notes license act

ILLINOIS REAL ESTATE LICENSE ACT OF 2000

INTRODUCTION

  • In Illinois, individuals engaged in the real estate business must follow the Real Estate License Act of 2000.

  • The Act is administered by the Illinois Department of Financial and Professional Regulation (IDFPR).

  • The law establishes standards for real estate licensees to protect the public.

  • The Act is available online at the Illinois legislature’s website.

  • Comprehensive understanding of the law is emphasized.

ARTICLE 1 – GENERAL PROVISIONS

  • The Act sets standards for real estate licensees and protects the public.

  • Important definitions from Article 1:

    • Act: Refers to the Real Estate License Act of 2000.

    • Address of record: The licensee's contact address submitted to IDFPR.

    • Agency: The relationship between a real estate licensee and the consumer.

    • Applicant: A person applying for a real estate license.

    • Blind advertisement: An ad not including the sponsoring broker's name, failing to meet disclosure requirements.

    • Board: Refers to the Real Estate Administration and Disciplinary Board.

    • Broker: A person or entity licensed to perform services related to the sale, purchase, leasing, or exchange of real estate.

    • Brokerage agreement: The relationship created between a consumer and a sponsoring broker for licensed activities and compensation.

    • Broker price opinion (BPO): An estimate of the probable selling price of a real estate interest; not considered an appraisal.

    • Client: The individual a licensee represents; also known as the principal.

    • Comparative market analysis: An opinion regarding pricing and market aspects; not considered an appraisal.

    • Confidential information: Information from a client that could harm their negotiation position if disclosed.

    • Consumer: An individual seeking or receiving services from a licensee.

    • Designated agency: Representation assigned to a specific licensee for a specific client by a sponsoring broker.

    • Dual agency: A situation where a licensee represents both the buyer and seller in a transaction.

    • Education provider: A licensed school providing required education.

    • Escrow moneys: Funds deposited for the benefit of parties to an accepted contract, including earnest money.

ARTICLE 5 – LICENSING AND EDUCATION

RESIDENTIAL LEASING AGENT LICENSE

  • Allows licensees to work specifically in residential property leasing.

  • Functions include showing residential properties, negotiating leases, and collecting rents.

  • Brokers and managing brokers do not need this license to perform leasing activities.

  • Must have a sponsoring broker to work or apply for the license.

  • 120-Day Student Residential Leasing Agent Permit: Allows unlicensed individuals to work temporarily under a sponsoring broker while completing requirements.

SOCIAL SECURITY NUMBER ON LICENSE APPLICATIONS

  • Applicants are required to provide their Social Security or Tax Identification number on applications.

APPLICATION FOR RESIDENTIAL LEASING AGENT LICENSE

  • Complete application along with appropriate fees is necessary.

REQUIREMENTS FOR A RESIDENTIAL LEASING AGENT LICENSE

  • Must be at least 18 years old.

  • Must be of good moral character.

  • Must have a high school diploma or equivalent.

  • Must complete a 15-hour leasing agent pre-license course.

  • Must pass a state-authorized examination.

REQUIRED LICENSES AND OWNERSHIP RESTRICTIONS

  • Various entities can hold real estate licenses; ownership by leasing agents is restricted to no more than 49%.

EXEMPTIONS FROM LICENSING REQUIREMENTS

  • Licensing is not required for:

    • Owners selling or leasing their own property.

    • Employees assisting owners in selling or leasing.

    • Individuals acting under a power of attorney.

    • Attorneys performing duties in accordance with their profession.

    • Resident managers, state officers, and certain other individuals.

REQUIREMENTS FOR A BROKER LICENSE

  • Applicants must:

    • Be at least 18 years old.

    • Be of good moral character.

    • Complete high school or equivalent.

    • Finish 75 hours of coursework and pass the state exam.

    • Must apply using proper forms and pay fees.

    • First-time renewals require 45 hours of post-license education.

REQUIREMENTS FOR A MANAGING BROKER LICENSE

  • Applicants must meet several qualifications:

    • Be at least 20 years old.

    • Be of good moral character.

    • Have at least two years licensed experience as a real estate broker.

    • Complete 45 hours of coursework and pass the examination.

LICENSING EXAMS

  • All applicants must pass an authorized examination within one year of passing the exam.

  • Certain limits on exam attempts, including re-taking education requirements after four failed attempts.

SPONSORING LICENSEES

  • Brokers must notify the IDFPR regarding any sponsorships or terminations within 24 hours.

  • Upon termination, licensees are placed on inactive status until they find new sponsorship.

LICENSEE CONTACT INFORMATION

  • Licensees must proactively update IDFPR on any personal information changes within 24 hours.

OFFICES

  • Brokers must display their office as a real estate business and notify IDFPR of office changes.

  • Each office must display the same name as the main office.

EXPIRATION AND RENEWAL OF LICENSES

  • Expired licenses can be renewed within five years; longer renewals require completion of pre-license requirements.

RECORDS FOR SPONSORING BROKERS

  • IDFPR maintains a list of current licensees that can be accessed by sponsoring brokers.

