Sec. 15-5. Legislative intent +22Illinois · Real Estate · English

The General Assembly found that applying common law agency to real estate relationships caused misunderstandings contrary to the public interest. Article 15 codifies the relationships between licensees and consumers to provide stability in the real estate market. It applies to the exclusion of common law concepts of principal/agent and fiduciary duties.

• ✓Article 15 replaces common law agency concepts and fiduciary duties for licensees
• ✓Article 15 governs relationships except where a written agreement provides otherwise, when there is a relationship other than designated agency

Article 15 may serve as a basis for private rights of action and defenses by sellers, buyers, landlords, tenants, managing brokers, and brokers. These rights do not extend to any other Articles of the Act. Article 15 is not intended to affect contractual relationships between managing brokers/brokers and their affiliated licensees.

• ✓Private rights of action apply only to Article 15, not other Articles of the Act
• ✓Article 15 does not affect contractual relationships between brokers and their affiliated licensees

The Department must maintain a public index of all formal decisions related to licensing actions including issuance, refusal, renewal, revocation, and suspension of licenses, as well as probationary and disciplinary actions taken under the Act.

• ✓The Department shall maintain an index of formal decisions on issuance, refusal, renewal, revocation, and suspension of licenses
• ✓The index must be available to the public during regular business hours

Licensees are considered to be representing the consumer they are working with as a designated agent, unless there is a written agreement between the sponsoring broker and the consumer providing a different relationship. This establishes designated agency as the default relationship in Illinois.

• ✓Designated agency is the default relationship absent a written agreement
• ✓A different relationship requires a written agreement between the sponsoring broker and the consumer

Any person who practices, offers, attempts, or holds themselves out to practice as a managing broker, broker, or residential leasing agent without a license faces a civil penalty up to $25,000 per offense, in addition to other legal penalties. The penalty is assessed after a hearing.

• ✓Civil penalty for unlicensed practice cannot exceed $25,000 for each offense
• ✓The penalty is assessed by the Department only after a hearing consistent with disciplinary hearing provisions
• ✓The Department has authority to investigate any and all unlicensed activity
• ✓The civil penalty must be paid within 60 days after the effective date of the order and constitutes a judgment enforceable in any court of record

A licensee representing a client must perform the brokerage agreement terms, promote the client's best interest, exercise reasonable skill and care, keep confidential information confidential, and comply with the Act and all applicable statutes including fair housing and civil rights laws.

• ✓Must promote the client's best interest over the licensee's or any other person's self-interest
• ✓Must exercise reasonable skill and care in performing brokerage services
• ✓Must keep all confidential information received from the client confidential
• ✓Must comply with fair housing and civil rights statutes

Promoting the client's best interest includes seeking a transaction at the price/terms in the agreement or acceptable to the client, timely presenting all offers unless waived, disclosing material facts of which the licensee has actual knowledge (unless confidential), timely accounting for money and property, and obeying lawful specific directions of the client.

• ✓Must timely present all offers to and from the client unless the client waived this duty
• ✓Must disclose material facts of which the licensee has actual knowledge, unless confidential
• ✓Must obey specific client directions that are not contrary to statutes, ordinances, or rules
• ✓Must timely account for all money and property in which the client has an interest

Material facts do not include, when located on or related to real estate NOT the subject of the transaction: (i) physical conditions without a substantial adverse effect on value, (ii) fact situations, or (iii) occurrences and acts at the property.

• ✓Physical conditions on non-subject property with no substantial adverse effect on value are not material facts
• ✓Fact situations and occurrences/acts on non-subject property are not material facts

A licensee does not breach a duty by showing alternative properties, showing the client's property to other buyers/tenants, or preparing contemporaneous offers on the same property. However, written disclosure must be given to all clients for whom contemporaneous offers are prepared, and the licensee must refer to another designated agent any client who requests it.

• ✓Must provide written disclosure to all clients when making contemporaneous offers on the same property
• ✓Must refer to another designated agent any client requesting such referral

A licensee is not liable to a client for providing false information that a customer gave the licensee, unless the licensee knew or should have known it was false. Buyer/tenant client licensees are not presumed to have breached duty by working for higher fees based on higher price. Common law duties regarding negligent/fraudulent misrepresentation remain unchanged.

