Chapter 14: Illinois Real Estate License Law

IDFPR

Charged with protecting and improving the lives of Illinois consumers. Secretary appointed by governor and oversees division of real estate.

Responsible for enforcing the license act of 2000

Choose rules, enforcement, and policy implementation

Administration of the Real Estate License Act of 2000

Major funds administered through IDFPR:

Real estate license administration fund

Real estate research and education fund

Real estate recovery fund

Real estate audit fund

the real estate license administration fund

To which license fees and other funds initially go

Real estate research and education fund

For research and scholarships

Real estate recovery fund

A consumer oriented fund for compensating consumers harmed by licensees actions

Real estate audit fund

For conducting audits of special accounts

Secretary of the IDFPR

Appointed by governor, oversees the division of banking, division on financial institutions, division of professional regulation, division of real estate

Division of real estate

Primary authority to administer Real Estate license act of 2000. Also empowered to issue rules and regulations regarding Act.

IDFPR has administrative activities to handle, plus additional functions

IDFPR Administrative Activities

Conducting license examinations

Issuing and renewing licenses

Preparing all forms, including applications and licenses

Collecting fees from applicants and licensees

Conducting hearings, imposing penalties, suspending licensees

Real Estate Coordinator (225 ILCS 454/25-15)

A licensed broker is appointed to this position by the IDFPR secretary, after recommendations of real estate pros considered. License becomes inactive after appointment. Duties:

Acting as chairperson of Real Estate Admin and Disciplinary Board, (no vote)

Liaison between board and pros

Preparing and passing around education materials

Appointing committees necessary

Supervising real estate activities

Real estate administration and disciplinary board (225 ILCS 454/25-10)

AKA the Board. Acts in advisory capacity to real estate coordinator regarding matters involving standards of professional conduct, discipline, and examination. In addition, Board conducts hearings on disciplinary actions against persons accused of violating act

Member terms are 4 years and expiration of terms staggered

No member reappointed after ten years

Composition of the board

RE Coordinator is head of board. Nonvoting. Board composed 15 members appointed by governor. Members subject to:

All members must be residents/citizens of state for 6 years prior to appointment date

Twelve members must be active managing or maintaining licensed brokers, two must be educator licensed

Three members must be consumer interest public members

The real estate research and education fund (225 ILCS 454/25-25)

Held in trust in the State treasury, administered by IDFPR. Annually on September 15, $125,000 is taken from fund to educate and research the education of real estate at higher institutions in order to better the real estate industry. $15000 of it is used for scholarship

Obtaining and keeping a real estate license

Determining who can obtain a real estate license, the purpose of a license, and those available covered in article 5 of RE2000,

Section 1450.100 Definitions

Definitions set forth and defined properly by the Real Estate Act of 2000.

The Act

The Real Estate License Act of 2000 (225 ILCS 454)

Affidavit of non-participation

A sworn statement made by an unlicensed person associated with or member of licensed real estate corporation, LLC, partnership, etc. attesting that the unlicensed person is not actively engaged in licensing activities at that association

Board

The Real Estate Administration and disciplinary board

CE

Abbreviation for continuing education

Compliance agreement

Entered into between a licensee and the Division in conjunction with administrative warning letter

Credit hour

A minimum of 50 minutes instruction through course approved by division in classroom, by web,or home study

Department

The department of financial and professional regulation

Designated managing broker

A managing broker who:

Sponsoring broker designated to manage their brokerage

And has responsibilities to supervise office and licensee activities

Director

The director of the division of real estate with the authority delegated by the Secretary

Discipline

Refusal to issue or renew a license, reprimand, suspension, etc.

Division

The department of financial and professional regulation-division of real estate

Education provider

A school licensed by department offering courses in pre-license, post, or CE

Electronic signature

Electronic personal verification attached to or legally associated with electronic record. The Act requires applications, affidavits, and docs to be e-signed

Home study

Education course administered independently by the student at home in self study format.

