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reproduced, stored in any retrieval system or transcribed in any form or by any means (electronic, mechanical, photocopy, recording or otherwise) without the prior written permission of the Real Estate Institute.
• A considerable amount of care has been taken to provide accurate and timely information. However, any ideas, suggestions, opinions, or general knowledge presented are those of the authors and other contributors, and are subject to local, state, and federal laws and regulations, court cases, and any revisions of the same. The viewer is encouraged to consult legal counsel concerning any points of law. This presentation should not be used as an alternative to competent legal counsel.
• This presentation is available exclusively for students enrolled in a course with Real Estate Institute.
• A relationship, either express or implied, in which a real estate broker or licensee enters into an agreement with a consumer to represent that consumer in a real property transaction.
According to Illinois Real Estate License Act, agents must perform the terms of the brokerage agreement and promote the best interests of the client by: • presenting all offers to and from the client in a
timely way, unless the client waives this duty• disclosing to the client known material facts
concerning the transaction, unless that information is confidential
• accounting in a timely way for all money and property received in which the client has, may have, or should have an interest in a timely manner
• Statements of opinion are permissible only as long as they are offered as opinions and without any intention to deceive.
• Statements of fact must be accurate.
• Exaggeration of a property’s benefits is calledpuffing. While puffing is legal, licensees must ensure that none of their statements can be interpreted as fraudulent.
• Negligent Misrepresentation occurs when the broker should have known that a statement about a material fact was false. If the buyer relies on the broker’s statement, the broker is liable for any damages that result.
• If a broker accidentally fails to perform some act, the broker may be liable for damages from such a negligent omission.
• If a contract to purchase real estate is obtained as a result of fraudulent misstatements, the contract may be disaffirmed or renounced by the purchaser. The broker can be liable for damages if either party suffers loss.
• If the licensee’s misstatements were based on the owner’s inaccurate statements and the licensee had no independent duty to investigate their accuracy, the broker may be entitled to a commission, even if the buyer rescinds the sales contract.
Munjal v. Baird & Warner held that a licensee has no duty to discover “latent material defects” in a property if a seller has not disclosed these defects to the broker prior to sale.
A latent defect is a hidden structural defect that would not be discovered by ordinary inspection. Buyers have been able to either rescind the sales contract or receive damages when a seller fails to reveal known latent defects.
In Illinois, Under Article 15 of the Real Estate License Act:
• “No cause of action shall arise against a licensee for the failure to disclose that an occupant of that property was afflicted with HIV or any other medical condition or that the property was the site of an act of occurrence which had no effect of the physical condition of the property or its environment or the structures located thereon.”
In Illinois, Under Article 15 of the Real Estate License Act:
• Listing agents have no legal duty to disclose that a known sex offender resides in a property near a listed home, but skilled buyers’ agents should be watchful of signals of hard-to-identify issues.
• Licensees are presumed to represent the consumer with whom they are working as the consumer’s designated agent, unless there is a written agreement between them specifying another relationship.
• The customer is entitled to factual information and fair and honest dealings as a consumer but does not receive advice and counsel or confidential information about the principal.
• The agent works for the client (principal) and with the customer.
In Illinois, consumers must receive the following disclosures no later than the time a brokerage agreement is entered into:• that a designated agency relationship will exist unless
there is a written agreement providing otherwise;• any other agency relationships available through the
brokerage;• the names of any designated agents; the amount and
manner of the broker’s compensation; and• whether or not the broker will share the
compensation with brokers who represent other parties in a transaction and disclosure of the amount to be paid to the cooperating broker.
• Upon discovering a latent defect in the property, the licensee should discuss the problem with the seller and then inform any prospective buyers of the defect.
• Upon discovering a latent defect in the property, the licensee should discuss the problem with the seller and then inform any prospective buyers of the defect.
Implied Agency Implied Contract Latent Defect Listing Agreement Material Facts Negligent Misrepresentation Principal Puffing Single Agency Special Agency Universal Agent
Whether a sponsored licensee is treated as an employee or an independent contractoraffects the structure of the sponsored licensee’s responsibilities and the sponsoring broker’s liability to pay and withhold taxes from the sponsored licensee’s earnings
The CAN-SPAM Act establishes requirements for sending commercial e-mail, spells out penalties for those who don’t comply, and gives consumers the right to have e-mailers stop sending messages to them.
The act does not legalize unsolicited fax ads or solicitation, but it does allow for an established business relationship exception.In general, a licensee may not legally send an unsolicited commercial fax message without express written consent or without an established business relationship with the client.