• ✓No liability for false info from a customer unless licensee knew or should have known it was false
• ✓Common law duty as to negligent or fraudulent misrepresentation is unchanged

The commission of even a single prohibited act, violation of a rule adopted under the Act, or violation of a disciplinary order constitutes a violation of the Act. No pattern of conduct is required.

• ✓A single prohibited act constitutes a violation of the Act
• ✓Violating a disciplinary order or an adopted rule also constitutes a violation

No cause of action arises against a licensee for failing to disclose: (i) that an occupant had HIV or any other medical condition; (ii) that the property was the site of an act/occurrence with no physical effect on the property; (iii) fact situations on non-subject property; or (iv) physical conditions on non-subject property that don't substantially adversely affect the subject property's value.

• ✓No duty to disclose that an occupant had HIV or any other medical condition
• ✓No duty to disclose acts/occurrences that had no effect on the physical condition of the property

The Department may refuse to issue/renew, place on probation, suspend, revoke, reprimand, or take other disciplinary/non-disciplinary action and impose a fine up to $25,000 per violation against any licensee, applicant, or person holding out as such, including licensees handling their own property.

• ✓The Department may impose a fine not to exceed $25,000 for each violation
• ✓Discipline may be imposed for any one or any combination of the enumerated causes
• ✓Discipline applies to licensees, applicants, persons holding out as such, and licensees handling their own property

Grounds include fraud/misrepresentation in obtaining a license; conviction or plea to felonies, misdemeanors, administrative sanctions, or Sex Offender Registration Act crimes; and inability to practice with reasonable judgment, skill, or safety due to physical/mental illness or disability.

• ✓Fraud or misrepresentation in applying for, procuring, or renewing a license is grounds for discipline
• ✓Conviction or plea of guilty/nolo contendere to a felony, misdemeanor, or crime requiring sex offender registration is grounds
• ✓Inability to practice with reasonable judgment, skill, or safety due to physical/mental illness or disability is grounds

Licensees must deposit all escrow moneys in a special account separate from personal/business accounts and maintain them until transactions are consummated or terminated, except for authorized disbursements or abandonment transfers to the State Treasurer. Failure to account for or remit moneys/documents belonging to others is grounds for discipline.

• ✓Escrow moneys must be kept in a special account separate and apart from personal and other business accounts
• ✓Escrow moneys must remain on deposit until the transaction is consummated or terminated, unless disbursed per written direction, contract terms, or court order
• ✓The escrow account shall be noninterest bearing unless required by law or requested in writing by the principals
• ✓Escrow moneys may be deemed abandoned only after 6 months from a written demand and transferred to the State Treasurer as unclaimed property
• ✓Escrow records must be made available to the Department within 24 hours of a request

Commingling the money or property of others with the licensee's own is a violation. Requiring a non-client party to allow the licensee to retain escrow moneys for commission/expenses as a condition of release is prohibited.

• ✓Commingling the money or property of others with the licensee's own money or property is grounds for discipline
• ✓A licensee may not require a non-client to allow retention of escrow moneys for the licensee's commission/expenses as a condition of release

Acting for more than one party without written notice, representing a broker other than the sponsoring broker, failing to have a written brokerage agreement, negotiating with a party known to have an exclusive agreement, and failing to provide minimum services under an exclusive agreement are grounds for discipline.

• ✓Acting for more than one party in a transaction without written notice to all parties is prohibited
• ✓A licensee may not perform licensed activities for a broker other than the sponsoring broker
• ✓Failing to have a written brokerage agreement between the sponsoring broker and client is a violation
• ✓Negotiating directly with a person known to have an exclusive brokerage agreement with another broker (without authorization) is prohibited
• ✓Failing to provide minimum services required by Section 15-75 under an exclusive brokerage agreement is a violation

Influencing transactions to promote racially/religiously segregated housing or discourage integrated housing, and engaging in acts violating Article 3 of the Illinois Human Rights Act, are grounds for discipline regardless of whether a Human Rights Commission complaint was filed.

• ✓Promoting racially and religiously segregated housing or discouraging integrated housing (blockbusting/steering) is grounds for discipline
• ✓Violating any provision of Article 3 of the Illinois Human Rights Act is grounds, whether or not a complaint was filed with the Human Rights Commission

Inaccurate, misleading, or contrary advertising; substantial misrepresentation; untruthful advertising; false promises likely to influence; continued flagrant misrepresentation; using unauthorized trade names/insignia; blind advertisements; and misleading 'free' offers are all grounds for discipline.

