a ground for disciplinary action under RCW 18.85.

Under RCW 18.85.361, a conviction of a crime — including a federal felony conviction — is an explicit ground for disciplinary action against a Washington real estate license, regardless of where the crime occurred or whether it involved Washington clients or properties. The statute focuses on the licensee's fitness and trustworthiness, not on the geographic location of the misconduct. A federal wire fraud conviction directly bears on Carl's fitness to hold a Washington real estate license.

Answer Options

Carl's argument is correct; the DOL may only discipline a licensee for conduct that occurred within Washington State.

The DOL may discipline Carl because a felony conviction, regardless of where it occurred, is a ground for disciplinary action under RCW 18.85.

The DOL must defer to Oregon's licensing authority and may only act after Oregon takes action against Carl's Oregon license.

The DOL may discipline Carl only if the federal conviction is also prosecuted at the state level in Washington.

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