Chapter 6 - Agency Obligations in Illinois

Question 1

Agency Disclosure

Answer 1

Ensures that all parties know who an agent works for and the obligations of the agent in a transaction, depending on the the agency relationship.

Question 2

Agency

Answer 2

A relationship in which a real estate broker or licensee, whether directly or through an affiliated licensee, represents a consumer by the consumer’s consent, whether express or implied, in a real property transation.

Question 3

Client

Answer 3

A person who is being represented by a licensee. AKA - Principal

Question 4

Consumer

Answer 4

A person or entity seeking or receiving licensed activities.

Question 5

Customer

Answer 5

A consumer who is not be represented by the licensee but for whom the licensee is performing ministerial acts.

Question 6

Material Facts

Answer 6

Is one that, if known, could affect a consumers decision.

Question 7

Confidential Information

Answer 7

Is information obtained by a Licensee from a client during the term of an agency agreement that:

• was made confidential by written request or written instruction of the client
• deals w/ the negotiating positions of the client
• is info that if disclosed could materially harm the negotiating position of the client

Question 8

Latent Defects

Answer 8

They pertain to the physical condition of the property that are actually known by the licensee and that could not be discovered by a reasonably diligent inspection of the property by the customer. For example, if a basement wall is cracked but not obvious to buyers entering the home, it is the duty of the agent to disclose the crack - even though a seller may feel the disclosure compromises their position on price and stability. By not disclosing the crack to the potential buys, the agent is being dishonest and violating a basic tenet of customer duty.

Question 9

Actual Fraud

Answer 9

is an intentional misrepresentation or concealment of a material fact. Actual fraud occurs when a person actively hides information, or makes statements known to be false or misleading. When any of this is done with the intent to deceive, they constitute actual fraud.

Question 10

Constructive Fraud

Answer 10

is a negligent misrepresentation or concealment of a material fact. When information is not disclosed or false statements are made unintentionally, it may be considered constructive fraud.

Question 11

Ministerial Acts

Answer 11

are administrative in nature and do not rise to the level of active representation on behalf of customer.

Question 12

Designated Agency

Answer 12

is a contractual relationship between a sponsoring broker and a client in which one or more licensees associated with or employed by the broker are designated as the agent of the client. A designated agency if the assumed relationship when a client signs a brokerage agreement.

Question 13

Minimum Services

Answer 13

• Accept delivery of and present to a client offers and counteroffers to buy, sell, lease or otherwise transfer any interest in the property or any portion.
• Assist a client in developing, communicating, negotiating, and presenting offers, counteroffers, and notices that relate to the offers and counteroffers until a lease or purchase agreement is fully executed and all contingencies are satisfied or waived.
• answer a client’s question relating to offers, counteroffers, notices, and contingencies.

Question 14

Non-Agency

Answer 14

When a licensee is not performing the minimum services required under an exclusive brokerage agreement, and is, therefore, not acting as the consumer’s exclusive agent, that licensee must disclose this fact in writing to the consumer.

Question 15

Dual Agent

Answer 15

Is a situation where the buyer and the seller in the same real estate transaction are both the clients of the same agent.

Question 16

First substantive Contact

Answer 16

Ideally, licensees should have the prospective buyer or seller sign either a non-agency disclosure or an agency agreement as early as possible in the first meeting.
With Seller this could be:
Prior to discussions about listing property, prior to presenting a comparative market analysis, prior to entering into a listing agreement
With a buyer this could be:
Prior to showing a property, prior to discussions about specific needs, when someone walks into a real estate office to ask an agent about a listed property, at an open house when he displays serious interest.

Question 17

Informed Consent

Answer 17

(written) is presumed to have been given by a client who signs a document that includes the mandated information. By law the disclosure must include the description of what a licensee can and cannot do as a dual agent.

Question 18

Disclosure

Answer 18

This is part of OLD CAR and a common law fiduciary duties.
An agent must make a complete disclosure of any material facts. A material fact is something that could affect someone’s decision regarding the transaction if it were known.

Question 19

Contemporaneous Offers

Answer 19

Are offers to purchase or lease on behalf of two or more clients represented by the same designated agent for the same real estate parcel or unit that the designated agent knows or has known or has reason to know will be taken under consideration by the owners or owner’s representative at the same time.