OUT-OF-STATE RECIPROCITY

  • Illinois allows out-of-state licensees to obtain reciprocal licensing.

FEES

  • License fees are specified by rule.

CONTINUING EDUCATION REQUIREMENTS

  • Most licensees must complete continuing education:

    • Residential leasing agents: 8 hours every two years.

    • Brokers: 12 hours every two years.

    • Managing brokers: 24 hours every two years, including a 12-hour broker management course.

OUT-OF-STATE CONTINUING EDUCATION

  • Equivalent education from other states may count if it meets Illinois standards.

COMPLYING WITH CONTINUING EDUCATION REQUIREMENTS

  • Licensees must certify completion of required continuing education upon renewal.

ARTICLE 10 – COMPENSATION AND BUSINESS PRACTICES

PAYMENT OF COMPENSATION

  • Brokers can pay compensations directly to other brokers, with restrictions on sponsored licensees.

DISCLOSURE OF COMPENSATION

  • Licensees must disclose compensation policies and amounts to clients in writing.

COMPENSATION TO UNLICENSED PERSONS

  • Paying unlicensed individuals for real estate services is illegal.

SPONSORING BROKER; EMPLOYMENT AGREEMENT

  • Licensees can have only one sponsoring broker and must have a written employment agreement with their broker.

EXPIRATION OF BROKERAGE AGREEMENT

  • Agreements must have defined terms and automatically terminate if the sponsoring broker's license is suspended or revoked.

DISCLOSURE OF LICENSED STATUS

  • Licensees must disclose their licensed status in relevant transactions.

ADVERTISING

  • Honest and proper advertising practices must be followed, including requirements for advertising ownership.

ARTICLE 15 – AGENCY RELATIONSHIPS

LEGISLATIVE INTENT

  • This article regulates licensee conduct to protect public interests and determines liability based on statute rather than common law.

RELATIONSHIPS BETWEEN LICENSEES AND CONSUMERS

  • Licensees are presumed to represent consumers unless otherwise agreed in writing.

DUTIES OF LICENSEES REPRESENTING CLIENTS

  • Licensees must:

    • Honor client agreements and present all offers promptly; disclose material facts, and keep clients informed.

    • Maintain confidentiality of client information and comply with laws.

DUTY TO DISCLOSE INFORMATION

  • Licensees are required to disclose physical defects in properties.

LICENSEE’S RELATIONSHIP WITH CUSTOMERS

  • Different expectations exist for licensees' relationships with customers versus clients.

DUTIES AFTER TERMINATION OF BROKERAGE AGREEMENT

  • Licensees must account for property and funds belonging to the client and maintain confidentiality post-termination.

AGENCY RELATIONSHIP DISCLOSURE

  • Licensees must disclose responsibilities and policies explicitly at the start of client relationships.

COMPENSATION DOES NOT DETERMINE AGENCY

  • Agency relationships are defined by agreements, not compensation structures.

DUAL AGENCY

  • Requires informed consent from both parties and must be documented.

DESIGNATED AGENCY

  • Specific designation of agents to represent buyers and sellers separately is allowed to mitigate dual agency issues.

NO SUBAGENCY

  • Prohibits subagency between MLS members.

VICARIOUS LIABILITY

  • Consumers are accountable for agents' actions only under specific circumstances.

ACTIONS FOR DAMAGES

  • Claims must be filed within specific timelines and are limited to actual damages or injunctions only.

EXCLUSIVE BROKERAGE AGREEMENTS

  • Must be documented and specify minimum services to be provided.

ARTICLE 20 – DISCIPLINARY PROVISIONS

INDEX OF DECISIONS

  • The Department maintains a list of formal disciplinary actions.

UNLICENSED PRACTICE

  • Civil penalties can be imposed up to $25,000 for unlicensed activity.

GROUNDS FOR DISCIPLINE

  • The Department is empowered to issue various disciplinary measures for violations.

VIOLATIONS

  • List of actions that can lead to disciplinary actions: fraud, misrepresentation, unlicensed activity, etc.

ARTICLE 25 – ADMINISTRATION OF LICENSES

REAL ESTATE ADMINISTRATION AND DISCIPLINARY BOARD

  • A board comprising appointed individuals oversees real estate licensing matters.

RULES

  • The Department is required to create rules to implement the Act based on board recommendations.

RELIANCE ON ADVISORY LETTERS

  • Licensees can request advisory letters for legal clarification from the Department without penalty for compliance.

PEER REVIEW ADVISERS

  • Licensees can assist in investigations of potential violations.

REAL ESTATE RESEARCH AND EDUCATION FUND

  • Established to support real estate education and research efforts.

    • Includes provisions for scholarships for underrepresented groups.

REAL ESTATE LICENSE ADMINISTRATION FUND

  • Funds administered to cover the Department's operational costs.

FUNDING FOR REAL ESTATE RECOVERY FUND

  • State maintains funds to ensure sufficient operational capacity; investments are utilized to grow the fund.

REAL ESTATE AUDIT FUND

  • Dedicated to auditing escrow accounts.

EXCLUSIVE STATE POWERS

  • States govern real estate licenses and restrict local governments from enacting conflicting regulations.