Illinois Real Estate License Act Passes! Effective Now! : Illinois Academy of Real Estate

Illinois Real Estate License Act Passes! Effective Now!

Provisions effective Dec. 31 2009

On December 31, Governor Quinn signed SB 1894 into law. SB 1894 contains the rewrite of the Illinois Real Estate License Act.

The Act contains numerous changes and additions, including a change in the requirements to obtain and maintain a license, and additional consumer protection and enforcement provisions. Changes in licensing classification from salesperson to broker, education requirements and the new license classification of managing broker become effective May 1, 2011.

Some of the highlights that become effective as of December 31, 2009 include:

·                                 Definitions – lead, regular employee (Section 1-10). The Act defines a “lead” as a name of a potential buyer, seller, lessor, lessee or client of a licensee and includes it under the definition of “broker” when a person is exchanging a lead for compensation. In addition there is a new definition for “regular employee.” A regular employee for purposes of the Act is a “person working an average of 20 hours per week” who would be considered a regular employee under IRS tests.

·                                 Change of Address (Section 5-41). The Act now clearly requires licensees to notify the Illinois Department of Financial and Professional Regulation (IDFPR) of every address where they practice and if they change the address of any office where they practice.

·                                 Advertising – Internet (Section 10-30). The Act has been amended to clarify that all methods of advertising are covered. In other words it clearly includes real estate advertising through the use of any medium, including on the Internet.

·                                 Advertising – deceptive and misleading (Section 10-35). Requires real estate licensees to tell consumers if they are going to sell or share any information that consumers might give them. Licensees may not use a URL or domain name that is deceptive or misleading. They may not “deceptively or without authorization frame another real estate brokerage or multiple listing service website.” Finally, they may not use meta tags, keywords or any other devices to mislead consumers or to deceptively drive them to their website.

·                                 Company Policy (Section 10-40). The Act clearly requires real estate brokerage offices to have a written office policy covering topics such as agency, fair housing, non-discrimination and harassment, clients’ confidential information, advertising, sponsored licensees’ supervision and training, disclosures, risk management, earnest money and escrow handling. (NOTE: The list is not exhaustive but used as an example.)

·                                 Agency – written notice (Section 15-15(b)). In a situation where a designated agent represents more than one buyer making contemporaneous offers on the same property, that agent must give written notice of this to all buyers and give buyers the opportunity to be referred to another designated agent if the buyer chooses to do so.

·                                 Agency – written disclosure (Section 15-35(a)). The Act states more clearly that EVERY client of a licensee must be given written disclosure as to who his/her designated agent is before beginning to work for that person and that the brokerage company must retain a copy of this disclosure. This notice can be part of a written brokerage agreement with the client.

·                                 Dual Agency – disclosing terms (Section 15-45(a)). When a licensee is acting as a disclosed dual agent, the amended Act prohibits the licensee from disclosing to the other party without permission the price or terms a party is willing to accept or pay.

·                                 Discipline - miscellaneous (Section 20-20). IDFPR can impose discipline upon a licensee if he/she violates the Act when dealing with his/her own property. Limits on monetary civil penalties have increased. A licensee can be disciplined based on a guilty plea in addition to a conviction of a crime. A person can be disciplined if he/she is determined to be unable to practice with the necessary degree of skill and judgment (to be determined by a hearing).

·                                 Guaranteed Sales Plans (Section 20-20(a)(29)). If this is used, the licensee must determine the guaranteed purchase price before beginning efforts to market the property and if the licensee purchases under the guarantee, he/she must cancel the listing or the listing period must be over.

·                                 Discipline – drugs/alcohol (Section 20-20(e)). If in enforcing the provisions of the Act, IDFPR believes the licensee is incompetent or under the influence of drugs or alcohol the licensee may have to submit to a mental or physical exam.

·                                 Enforcement – continuing violations (Section 20-21). IDFPR can issue an injunction or a cease and desist order if it believes there is a continuing violation of the provisions of the Act. A hearing will be scheduled to assess the facts.

·                                 Enforcement – private right of action (Section 20-21(c)). The Act now contains a private right of action where private citizens can start an action seeking to stop the unlicensed practice of real estate brokerage.

NOTE: This is a summary of some of the provisions that will Illinois real estate licensees. It is meant to point out major changes. The licensee is advised to consult the Act and competent council for additional changes and interpretation.