• ✓Inaccurate, misleading, or false advertising and untruthful advertising are grounds for discipline
• ✓Making false promises of a character likely to influence, persuade, or induce is prohibited
• ✓Advertising by blind advertisement is prohibited except as permitted in Section 10-30
• ✓Advertising merchandise/services as 'free' without disclosing conditions/obligations is a violation

Displaying a 'for rent' or 'for sale' sign or advertising property as for sale/rent without the written consent of the owner or the owner's authorized agent is grounds for discipline.

• ✓Displaying a 'for rent' or 'for sale' sign without written owner consent is prohibited
• ✓Advertising property as for sale or rent without written owner consent is a violation

Dishonorable/unethical/unprofessional conduct likely to deceive or harm the public, any conduct constituting dishonest dealing, and (when a licensee is also an attorney) acting as attorney for a party in the same transaction where the licensee acted as broker are grounds for discipline.

• ✓Dishonorable, unethical, or unprofessional conduct likely to deceive, defraud, or harm the public is grounds
• ✓Any conduct constituting dishonest dealing is grounds for discipline
• ✓An attorney-licensee may not act as attorney for the buyer or seller in the same transaction where acting as managing broker or broker

Failing to timely provide sponsorship/termination information, failing to respond to Department requests within 30 days, failing to notify within 30 days of Section 5-25 information, and a designated managing broker's failure to provide company policy or perform Section 10-55 duties are all grounds.

• ✓Failure to timely provide sponsorship or termination information to the Department is a violation
• ✓Failing to provide requested information or respond within 30 days of a Department request is grounds
• ✓Failing to notify the Department within 30 days of information required in Section 5-25 is a violation
• ✓A designated managing broker must provide a written company policy and perform Section 10-55 duties

The Department may refuse, renew, or suspend a license for failure to file returns or pay taxes/penalties/interest, and may take action based on a certification of child support delinquency (more than 30 days delinquent) from the Department of Healthcare and Family Services.

• ✓The Department may refuse, renew, or suspend a license for failure to file tax returns or pay taxes until requirements are satisfied
• ✓The Department may act against a license based solely on a certification of child support delinquency of more than 30 days

Filing liens or recording written instruments in any Illinois county on noncommercial residential real property relating to a broker's compensation for licensed activity is grounds for discipline.

• ✓Filing liens on noncommercial residential real property relating to a broker's compensation is prohibited
• ✓This applies to any county in the State for licensed activity under the Act

Licensees must treat all customers honestly and must not negligently or knowingly give them false information. A licensee engaged by a seller client must timely disclose to prospective buyer customers all latent material adverse facts about the physical condition of the property that the licensee actually knows and that could not be discovered by a reasonably diligent inspection.

• ✓Must treat all customers honestly and not negligently or knowingly give false information
• ✓Must timely disclose latent material adverse physical defects actually known that reasonable inspection wouldn't reveal

A licensee is not liable to a customer for providing false information if the licensee's client gave the licensee the false information and the licensee had no actual knowledge it was false. No cause of action arises against a licensee for revealing information in compliance with this Section.

• ✓No liability to a customer for false info from the client if licensee had no actual knowledge it was false
• ✓No cause of action for revealing information in compliance with the Section

The Department may issue citations to licensees for failing to meet continuing education or post-license education requirements. The citation states the name, address, license number, deficient hours, and penalty (max $2,000). A citation does not excuse completing the required education.

• ✓Citation penalty for CE/post-license education deficiencies shall not exceed $2,000
• ✓A citation does not excuse the licensee from completing all required continuing/post-license education
• ✓A cited licensee has 30 days after service to request a hearing; failure to request results in a final non-disciplinary order
• ✓Any fine is due and payable within 30 days of the final order or the Secretary's order
• ✓Payment of a citation fine is not reportable discipline unless the licensee has previously received 2 or more citations and 2 or more fines

Except as provided in a written agreement, neither the sponsoring broker nor affiliated licensees owe further duties after termination, expiration, or completion of the brokerage agreement, except: (1) to account for all moneys and property relating to the transaction; and (2) to keep confidential all confidential information received during the agreement.

