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Illinois Real Estate Exam Prep > Illinois Licensing Prep > Flashcards

Illinois Licensing Prep Flashcards

1
Q

Purpose of License Law in Illinois

A

Intended to regulate the industry for the intention of protecting the public

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2
Q

Real Estate License Act of 2000
The Act

A
  • Address of Record: Designated address of licensee in license file maintained by Department. Must inform department of any change of address. - Agency
  • Applicant: Any person who applies to IDFPR for a valid license
  • Blind Advertisement
  • Board: The Real Estate Administration and Disciplinary Board of IDFPR
  • Branch Office: A sponsoring broker’s office rather than the sponsoring broker’s principal office
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3
Q

Three Meridian Lines Used in PLSS in Illinois

A
  • Third Principal Meridian: Divides state down the center. Established as a line running true north from point of confluence of the Ohio & Mississippi Rivers.
  • Fourth Principal Meridian: Established for surveying lands located between the Illinois & Mississippi rivers.
  • Second Principal Meridian: Used in some descriptions of some land in Illinois, although it is located in Indiana.
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4
Q

Range Lines in Illinois

A

One baseline for each meridian.
- Baseline for 2nd & 3rd Meridians is the same. Referred to as the “Centralia Baseline,” as it intersects at a point near Centralia, Illinois.
- Baseline for 4th Meridian runs straight west from the beginning of that Meridian near Beardstown, Illinois
- Second Baseline for 4th Meridian runs along the Illinois-Wisconsin border.

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5
Q

Salesperson License in Illinois

A

Broker’s License

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6
Q

Traditional Broker’s License in Illinois

A

Managing Broker’s License

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7
Q

Illinois prohibits advertising a property…

A

In a manner that creates a reasonable likelihood of confusion regarding the permitted use (zoning) of the property

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8
Q

Illinois Environmental Protection Agency (IEPA)

A

The agency in charge of maintaining the state’s air, land and water quality. They achieve this through inspection, regulation, enforcement, recycling, education and prevention

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9
Q

Performing Lead Abatement or Mitigation without a License

A

Guilty of a Class A misdemeanor

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10
Q

Illinois Department of Public Health

A

Oversees training and licensing of lead abatement contractors and workers

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11
Q

Illinois Residential Real Property Disclosure Act

A

Requires that sellers provide purchasers with a written seller disclosure of property condition prior to the purchaser signing an offer to purchase.

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12
Q

Agency in Illinois

A

A written document is not needed to create an agency relationship. An agency relationship can be created by actions.

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13
Q

Exclusive Brokerage Agreements, Exclusive Listing Agreements & Exclusive Buyer Brokerage Agreements

A

Must be in writing

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14
Q

Brokerage Agreement & the Illinois Code

A
  • Each Brokerage must enforce the Illinois Human Rights Act
  • No license shall obtain any written brokerage agreement that does not either provide for automatic expiration or provide the client with the right to terminate the agreement by giving no more than 30 days prior written notice
  • Any brokerage agreement NOT containing such a provision for AUTOMATIC EXPIRATION will be VOID
  • Every brokerage agreement must EXPRESSLY STATE that NO CHANGES TO THE CONTRACT REGARDING THE AMOUNT OF COMMISSION OF THE TIME OF THE PAYMENT OF THE COMMISSION IS PERMISSIBLE UNDER THE LAW. A contract with such changes WITHOUT the changes MADE IN WRITING AND THEN SIGNED BY ALL PARTIES will be VOID.
  • If a listing agreement provides that, in the event of a default by a buyer, the broker’s full commission or fees will be paid out of an earnest money deposit then such a clause must be written INTO THE LISTING AGREEMENTS in letters larger than those generally used in a listing agreement
  • Although net listings are legal in Illinois, because of ethical considerations, licensees are discouraged from using this type of listing
  • On taking a listing, a licensee must use due care and diligence to investigate, substantiate and verify the accuracy of all information supplied by an owner and contained in a listing
  • In addition, under the Administrative Code, all brokerage agreements for residential properties of four units or less which provide for a “protection period” subsequent to its termination date, must clearly state that no commission or fee will be due. It must also include the language: “owing pursuant to the terms of the brokerage agreement if, during the protection period, a valid, written brokerage agreement is entered into with another licensed real estate broker.”
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15
Q

