Illinois Residential Leasing Agent Course Study Notes

Residential Leasing Agent Pre-Licensing Course Overview

Mandatory Requirements: This course is a mandatory $15$ -hour pre-licensing program designed to prepare students for the Illinois State Examination. To successfully complete the course, a student must achieve a passing grade of $75\%$ or better on the final exam.
Course Objectives: The primary goals are to master the subjects required for professional conduct with clients, lessees, and lessors, and to understand agency principles essential to real estate.
Required Text: The course utilizes Modern Real Estate Practice in Illinois, 10th Edition.
Administrative Specifics:
- Transcripts: Students must provide their full name and current address for transcript creation. The original transcript is required to scan into the IDFPR online profile after passing the state exam.
- Transcript Replacement: There is a $10$ dollar charge to issue a new transcript if the original is misplaced.
- Time Limit: Students must finish the course within a $6$ month period. Failure to do so requires re-registering and paying for the class again (less the cost of the book).
State Exam Registration Process (PSI):
1. Visit www.goamp.com.
2. Select Clients/Partners, then Student User: Illinois.
3. Complete New Student Registration.
4. Notify the education provider once registration is confirmed via email by PSI.

Real Property and the Law

Classifications of Property:
- Real Property: Built on the concepts of land, real estate, and real property. It is conveyed by a deed.
- Personal Property (Personalty/Chattels): Movable items not affixed to land. Examples include chairs, tables, money, and bonds. It is conveyed by a bill of sale.
Definitions:
- Land: The earth's surface extending downward to the center of the earth and upward to infinity, including naturally attached objects.
- Real Estate: Land plus all human-made improvements attached to it (e.g., buildings, fences).
- Real Property: The interests, benefits, and rights inherent in real estate ownership, often described as a bundle of legal rights.
Manufactured Housing: Dwellings built off-site and moved to a lot. Historically called mobile homes (pre- $1976$ ), they became federally regulated under the National Manufactured Housing Construction and Safety Standards Act of $1976$ . Generally considered personal property unless permanently affixed to land.
Plants and Crops:
- Fructus Naturales: Trees, perennial shrubs, and grasses not requiring annual cultivation are treated as real estate.
- Emblements (Fructus Industriales): Annually cultivated crops (wheat, corn, vegetables) are personal property.
- Illinois Farmland Custom: Possession usually transfers on March $1$ because it falls after harvest and before new planting. The buyer typically assumes the full current year tax bill without proration.
Changing Property Status:
- Severance: Changing real property into personal property (e.g., cutting down a tree).
- Annexation: Changing personal property into real property (e.g., mixing sand and cement to build a sidewalk).
Fixtures and Trade Fixtures:
- Fixture: Personal property so attached to a building that it becomes real property by law (e.g., heating systems, plumbing).
- Legal Tests (Intent): Courts determine if an item is a fixture based on the Method of Attachment, Adaptation to real estate, and written Agreement.
- Trade Fixture (Chattel Fixture): Property used for business, owned and installed by a tenant. These are removable by the tenant before the lease expires. If not removed, they become the landlord's property through accession.
Characteristics of Real Estate:
- Economic: Scarcity, improvements, permanence of investment, and location (situs).
- Physical: Immobility, indestructibility, and uniqueness (nonhomogeneity).

Real Estate Contracts and Law

Contract Definition: A voluntary agreement or promise between legally competent parties, supported by legal consideration, to perform (or refrain from) a legal act.
Contract Classifications:
- Express vs. Implied: Express contracts are stated in words (oral or written). Implied contracts are shown by acts and conduct.
- Bilateral vs. Unilateral: Bilateral involves two promises (promise for a promise). Unilateral involves one promise to induce an act from a party who is not legally obligated to perform (e.g., an option).
- Executed vs. Executory: Executed means all parties have fulfilled promises. Executory means one or both parties still have acts to perform.
Essential Elements of a Valid Contract:
1. Offer and Acceptance (Mutual Assent): A "meeting of the minds" on all terms.
2. Consideration: Something of legal value (e.g., money, love, and affection).
3. Legally Competent Parties: Parties must be of legal age (in Illinois, $18$ ) and have mental capacity.
4. Consent (Reality of Consent): Act must be free and voluntary; no fraud, duress, or misrepresentation.
5. Legal Purpose: The contract's objective must be legal.
Status of Contracts:
- Valid: Binding and enforceable.
- Void: No legal force; lacks essential elements.
- Voidable: Appears valid but may be rescinded by a party (e.g., contract with a minor).
- Unenforceable: Valid on the surface but neither party can sue to force performance (e.g., oral contract where writing is required).
Illinois Statute of Frauds (Frauds Act): Contracts for the sale of land or leases longer than $1$ year must be in writing to be enforceable.
Contract Discharge: Terminated through performance, breach, assignment (substitution of parties), or novation (substitution of a new contract).