• ✓Duty to account for all moneys and property survives termination
• ✓Duty to keep confidential information confidential survives termination

The Secretary may seek injunctions through the Attorney General or State's Attorney to enjoin violations. The Department may issue a rule to show cause why a cease and desist order should not be entered, requiring an answer within at least 7 days. Private parties injured by unlicensed practice may also petition for relief.

• ✓The Secretary may petition for a temporary restraining order (without notice) and preliminary/permanent injunctions against violations
• ✓A cease and desist rule to show cause must allow at least 7 days to file a satisfactory answer
• ✓Failure to answer satisfactorily causes an immediate cease and desist order
• ✓Licensees, interested parties, or injured persons may petition for injunctive relief against unlicensed practitioners

A licensee acting as a designated agent must advise the consumer in writing, no later than beginning to work as a designated agent, that a designated agency relationship exists (unless a written agreement provides a different relationship) and the name(s) of the designated agent(s). This disclosure may be part of a brokerage agreement or a separate document, retained by the sponsoring broker and provided to the consumer/client.

• ✓Written disclosure of designated agency must be made no later than beginning work as designated agent
• ✓Disclosure must include the name(s) of the designated agent(s) and a copy retained and provided to consumer

The licensee must discuss with the consumer the sponsoring broker's compensation policy, including terms and amounts offered to cooperating brokers. A licensee must disclose in writing to a customer that the licensee is not acting as the customer's agent, at a time intended to prevent disclosure of confidential info, but no later than preparation of an offer to purchase or lease.

• ✓Must discuss the sponsoring broker's compensation policy including cooperating broker amounts
• ✓Must disclose in writing non-agency to a customer no later than preparation of an offer to purchase or lease

Working or acting as a managing broker, broker, or residential leasing agent, or holding oneself out as licensed, without a valid active license is a Class A misdemeanor for a first offense and a Class 4 felony for second or subsequent offenses.

• ✓Unlicensed practice or holding oneself out as licensed is a Class A misdemeanor
• ✓A second or subsequent offense is a Class 4 felony

The payment or promise of payment of compensation to a licensee is not determinative of whether an agency relationship has been created between a licensee and a consumer. Who pays does not establish who is represented.

• ✓Payment or promise of compensation does not determine an agency relationship
• ✓Agency is established by the relationship, not by who pays the compensation

All information collected during an examination or investigation, including complaints, is confidential and may only be disclosed to law enforcement, regulatory agencies with a regulatory interest, or in response to a lawful subpoena. However, a formal complaint filed by the Department or any order issued against a licensee is a public record.

• ✓Investigation/examination information and complaints are confidential and generally not disclosed
• ✓Disclosure is limited to law enforcement, regulatory agencies with appropriate interest, or a lawful subpoena
• ✓A formal complaint filed by the Department or any order issued against a licensee/applicant is a public record

A licensee may act as a dual agent (or a broker may permit sponsored licensees to) in the same transaction only with the informed written consent of all clients. Consent is presumed when a client signs a statutory disclosure document. The disclosure form must be presented when the brokerage agreement is entered into and may be signed then or before the licensee acts as a dual agent.

• ✓Dual agency is permitted only with the informed written consent of all clients
• ✓The dual agency disclosure form must be presented at the time the brokerage agreement is entered into
• ✓Consent is presumed if the client signs the statutory dual agency disclosure document

A dual agent CAN treat all clients honestly, provide property info to buyers, disclose latent material defects, disclose buyer's financial qualifications to seller, explain terms/costs, and provide comparable sales data. A dual agent CANNOT disclose confidential info without permission, the price/terms a party will accept beyond listing price, or recommend price/terms either party should offer or counter.

• ✓A dual agent cannot disclose confidential information about a client without permission
• ✓A dual agent cannot disclose the price/terms a party will accept beyond the listing price without permission
• ✓A dual agent cannot recommend a price or terms a client should offer or counter with

A licensee acting as a dual agent must obtain written confirmation from clients of their prior consent, obtained when clients execute an offer or contract. This may be in another document (like a purchase contract), in which case the client must both sign and initial the dual agency confirmation provision using the statutory confirmation language.

