QUESTION: I HAVE A RENTAL PROPERTY LOCATED IN KING COUNTY, WASHINGTON. A prospective tenant advised me that his credit score would be low and offered six months advance rent to compensate. Is it legal to accept more than first and last month rent when renting a house in King County? Also I was told that it is illegal to ask for the last month rent if I ordered a credit check on a prospective tenant. Is that true?

ANSWER: Moneys paid as an advance rental deposit or security for performance by a tenant are governed by RCW 59.18.260 through RCW 59.18.285. It is permissible to accept 6 months (or more) advance rent so long as the lease or rental agreement is in writing and contains terms and conditions under which the deposit or any portion thereof may be applied as rent or withheld by the landlord. The landlord shall provide the tenant with a written receipt for the deposit and shall provide written notice of the name and address and location of the depository and any subsequent changes thereof. Screening of tenants is governed by RCW 59.18.257. The statute contains the terms and conditions under which tenant screening may occur, responsibility for costs, notices and sharing of information. It is permissible to require an advance payment of last month’s rent or other security regardless of whether or not the landlord has conducted a tenant screening or obtained a credit check on a prospective tenant so long as the deposit is treated in accordance with RCW 59.18.260 through RCW 59.18.285.

Question: Do I need to file and maintain a Washington Department of Licensing Master Business License (under my LLC name) when the sole purpose for forming and maintaining my LLC was to isolate money I’ll be paid from the company of which my LLC is a member? We have always recommended that our investors form an LLC to invest their money and have their LLC as a member of the Main company.

Answer: You do not need a MBL or City business license if the only activity of the company is to passively invest in real estate. However, you do need to register the LLC with the Washington Secretary of State, which I trust you have done. Also, please remember that the value of your service-contribution is taxable income to you and should be reported on your federal income tax return the year that the vesting takes place. Also, the income from your investment, even though it’s passive income because it was derived from a business activity, should be reported with your other business income as if the LLC were a separate client; you will be responsible for B&O tax on that passive income. If you were an employee and received your membership interest in the LLC as a form of compensation, then you would not be responsible for B&O tax, however, in your case, as I understand it, you are a independently licensed professional so you will be responsible for payment of B&O tax on the distributions to your LLC.