Real Estate Brokerage and Consumer Protection

Antitrust Laws: Prohibit monopolies and conspiracies that restrain trade.
- Price-Fixing: Competing companies setting standard commission rates. Companies must independently determine fees.
- Group Boycotting: Businesses conspiring to withhold patronage from a competitor.
- Allocation of Customers/Markets: Agreements to divide territories or price ranges.
- Tie-in Agreements: Conditioning the sale of one product on the purchase of another.
- Penalties: Under the Sherman Act, individuals face up to $1\,million$ dollars in fines and $10$ years in prison. Corporations face up to $100\,million$ dollars. Victims may sue for treble (triple) damages.
Consumer Protection Measures:
- National Do Not Call Registry: Managed by the FTC. Licensees can call established business relationships for up to $18$ months after a transaction and inquiries for up to $3$ months. Companies must access the registry every $31$ days.
- CAN-SPAM Act of 2003: Sets requirements for commercial email. Must include an opt-out method, accurate header information, and a valid physical postal address.
- Junk Fax Prevention Act of 2005: Prohibits unsolicited faxes. Requires an opt-out notice on the first page. Illinois law allows for a $500$ dollar fine for unsolicited fundraising/advertising emails.

Leases and Leasehold Estates

Leasehold Estates:
- Estate for Years: For a definite period (days, weeks, months, years) with specific start and end dates. No notice is needed to terminate.
- Estate from Period to Period (Periodic Tenancy): Indefinite term; automatically renews (e.g., month-to-month). Termination requires proper notice.
- Estate at Will: Possession with landlord's consent for an uncertain duration. Terminates upon death of either party.
- Estate at Sufferance: Tenant remains after lease expires without consent (holdover). Landlord may evict or treat as a holdover and charge double rent ( $735\,ILCS\,5/9-202$ ).
Illinois Notice Requirements for Termination:
- Year-to-Year: $60$ days' written notice.
- Month-to-Month: $30$ days' written notice.
- Week-to-Week: $7$ days' written notice.
- Farm (Year-to-Year): $4$ months' written notice (must vacate by March $1$ , notice by November $1$ ).
Valid Lease Requirements: Capacity, legal objective, offer/acceptance, and consideration. Leases for more than $1$ year must be in writing.
Terms and Provisions:
- Quiet Enjoyment: Landlord’s promise that the tenant may take possession without interference.
- Security Deposits: In properties with $5$ or more units, landlords must provide an itemized damage statement within $30$ days of move-out to withhold funds. Entire deposit must be returned within $45$ days if no statement is sent.
- Security Deposit Interest: Required for units of $25$ or more if held for more than $6$ months. Chicago rate was $0.01\%$ in $2016$ .
- Implied Warranty of Habitability: Landlord must keep residential units fit for human occupancy (water, heat, electricity). Remedies for breach include constructive eviction.
Types of Leases:
- Gross Lease: Tenant pays fixed rent; landlord pays all property charges (taxes, insurance).
- Net Lease: Tenant pays rent plus some or all property charges.
- Percentage Lease: Common in retail; rent is a base fee plus a percentage of gross sales over a breakpoint.
Lease Calculation Example: Base rent $1,300$ dollars/month + $5\%$ of sales over $160,000$ dollars. With annual sales of $250,000$ dollars:
- Annual Base Rent: $1,300 \times 12 = 15,600$ dollars.
- Sales Over Breakpoint: $250,000 - 160,000 = 90,000$ dollars.
- Percentage Rent: $90,000 \times 0.05 = 4,500$ dollars.
- Total Rent: $15,600 + 4,500 = 20,100$ dollars.
Eviction: Actual eviction in Illinois requires a "forcible entry and detainer" action filed in circuit court. Self-help (lockouts) is illegal.

