Illinois Real Estate License Act of 2000 Rewrite FAQs

1. When does the rewrite of the Illinois Real Estate License Act of 2000 (the Act) become effective?
2. If I hold a broker’s license today, what is required of me to renew before my license expires on 4/30/2010?
3. If I hold a salesperson’s license today, what does this mean for my license that is due to expire on 4/30/2011?
4. What is happening to the categories of licensure in the new Act?
5. Do I need to worry about the transition right away?
6. What are some of the changes to the definitions under the Act?
7. Must I provide my Social Security Number on my application for a license?
8. Must I notify the Illinois Department of Financial and Professional Regulation (IDFPR) of address changes?
9. Do provisions of the Act apply to advertising over the Internet?
10. If I hold or transition into a managing broker’s license but I do not act as a managing broker may I use the term “managing broker” in my advertising?
11. What other concerns might there be with regard to advertising under the Act?
12. If I am the managing broker of an office must I have a written office policy?
13. If I am a buyer’s agent may I represent more than one buyer making offers on the same property?
14. Must I give written notice to my client when I act as a designated agent for the client?
15. Is there any change to the dual agency disclosure requirements?
16. Does the Act apply to me when I am dealing with my own property?
17. What are some other changes to the discipline provisions of the Act?
18. Are licensees allowed to do Guaranteed Sales Plans under the Act?
19. Are there any changes to the enforcement provisions of the Act?
20. Where can I find more information on the new Act?

1. When does the rewrite of the Illinois Real Estate License Act of 2000 (the Act) become effective?

A. The Act becomes effective on December 31, 2009.

2. If I hold a broker’s license today, what is required of me to renew before my license expires on 4/30/2010?

A. Your requirements to renew your broker’s license for your next renewal remain the same. You will owe the fee to renew, and 12 hours of continuing education for the two year renewal period ending 4/30/2010 along with successful completion of the existing 6 hour broker management continuing education course.

3. If I hold a salesperson’s license today, what does this mean for my license that is due to expire on 4/30/2011?

A. Your license will be extended for another year and will expire on 4/30/2012 instead of 4/30/2011.

4. What is happening to the categories of licensure in the new Act?

A. Once the transition is complete there will be two main categories of licensure: (1) managing broker and (2) broker. Note that the leasing agent license remains unchanged for the most part.

No new salespersons’ licenses will be issued after 4/30/2011, and the salesperson license category will no longer exist after 4/30/2012. All existing salespersons’ licensees will need to transition to the broker license category before May 1, 2012. Existing broker licenses will remain the same and some brokers will transition to managing broker.

5. Do I need to worry about the transition right away?

A. For the most part, no. The transition period does not begin until May 1, 2011. IAR will be publishing up-to-date information to assist licensees with the transition. However, it is important to note those changes that go into effect on December 31, 2009.

Things to know for December 31, 2009

6. What are some of the changes to the definitions under the Act?

A. Here are some of the new or amended definitions under Section 1-10 of the Act:

“Lead” is defined as a name of a potential buyer, seller, lessor, lessee or client of a licensee. Lead is now clearly included under the definition of “Broker” so, if a person exchanges a lead for another and for compensation that person will need a real estate license to do so.

“Regular Employee” is defined as a “person working an average of 20 hours per week” who would be considered a regular employee under IRS tests. This will affect the “by owner” exemption in Section 5-20.

“Broker” is amended to include the performance of licensed activities through the use of “any media or technology.”

“Proctor” is any person who has a written agreement with a pre-license school or a continuing education school to administer exams “fairly and impartially.” This can be the instructor of the class or someone else.

7. Must I provide my Social Security Number on my application for a license?

A. Yes, under the Act you must now provide your Social Security or your Tax ID number on your application for licensure under new Section 5-6.

8. Must I notify the Illinois Department of Financial and Professional Regulation (IDFPR) of address changes?

A. Yes, under Section 5-41 the Act clearly requires licensees to notify IDFPR of any change of office address.

9. Do provisions of the Act apply to advertising over the Internet?

A. Yes, Section 10-30 of the Act has been amended to clarify that advertising requirements apply to all methods of advertising employed by licensees. This would include advertising using any medium including the Internet or social media.