Sales Contract and the Illinois Code

A

Since 1966, when the Illinois Supreme Court made its decision in the case of Chicago Bar Association, et al. v. Quinlan and Tyson, Inc., there have been certain limitations placed on licensees drafting sales contracts. These regulations include the following:
- Licensees are ONLY authorized to fill in blanks and make the appropriate deletions on already-printed form contracts used in the real estate industry.
- ALL insertions and deletions of even the SIMPLEST information must be made at the DIRECTION of the PRINCIPALS, based on the negotiations.
- Anything written into a form that contradicts the printed document takes precedence over the printed information in the document.
- Licensees are NOT PERMITTED to use any document subsequent to the sales contract (or related to it), including but not limited to the: Deed, Bill of Sale, Affidavit of Title, Note, Mortgage
- The licensee should NOT use any form entitled, “Offer to Purchase,” if that form is intended to become a legally binding real estate contract.
- Illinois law requires that sales contracts indicate at the top “REAL ESTATE SALES CONTRACT” in bold type

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16
Q

Fiduciary Duties in Illinois

A
  • Acting in accordance with the brokerage agreement
  • Promoting the best interests of the clients by: Seeking a transaction at the price and terms stated in a brokerage agreement or at a price and terms acceptable to the client; Presenting all offers to and from the client in a timely manner; Disclosing all material facts regarding the transaction of which the licensee has actual knowledge, unless the information is confidential; Obeying direction if the directions do not contradict law or public policy; Providing a timely accounting of all monies and property received, in which the client may have an interest; Acting in a manner that promotes the client’s best interests rather than those of the licensee
  • Exercising skill and care in performing all duties
  • Maintaining confidentiality
  • Complying with Real Estate License Act of 2000 and other laws
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17
Q

Referral Fees in Illinois

A

Illinois real estate law states that licensees may NOT pay referral fees to unlicensed people who are not principals to the transactions. Licensees cannot receive compensation for any referrals made to the following entities:
- Lenders
- Home Inspectors
- Title Companies
- Companies that do radon mitigations
- Other real estate related companies

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18
Q

Sub-Agency Through MLS

A

These offers are not allowed in Illinois. This means the listing agent and seller can’t advertise via the MLS for other licensees to show the property for sale, while acting as the seller’s subagent and earning a commission.

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19
Q

Statute of Limitations in Illinois

A

According to the Act, bringing an act for damages is 2 years in most cases. In NO case can any legal actions be commenced after 5 years.

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20
Q

Compensation & the Act

A

A licensee:
- Must be a licensed real estate managing broker or affiliated licensee under a managing broker.
- Must have been employed by the principal under a valid contract
- Must have been the procuring cause of the sale (producing a ready, willing and able buyer makes them entitled to a commission)

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21
Q

Agent’s Authority

A

In Illinois, contractual relationships are always formed at the managing broker level, never at the broker level.

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22
Q

Designated Agency in Illinois

A

Is standard in Illinois. A licensee is considered to hold this type of agency unless stated otherwise in a written agreement.

23
Q

Dual Agency Consent Agreement

A

Required in the event of dual agency in Illinois. The Act dictates the language that must be used on this form and the licensee cannot change that language. The exact language for this consent is contained in the Illinois license act.

24
Q

Broker Services & Legal Services

A

In Illinois, it is prohibited for one individual to provide both of these services to a client.

25
Q

Residential Real Property Disclosure Act

A

Illinois requires that when a seller signs the standard listing agreement, they must prepare a disclosure document. Disclosure documents must be completed by the seller or seller’s attorney or power of attorney. The licensee must never complete the disclosure forms.

26
Q

Material Facts

A

A licensee must disclose this about the physical condition of the property about which the licensee has actual knowledge

27
Q

Illinois Radon Awareness Act

A

Seller’s disclosure requirements regarding the presence of radon on the property:
- The seller must provide the buyer with An Illinois Emergency Management Agency (IEMA) pamphlet entitled Radon Testing Guidelines for Real Estate Transactions (or an equivalent pamphlet approved for use by IEMA) and The Illinois Disclosure of Information on Radon Hazards form.
- The seller must give the pamphlet and disclosure form listed above (indicating that the property may present the potential for exposure to radon) to the potential buyer before the buyer is obligated under any contract to purchase residential real property. The Act does not obligate a seller to conduct any radon testing or mitigation activities. However, the parties may agree in their contract to mitigate.

