The proposed bill establishes a new chapter in Title 31 of the Revised Code of Washington (RCW) that regulates home equity sharing agreements. It defines essential terms related to these agreements and distinguishes them from traditional mortgage loans. Starting July 1, 2026, individuals or entities wishing to originate home equity sharing agreements must obtain a license from the Department of Financial Institutions. The bill outlines the licensing process, which includes application requirements, background checks, and a surety bond of at least $30,000. The director of the Department is responsible for overseeing compliance, enforcing penalties, and has the authority to deny applications or revoke licenses for violations.

In addition to licensing requirements, the bill introduces consumer protections, such as a mandatory three-day rescission period for homeowners, a minimum initial equity requirement of 10%, and standards for independent appraisals. It prohibits certain practices by licensees, including charging penalties for early settlement and using affiliated appraisers without disclosure. The bill also establishes penalties for violations, categorizing them as gross misdemeanors, while allowing for a good faith exception for actions taken based on the director's guidance. Overall, the legislation aims to create a transparent and fair environment for homeowners engaging in equity sharing agreements, aligning these practices with the Consumer Protection Act.