Real Estate Agency and Statutory Duties

Governing Law: Illinois is a statutory agency state governed by Article $15$ of the Real Estate License Act of $2000$ .
Fiduciary/Statutory Duties (COLD AC):
- Care: Using skill/expertise to protect the client.
- Obedience: Following lawful instructions.
- Loyalty: Putting the client's interest above all others (including the agent's commission).
- Disclosure: Informing the client of all material facts (e.g., physical defects, neighborhoods).
- Accounting: Reporting funds; no commingling or conversion. Escrow funds must be deposited by the next business day.
- Confidentiality: Protecting client negotiating positions (e.g., price bottom).
Agency Disclosures:
- Disclosure of No Agency: Must be provided to customers to prevent the disclosure of confidential information, no later than first substantive contact.
- Designated Agency: Sponsoring brokers designate specific agents to represent a client to the exclusion of others in the firm.
- Dual Agency: Representing both buyer and seller in one transaction. Requires informed written consent from both parties. In Illinois, a licensee cannot be a dual agent if they have an ownership interest in the property.
Latent Defects: Structural defects not discoverable by ordinary inspection. Sellers and agents have a duty to disclose known latent defects.
Stigmatized Properties: Properties branded undesirable due to events (homicide, suicide). In Illinois, licensees have no legal duty to disclose that a property is stigmatized.

Illinois Real Estate License Act of 2000

Administration: Overseen by the Division of Real Estate within the IDFPR.
- Real Estate Coordinator: Appointed by the IDFPR Secretary; acts as liaison/chairperson for the Board.
- Disciplinary Board: Consists of $15$ members appointed by the Governor. $12$ must be brokers for at least $10$ years; $2$ must be instructors; $3$ are public members representing consumers.
License Categories and Requirements:
- Residential Leasing Agent: Must be $18$ years old, complete a $15$ -hour pre-license course, and pass the exam. Limited to leasing/renting only.
- Broker: Must be $18$ years old, complete $75$ hours of pre-license and $45$ hours of post-license education ( $120$ total), and pass the exam.
- Managing Broker: Must be $20$ years old, have $2$ years of active licensure as a broker, and complete $165$ total hours of education.
Exemptions from Licensure: Owners/lessors managing their own property, attorneys-in-fact, court-ordered representatives, and resident managers living on-site.
Business Entity Rules: Corporations/LLCs cannot have residential leasing agents owning more than $49\%$ of the company stock.
Advertising Rules:
- Must include the sponsoring broker's business name (at least equal in size to the agent/team name).
- Blind ads (ads without firm name) are prohibited.
- Agent-owned properties must be disclosed as "broker-owned" or "agent-owned" in writing.
Discipline and Penalties:
- IDFPR can impose civil penalties of up to $25,000$ dollars per violation.
- Causes include steering, blockbusting, commingling, and failure to provide minimum services.
- Statute of Limitations: Disciplinary action must be taken within $5$ years of the violation.
Real Estate Recovery Fund:
- Compensates consumers for monetary losses due to licensee violations.
- Payout amounts are adopted by rule.
- If the fund balance falls below $750,000$ dollars, it is upgraded to a minimum of $800,000$ dollars using the License Administration Fund.
- Statute of Limitations for fund claims: Individual must sue within $2$ years of the violation.

Fair Housing and Ethical Practices

Federal Fair Housing Act (Title VIII): Prohibits discrimination based on Race, Color, Religion, Sex, National Origin, Disability, and Familial Status.
Illinois Human Rights Act Protections: Adds Age ( $40+$ ), Ancestry, Marital Status, Military Status, Unfavorable Discharge from Military Service, Sexual Orientation, and Order of Protection status.
Exemptions (None for Race):
- Owner-occupied buildings with $4$ or fewer units.
- Single-family housing sold without a licensee if the owner owns $3$ or fewer homes.
- Housing for older persons ( $62+$ or $80\%$ of units occupied by $55+$ ).
Specific Violations:
- Blockbusting: Predicting neighborhood decline due to protected classes to induce selling.
- Steering: Channeling homeseekers to or away from specific areas.
- Redlining: Lenders refusing to provide loans in certain geographic areas regardless of creditworthiness.
Americans with Disabilities Act (ADA):
- Title I: Requires employers with $15$ or more employees to make reasonable accommodations.
- Title III: Mandates full accessibility to commercial spaces and public services.
Restoration: Landlords may require disabled tenants to pay into an interest-bearing escrow account over time to cover the cost of restoring modifications made for accessibility.