28
Q

Carbon Monoxide Detectors

A

Illinois homes are required to have at least one of these in operating condition within 15 feet of every room used for sleeping purposes. Homes that do not burn fuel for heat, ventilation or hot water; are not connected to a garage; and are not a source of carbon monoxide are not required to install.

29
Q

Illinois Real Estate Tax

A

Imposed when the title to a property is conveyed. The amount of a tax is $.50 per $500 of taxable consideration. Illinois imposes an additional tax of $.75 per $500 or portion thereof

30
Q

Distribution of Tax

A

The transfer tax is distributed as follows: - 50% to the Illinois Affordable Housing Trust Fund
- 35% to the Open Space Land Acquisition and development fund
- 15% to the Natural Areas Acquisition Fund

31
Q

Three Categories of Licensees in Illinois

A

Broker
Managing Broker
Residential Leasing Agent - ONLY performs activities related to the leasing of residential real property

32
Q

Affidavit of Non-Participation

A

A sworn statement made by an unlicensed person associated with or an owner or member of a licensed real estate corporation, limited liability company, partnership, or limited partnership attesting that the unlicensed person is not actively directing or engaging in real estate activities as part of that association or ownership.

33
Q

Compliance Agreement

A

An agreement entered into between a licensee and IDFPR in conjunction with an administrative warning letter.

34
Q

Credit Hour

A

A minimum of 50 minutes of instruction through a course approved by the Division in a classroom, by interactive webinar, online distance education, correspondence or a home study course.

35
Q

Continuing Education

A

Each person who applies for renewal of their license as a managing broker or broker must successfully complete 12 hours of real estate continuing education courses recommended by the Board and approved by the Division.

36
Q

Renewal Compliance

A

Under Illinois real estate law, licensee compliance with CE requirements must be certified according to the following provisions:

  • Each renewal applicant must certify, on the renewal application, full compliance with the CE requirements of the law
  • The Division has the authority (in the context of compliance audits) to require additional evidence demonstrating compliance with the CE requirements. It is the responsibility of each renewal applicant to retain or otherwise produce evidence of compliance.
  • In the context of a compliance audit, the Division shall accept verification submitted directly from an education provider on behalf of a renewal applicant as proof of CE compliance.
  • Failure to comply with CE requirements is a violation of the Act and may subject a licensee to a citation or such other discipline as set forth in the Act and Illinois real estate law.
37
Q

Rental Finding Services

A

Under the Illinois code, this is any business, which finds, attempts to find, or offers to find, for any person who pays or is obligated to pay a fee or other valuable consideration, a unit of rental real estate or a lessee to occupy a unit of rental real estate, not owned or leased by the business.

38
Q

Rental Finding Services Contract

A

Under Illinois law, this contract must include at a minimum, the following provisions:
- The term of the contract.
- The total amount to be paid for the services to be performed and a clear designation of the amount, if any, paid in advance of the performance of the services.
- A statement regarding the refund or non-refund of the fee paid in advance, which must include all of the following: The precise conditions, if any, upon which a refund is based; The fact that the conditions shall occur within 90 days from the date of the contract (and this must be uniform in type of a size larger than that used for the balance of the contract); The fact that the refund MUST be paid no later than ten (10) days after demand, provided the check has been honored.

39
Q

Grounds for Discipline

A

The Department may refuse to issue or renew a license, place a licensee on probation, suspend or revoke any license, reprimand, or take any other disciplinary or non-disciplinary action the Department deems necessary, or impose a fine as set forth in Article 20 of the Illinois Real Estate License Act of 2000 for any one or a combination of the following causes:
- Fraud or misrepresentation in applying for or obtaining a license or license renewal.
- Conviction of, plea of guilty or nolo contendere, to a felony or misdemeanor involving dishonesty, fraud, larceny, embezzlement, or obtaining money, property or credit by false pretenses, in Illinois or any other state or jurisdiction.
- Inability to practice with reasonable judgment, skill or safety as a result of physical illness, including but not limited to, deterioration through the aging process or loss of motor skill, or mental illness or disability. (The Department can suspend the license, insist on a physical examination, and require the licensee to participate in rehab prior to reinstating the license).
- Conducting real estate business in a retail establishment if not separated from the main retail business in a separate and distinct area.
- Disciplinary action of another state or jurisdiction if at least one of the grounds for discipline is the same as or equivalent to one of the grounds for discipline in Illinois.
- Engaging in real estate activity without a license or after the licensee’s license or temporary permit was expired or while the license was inoperative