Interactive delivery method

Delivery of course, approved by department, through medium of interaction with student

Interactive webinar

Delivery of a course by licensed instructor through medium allowing for live 2 way communication

Learning management system

A software system application used for the administration, documentation, tracking, reporting, and delivery of education materials

Office

Sponsoring broker’s place of business where General public invited to engage

Online distance education

Interactive course online but not in real time, self study

Post license education

45 hours of educated required of new brokers after being sponsored. Three 15 hour course, each with 50 question exam

Principal office

Office location that serves as principal business place

Who needs to be licensed? (225 ILCS 454/1-10)

Anyone involved with actual licensing activities needs a license given by IDFPR

Other definitions (225 ILCS 454/1-10)

Illegal for anyone to act as managing broker, broker, or residential leasing agent without IDFPR license.

Designated managing broker

Broker with supervisory responsibilities chosen to run office

Inactive

Status of licensee who is not currently engaging in activities but holds license

Person

individuals, corps, entities, LLCs, subject of transaction as single entity

Proctor

Any person with written agreement and license as education provider to give classes

Renewal period

180 days period prior to expiration date of licenses for initial broker license, then 90 days prior after

Residential leasing agent

A person who is employed by a broker to assist in leasing activities

Secretary

Department of financial and professional regulation

Self sponsor

Licensed managing brokers who operates brokerage as sole proprietorship

Sole owner

Person with 100% beneficial ownership

SOS

Illinois Secretary of State

Sponsoring broker

Broker who certifies to department the sponsorship of licensed individuals

Sponsoring brokers name

Name of sponsoring broker

Sponsorship

The backing of a sponsored broker to a new licensee with written agreement

Transaction

Exists once an agreement has been reached and an accepted real estate contract is signed or lease agreed to

Virtual office

Space brokerage activities take place outside and online

License requirement exemptions (225 ILCS 454/5-20)

People exempted from restrictions and regulations imposed on licensed people.

Civil Penalty for the Unlicensed Practice of Real Estate (225 ILCS 454/20-10)

Illegal for anyone to practice without IDFPR license. $25000 per offense, is a judgement

License Categories and Requirements (225 ILCS 454/5)

Brokers, managing brokers, residential leasing agent, provides requirements and limitations

General Requirements

All individuals must pass written examination administered by testing service. License must be applied to at most one year after passing state test

Broker’s License (225 ILCS 454/5)

Individual or entity with the intention of receiving compensation for real estate activities

Broker Requirements

18 years old

Good moral character

Social security number

4 year GED course

120 hours pre and post

Pass IDFPR exam

Submit valid application with fees

Complete post licensing classes

Managing brokers license (225 ILCS 454/5)

Individuals engaged with managing the activities of agents and other individuals under their umbrella and office supervision

Managing Broker Requirements

20 years old

Good moral character

Social security number

2/3 years active licensee broker

GED

165 hours of edutainment

New exam passed

Valid application

Corporations, LLC, Partnerships, and Limited Liability Partnership Licenses

An amendment to RE2000 that makes it uniform for any entity to get licensed.

Residential Leasing Agent’s License (225 ILCS 454/5)

Can engage only in leasing activities for residential properties. Specialized license route. Cannot sell property and can only work with renters

Regular requirements +

15 hour leasing agent class

Pass IDFPR exam

Restrictions on Licensure (225 ILCS 454/5-15)

No business may be granted the proper licensure if members of the business have been denied licenses already or if they have been barred

The Licensing Examination

Applicants are eligible to take the licensing examination only after they have met the education and age requirements set out by by the real estate license act of 2000. Candidates must register for testing service in advance of test and pay fees prior to

Computer taken, immediately graded, get score report, license instructions inside if passed

The Real Estate License

Licensees just deliver a copy of their license to their sponsoring broker and carry on their person a physical/electronic copy of their license

What happens to your license when you change or leave firm (225 ILCS 454/5-40)

Licensee must log into IDFPR and leave the brokerage, license becomes inactive.

Change of address, name, or business information (225 ILCS 454/5-41)

Licensees responsibility to inform department of any change of address, email, telephone number, or office with 24 hours after any such change. Sponsoring brokers must notify change of designated managing brokers within 15 days of change

Expiration and Renewal

established by rule. Renewal must be within 90 days before expiration. Prior to first renewal, 45 hours post ed must be completed. Fees required to renew

Nonresidents and license by reciprocity (225 ILCS 454/5-60)

States that have reciprocity allow licensees to go between states for transacting. For this type of license:

Broker must have license in home state

Better or equal standards

Two years of brokerage experience

Official statement and IDFPR support

Test on laws

Renewal without fee (225 ILCS 454/5-50)

renewal without paying reinstatement fees if license expires while:

On active military duty

Training

Serving as real estate coordinator of IDFPR employee

License Fees

Residential leasing agent: $75

Initial licensing fee: $125

Failure to Pay (225 ILCS 454/20-25)

If payment is not received within 30 days of notification, IDFPR immediately revokes license

Expiration and Renewal of Licenses

Broker license expires on April 30 every even numbered year, managing broker’s license on April 30 every odd year. $150, $200 fees respectively

Continuing education

Residential leasing agents must complete no less than 8 hours of education, brokers = 12 hours

Course Content

For CE. Must consist of single curriculum plus elective curriculum. All subject areas must be approved by IDFPR

Credit Hours May be Earned for Self Study Programs

all core curriculum course must be provided only in classroom or through live webinar

No more than twelve credit hours per day

limit on pre and post licensing class hours in one day

Ownership of a real estate business (225 ILCS 454/5-15 & Administrative Code 1450.600)

Anyone who manages a real estate business must be licensed. Unlicensed associates must file affidavit of nonparticipation wirh Division

Place of business (225 ILCS 454/5-45 & Administrative Code 1450.730)

Proof of licensure must be readily available to public at sponsoring broker office

Offices and Virtual offices

Any real estate business, physical or digital, must have a place for public to access data available to them

Exceptions to required place of business

A broker in IL with reciprocity may be exempt from requirement of maintaining definite place of business if:

Maintaining broker license in home state

Maintaining office in home state

Filed written statement with IDFPR

Loss of an office manager (225 ILCS 454/5-29)

Upon no replacement of sponsoring broker, an application can be submitted to the department with 15 days. IDFPR must allow and sign off on continued business of brokerage

Employment or Independent Contractor Agreements (225 ILCS 454/10-20)

A licensee must only have one sponsoring broker at any given time and may perform real estate activities only for that sponsoring broker. Must have written employment contact

Recordkeeping (225 ILCS 454/5-45 (d))

Any record required by act to be created maintained and safely secured and stored in accessible place in original format

Agency Relationships (225 ILCS 454/15)

Informed Written Consent

Required of both buyer and seller for dual agency.

Once relationship is formed between licensee and sponsoring broker, statutory duties for clients are placed into hands of new broker.

Designated agency

Allows for sponsoring broker to appoint or designate one agent for buyer and one for seller, even within firm, without being a dual agent.

Disclosure

Heavily addressed in article 15. An acknowledgment, state clearly and in writing, of key facts that if left untold, may change circumstances and influence events.

Must be disclosed.

Material facts

Known latent facts

Agency relationships

Designated agency

Dual agency

No agency

Compensation sources

contemporaneous offers

Material facts

Licensee must disclose all of these in which they have knowledge of. Material facts do not consider stigmatized property

Agency relationship (225 ILCS 454/15-35)

Before any agreement (with seller or buyer) a consumer must be informed in writing no later that the date started of current designated agent:agency and name

Compensation (225 ILCS 454/10-5)

The Act holds that all clients must be made aware of compensation, sources, and policies of brokerage

Handling Client Funds (225 ILCS 454/20-20)

Purchase contacts dictate to who and what money goes to and earnest money location. All record should be kept and all money to be deposited immediately

Teams

Two or more licensees who work together to provide real estate brokerage services and represent themselves to the public as one umbrella

Advertising Regulations

All ads prepared by licensees must include relevant information necessary. Can never be advertising under another sponsoring broker.

Blind ads

Those not indicating brokerage firms name, or licensee info.

Online advertising

Online advertising includes business website, social media, and email. Rules: proper identification.

Direct display

License plate information

Not misleading

Updated and kept current

Selling your own property

When you have an interest in a property and are selling, you must use the term broker owned in all advertising and on listing sheets.

Requires identification of sponsoring broker

Licenses may not list their name or otherwise advertise in their name to the general public through any medium advertising as being in the real estate business without also listing their sponsor brokers name

Compensation and business practice (225 ILCS 454/10)

A license you may not receive conversation from anyone other than sponsoring broker.

Sponsor brokers can only pay their direct licensees and other sponsoring brokers

Compensation issued to an agent from both buyer and seller must be disclosed

Illegal to compensate anyone unlicensed

Funds from buyers may only go through sponsoring broker