10. If I hold or transition into a managing broker’s license but I do not act as a managing broker may I use the term “managing broker” in my advertising?

A. No. Effective May 1, 2011 only those licensees with a managing broker’s license who are currently acting as managing brokers and on record with IDFPR as a managing broker may hold themselves out to the public as a managing broker. In other words, you can still hold a managing broker’s license but can’t hold yourself out as such unless you are actually acting as a managing broker at the time. Those licensees with a managing broker’s license and designated as a managing broker with IDFPR must identify themselves to the public in their advertising as a “managing broker.”

11. What other concerns might there be with regard to advertising under the Act?

A. There are new provisions contained in Section 10-35 which we call the “don’t be sneaky provisions.”

Licensees must tell consumers if they are going to share or sell information that they collect.

Licensees must not use a URL or domain name that is deceptive or misleading.

Licensees must not frame another real estate brokerage or multiple listing service website in a deceptive manner or without authorization from the owner of the site.

Licensees must not use metatags, keywords or other devices that would mislead consumers or deceptively drive them to the licensee’s website.

12. If I am the managing broker of an office must I have a written office policy?

A. Yes. The Act now clearly requires a written office policy for real estate brokerage offices. The written policy should include topic areas like:

Agency

Fair Housing, non-discrimination and harassment

Clients’ confidential information

Advertising

Sponsored licensees’ supervision and training

Disclosures

Risk management

Earnest money and escrow handling

as well as any other provisions pertinent to your brokerage business.

13. If I am a buyer’s agent may I represent more than one buyer making offers on the same property?

A. Yes, but there is a change under the Act. While this would not be considered disclosed dual agency, and the Act allows a designated agent to represent more than one buyer interested in the same property (recognizing that each buyer’s confidential information must be protected), there is an additional requirement if and when both buyers make contemporaneous offers on the property. The designated agent must give written notice to their clients making the contemporaneous offers and the buyers must have an opportunity to choose to be referred to another designated agent. (427 - Disclosure of Contemporaneous offers)

Can this form be incorporated into a brokerage agreement?

A: Not really. We highly recommend that in this case, the form not be incorporated into the brokerage agreement because it is important for buyers to understand the facts as they are unfolding

14. Must I give written notice to my client when I act as a designated agent for the client?

A. Yes, the Act requires that every client of a licensee must be given written disclosure as to who his/her designated agent is before beginning work for that person and the brokerage company must retain a copy of this disclosure. This notice can be part of a written brokerage agreement with the client. Note that this requirement applies to sellers, buyers and tenants/lessees even in cases where there is no written brokerage agreement being used.

15. Is there any change to the dual agency disclosure requirements?

A. Yes. The Act still requires that written disclosure be made and informed consent given by the clients before a licensee may act as a disclosed dual agent. The Act amends the dual agency disclosure requirements to say that the licensee is prohibited from disclosing to the other party without permission the price or terms a party is willing to accept or pay.

16. Does the Act apply to me when I am dealing with my own property?

A. Yes, the Act now clearly states that a licensee can be disciplined when dealing with the property of others but also when dealing with his/her own property, which includes an interest in property through an option or other means.

17. What are some other changes to the discipline provisions of the Act?

A. A licensee can be disciplined based on a guilty plea in addition to conviction of a crime. A licensee can be disciplined if he/she is determined to be unable to practice with the necessary degree of skill and judgment, which might be determined by a hearing.

18. Are licensees allowed to do Guaranteed Sales Plans under the Act?

A. Guaranteed Sales Plans are still allowed but are subject to very strict requirements that are more fully set forth in Section 20-20(a)(29). The process has changed in the following manner: If the licensee will be employing the use of a Guaranteed Sales Plan, 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.

19. Are there any changes to the enforcement provisions of the Act?

A. Yes, there are a few changes and a few are highlighted below:

If 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.

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.

The Act contains a private right of action where private citizens can start an action seeking to stop the unlicensed practice of real estate brokerage.

20. Where can I find more information on the new Act?

A. Go to www.IARlicenselaw.org for more information as it becomes available or as requirements for transition get closer.