40
Q

The Department may take Disciplinary Action for…

A
  • Cheating on or attempting to subvert a licensing exam or continuing education exam.
  • Aiding or abetting an applicant to subvert or cheat on a licensing exam or continuing education exam.
  • Advertising in a way that is inaccurate, misleading, or contrary to the Act.
  • Making substantial misrepresentation or untruthful advertising.
  • Making any false promises that are likely to influence, persuade or induce.
  • Pursuing a continued and flagrant course of misrepresentation or making of false promises through licensees, employees, agent, advertising, or otherwise.
  • Using misleading or untruthful advertising, or using trade name or insignia of membership in a real estate organization when the licensee is not a member.
  • Acting for more than one party in a transaction (acting as a dual agent) without written notice to all parties.
  • Representing or attempting to represent a broker other than the sponsoring broker.
  • Failure to account for or remit moneys or documents coming into his/her possession that belong to others.
41
Q

Practicing Real Estate Without a License

A

Any person who is found working or acting as a managing broker, real estate broker, real estate salesperson, or residential leasing agent or holding himself or herself out as a licensed sponsoring broker, managing broker, real estate broker, or residential leasing agent without being issued a valid existing license is guilty of a Class A misdemeanor.

On conviction of a second or subsequent offense, the violator will be guilty of a Class 4 felony.

42
Q

Illinois Human Rights Act

A

In addition to the classes protected under the federal laws, Illinois has added these classes: - Age
- Ancestry
- Marital Status
- Military Status
- Sexual Orientation
- Order of Protection Status
- Unfavorable Discharge from Military Service in connection with employment, real estate transactions, access to financial credit, and the availability of public accommodations

43
Q

Chicago Fair Housing Ordinance

A

Source of income was added to the already existing federal and state protected classes. Any broker who fails to comply with any of the provisions of this ordinance, will be punished by a fine in any sum

44
Q

Illinois Affordable Housing Act

A

Came into effect on January 1, 2004. The purpose is to increase the supply for low and moderate income families in every jurisdiction. The act requires all areas meet at least 10% compliance level.

45
Q

Ad Billboards in Illinois

A

Ads with human models showing all one race, all able-bodied, all one gender are illegal.

46
Q

Illinois Prepayment Penalty

A

In Illinois, lenders are prohibited from charging borrowers a prepayment penalty on a fixed rate loan with an interest rate greater than 8% per year.

47
Q

Illinois Mortgage Foreclosures

A

Illinois statute holds that mortgage foreclosures must be accomplished through a court proceeding. That means that Illinois is a judicial foreclosure state.

48
Q

Equitable Right of Redemption in Illinois

A

The right to redeem property between the time of default and the foreclosure sale. The right is exercised within seven months after the date of service on the borrower or after first publication date, whichever is later.

49
Q

Statutory Right of Redemption in Illinois

A

There is NO statutory right of redemption in Illinois.

50
Q

Statutory Right of Reinstatement

A

An option available when the borrower wants to cure the default (bring payments up to date) and reinstate the loan as if the loan had not been accelerated at all.
- Can be exercised for 90 days after service of summons or publication date.
- May be exercised only once every 5 years.
- If reinstatement occurs, the lender must dismiss the suit and the mortgage continues in effect as if no foreclosure had been undertaken.

51
Q

Real Estate Contract Legal Action

A

In Illinois, the time limit is six years

52
Q

Earnest Money in Illinois

A

According to the Illinois Real Estate License Act of 2000, sponsoring brokers who are responsible for earnest money deposits for property sales (and security deposits for leases) MUST ESTABLISH escrow accounts in which to deposit the funds they have been given.

53
Q

Statutory Month Variation Method

A

A proration method allowed by Illinois. With this method, the yearly charge is divided by 12 to determine a monthly amount. The monthly charge is then divided by the actual number of days in the month in which the closing occurs. The final number is the daily charge for that month

54
Q

Property Management Agreements

A

Under Illinois law, there must be a written property management agreement between the property owner and the broker in a property management relationship.

Illinois Real Estate Exam Prep (11 decks)

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