• Owners or lessors (whether individuals or business entities) or their regular employees who sell, lease, or otherwise deal with their own property in the ways described under Section 1-10 in the course of the management, the sale, or another disposition of their or their employer’s property
• Attorneys-in-fact acting under duly executed and recorded powers of attorney to convey real estate from the owner or lessor or performing their duties as attorneys-in-fact
• The services rendered by an attorney at law in the performance of his or her duties as an attorney at law
• Any person acting as receiver, trustee in bankruptcy, administrator, executor or guardian or while acting under a court order or under the authority of a will or a testamentary trust
• A resident apartment manager working for an owner or working for a broker employed to lease the property, if the apartment is his or her primary residence
• Any officer or employee of a federal agency, state government or other political subdivision performing official duties
• Any multiple listing service or other information exchange of real estate information
• Railroads and other public utilities regulated by the state or their subsidiaries or affiliates and the employees of such organizations
• Any medium of advertising that routinely sells real estate advertising but provides no other related services
• Any resident lessee of a residential dwelling unit who refers no more than three prospective tenants in any 12-month period and who receives no more than $5000- or two-month’s rent (whichever is less) in compensation (or finder’s fees)
• Any person who is licensed without examination under Section 10-25 of the Auction License Act for the limited purpose of selling or leasing real estate at auction
• A hotel operator who is registered with the Illinois Department of Revenue and pays taxes under the Hotel Operator’s Occupation Tax Act and rents rooms for a period of not more than 30 consecutive days and not more than 60 days in a calendar year
Nonresidents and License by Reciprocity• A broker licensed in a state that has a reciprocal
licensing agreement with Illinois may be issued an Illinois license without examination under certain conditions, but they must successfully take the Illinois portion of the state exam.
• Illinois has reciprocity with Colorado, Connecticut, Florida, Georgia, Indiana, Iowa, Nebraska, and Wisconsin.
Licensees may be subject to disciplinary action if they:
• make a false or fraudulent representation in attempting to obtain a license;
• have been convicted of a felony or of a crime involving dishonesty, fraud, larceny, embezzlement, obtaining money, property or credit by false pretenses or by means of a confidence game;
• have been convicted of a crime that constitutes a felony under Illinois law;
• have been convicted of a felony in a federal court;
• perform or attempt to perform any act as a licensee in a retail sales establishment in a space not separated from the main retail business;
• have been subjected to disciplinary action by another state, if at least one of the grounds for that discipline is the same as or equivalent to a cause for discipline in Illinois;
• have engaged in real estate activity without a valid license (an additional civil penalty of up to $25,000 may be imposed for this violation); or
• attempt to subvert or cheat on the licensing exam or assist someone else in doing so.
• Cheating on continuing education courses or examinations.
• failing to account for or to remit any monies or documents belonging to others;
• failing to maintain and deposit in a special non-interest bearing account, separate from a personal or other business accounts, all escrow monies belonging to others;
• failing to make all escrow records and related real estate business documents available to IDFPR;
• failing to furnish on request copies of all documents relating to a real estate transaction;
• failing by a sponsoring broker to submit termination documentation in a timely manner;
• demonstrating unworthiness or incompetency;• commingling the money or property of others with their own;• employing any person on a purely temporary or single-deal
basis as a means of evading the law regarding payment of commission to nonlicensees;
• permitting the use of their license as a broker to enable a salesperson or an unlicensed person to operate a real estate business;
• engaging in any conduct, whether or not specified in the license act, that constitutes dishonest dealing;
• displaying a sign on any property without the written consent of an owner or advertising that a property is for sale or for rent without the owner’s consent;
• failing to provide information requested by IDFPR within 30 days of the request;
• disregarding or violating any provision of the license law, rules, or regulations;
• assisting any individual or business entity in disregarding the license act;
• advertising any property for sale, or advertising any transaction of any kind relating to the sale of property, without clearly disclosing the name of the firm with which the licensee is associated or evidence of the broker’s occupation;
• influencing or attempting to influence a prospective seller, purchaser, occupant, landlord, or tenant so as to promote the continuance or maintenance of racially and religiously segregated housing or to retard, obstruct, or discourage racially integrated housing;
• engaging in any act that constitutes a violation of the Illinois Human Rights Act
• inducing any party to a contract of sale or listing agreement to break the contract for the purpose of substituting a new contract or listing agreement with a third party;
• negotiating a sale, exchange, or a lease of real property directly with an owner or lessor without authority from the listing broker if the licensee knows that the owner or lessor has a written exclusive listing agreement with another broker;
• where the licensee is an attorney, acting as both the lawyer and the licensee for either the buyer or the seller in the same transaction;
• A sales plan in which a sponsoring broker enters into a contract with the seller, promising to purchase the property for a specific price if the property is not sold within an agreed period of time.
• In Illinois, a sponsoring broker must:• Provide written details• Offer evidence of financial resources• Market the listing in the same manner as other
listings• Not purchase the property until the listing
Provides a means of compensation for actual monetary losses suffered by any person as a result of a violation of the license act, rules, or regulations.
Financing The Recovery Fund • Fines, penalties, and application funds are
deposited in the State Treasury in a specific Real Estate Recovery Fund.
• If the balance goes down to $750,000, the Treasurer will cause sufficient funds to increase the balance to $800,000 with monies from the Real Estate License Administration Fund.