• ✓Must obtain written confirmation of prior dual agency consent when executing an offer or contract
• ✓If included in another document, client must sign and also initial the dual agency confirmation provision

No cause of action arises for a dual agent making allowed/required disclosures, and such disclosures don't terminate agency. In dual agency there is no imputation of knowledge among clients, brokers, or licensees. A licensee may withdraw without liability from a non-consenting client. A licensee CANNOT serve as a dual agent when the licensee, or an entity in which they have ownership interest, is a party to the transaction.

• ✓No imputation of knowledge among clients, brokers, or affiliated licensees in dual agency
• ✓A licensee cannot be a dual agent when the licensee or their owned entity is a party to the transaction
• ✓A licensee may withdraw without liability from a client who has not consented to disclosed dual agency

A person whose check is returned unpaid or whose credit/debit card is declined owes a $50 fee plus the amount owed. The Department notifies the person to pay by certified check or money order within 30 days; failure results in automatic revocation or denial without a hearing.

• ✓A returned check or dishonored card charge incurs a $50 fee in addition to the amount owed
• ✓Payment must be made by certified check or money order within 30 calendar days of notification
• ✓Failure to remit within 30 days results in automatic revocation or denial without a hearing
• ✓The Secretary may waive fees where they would be unreasonable or unnecessarily burdensome

A sponsoring broker entering a brokerage relationship for listing or representing a person in buying/selling/exchanging/renting/leasing must set forth the terms in a written brokerage agreement, specifically designating which licensees act as legal agents to the exclusion of all other affiliated licensees. Such a broker is not deemed to act for more than one party if designated licensees don't represent more than one party.

• ✓Brokerage relationships must be set forth in a written brokerage agreement
• ✓The agreement must specifically designate licensees as legal agents to the exclusion of all other affiliated licensees

Nothing prevents a client from enforcing an oral agreement; the absence of a written agreement does not create an affirmative defense to the existence of an agreement or whether licensed activity was performed, and courts may impose legal/equitable remedies. Sponsoring brokers must take ordinary and necessary care to protect confidential information. A designated agent may disclose confidential info to the sponsoring broker for advice benefiting the client, but it cannot be further disclosed unless required or permitted by the client.

• ✓Absence of a written agreement does not create an affirmative defense; oral agreements may be enforced
• ✓Sponsoring broker must take ordinary and necessary care to protect client confidential information
• ✓Confidential info disclosed to the sponsoring broker cannot be further disclosed unless required or permitted by the client

When a civil or criminal adjudication (or administrative order) finds a licensee illegally discriminated in licensed activity, the Department must, upon Board recommendation and after notice and hearing, suspend/revoke the license or take disciplinary action, unless in the appeal process. The finding is a matter of record and cannot be re-challenged at the hearing.

• ✓A civil/criminal adjudication of illegal discrimination requires suspension or revocation upon Board recommendation, unless in the appeal process
• ✓An administrative order finding of discrimination requires disciplinary action upon Board recommendation
• ✓The underlying discrimination finding is a matter of record and its merits cannot be challenged in the licensee's hearing request

A broker is not considered a subagent of another broker's client solely by membership or affiliation in a multiple listing service or similar information source, and an offer of subagency may not be made through an MLS or similar information source.

• ✓MLS membership alone does not create a subagency relationship
• ✓An offer of subagency may not be made through an MLS or similar information source

The Illinois Administrative Procedure Act is expressly adopted into the Act, except that the provision allowing a licensee to show compliance with all lawful requirements for retention/continuation/renewal is excluded. Notice is deemed sufficient when mailed to the last known address of record.

• ✓The Illinois Administrative Procedure Act is adopted except the Section 10-65(d) right to show compliance for license retention
• ✓Notice is deemed sufficient when mailed to the last known address of record

Before disciplining, the Department must, at least 30 days before the hearing, notify the person charged (and their managing/sponsoring broker) in writing of charges and hearing details, direct filing of a written answer under oath within 20 days, and warn that failure to answer results in default. The Board hears the charges; failure to answer may result in discipline without a hearing.

• ✓The Department must give written notice of charges and hearing at least 30 days before the hearing date
• ✓The person must file a written answer under oath within 20 days after service of the notice
• ✓Failure to file an answer may result in default and discipline (including a fine) without a hearing
• ✓Notice must also go to the designated managing broker and sponsoring broker, and a copy of the final order delivered to them
• ✓Notice may be served by mail or electronic means to the address/email of record