Many license law questions will be answered at DFPR’s website.

If you have legal questions, are an Illinois sponsoring broker and a member of the Illinois Association or REALTORS, you may use the IAR Legal Hotline by calling Betsy Urbance at 800-952-0578 (9 am- 2:30 pm).  You may also email her at BUrbance@iar.org.

Remember that every case is a little different. You may want to consider asking for an "advisory letter" from DFPR or seek your own legal council (always a good idea!)

The following are recent questions asked in class that might be on interest to you, or needed additional research:

NOTE: Links have been moved to "FAVORITE LINKS" tab

Bloomington Ethics Class Students

I emailed both Bruce Aydt and Lynn Madison who are experts on the Code and they doing the Ethics training sessions annually for IAR. Bruce was also chair of NAR's Professional Standards Committee. They both agreed that both parties should be aware that an agent is getting paid from both sides, but the amount would not have to be disclosed. Here is a quote from Bruce:

"I have never believed that Article 7 requires the amount to be disclosed – just the fact that compensation is being received by the agent from both buyer and seller.  If the seller asks how much, I think it’s still appropriate to say that the amount is a confidential amount as part of the buyer’s agreement with the buyer’s agent."

From Lynn:

"I certainly agree with Bruce in that it says all parties and not just your clients. 

My personal thoughts are that it's somewhat like our requirement in Illinois Lic Law that requires we disclose to both parties if we are getting a referral fee to avoid a dual agency.  In many cases it is irrelevant to one of the parties that we're getting it but the license law didn't list the times when we have to and when we don't have to disclose it - we just do it all the time.  Same here, I think."

 

ETHICS (FROM EDWARDSVILLE CLASS)

Under Standard of Practice 1-15, does a listing agent have an affirmative obligation to disclose the existence of multiple offers to buyers' agents, or must they ask?

If you read that section thoroughly, it says "in response to inquires". Thus, there is no affirmative obligation to disclose multiple offers unless asked.

Keep in mind that the listing agent must always keep the seller's best interest in mind. If the listing agent and the seller have discussed this issue, and the seller is lead to believe that all buyers will be told when there are multiple offers, then it would be a good idea for the listing agent to disclose, even if not asked, as that is what the seller expects.

ADVERTISING ISSUES

 

Is is allowable to use "Clairemont Team Realtors" as a name for my team or as a website URL?

Answer from Laurie Janik at NAR:


Please let them know that "Clairemont Team Realtors" is not permitted, but "Team Clairemont Realtors" would be OK. The rule is that members can use the term Realtor adjacent to their name or the name of the brokerage business.  Since Clairemont is their name, they can use "Team Clairemont REALTORS".

There is a company in my area that will put "virtual furniture" in photos and virtual tours. Would this be legal?

From IAR legal staff:

I think this is misleading unless there is language added to the photos/video to explain that this home is “virtually staged” and that it is vacant in reality.  In other words the licensee must adequately disclose that this is not an accurate depiction of the current condition of the property or the condition of the property prior to being vacant. You might even need to invite interested buyers to view the property in real life to see it as it is.  I can see with increased capacity to do these things that they will be done; but there are still license law/ethical duties to present a true picture.  Without qualifying language, this will be a violation of the true picture requirement of both license law and REALTOR Code of Ethics.

Is it ok to have a website named "AnyCityMLS.com"?

Based on the new case interpretation from NAR, regarding Standards of Practice 12-10 and 12-12, the answer would be "no". A URL or domain name should not contain "MLS", unless that is part of the real estate company's name. It is considered misleading, as the public might assume it is an official website for a local MLS.

Would an email address, such as "mls@JoeSmith.com" be unethical, based on the new Code of Ethics case interpretation?

There is no definitive answer here, according to NAR. Article 12 does not specifically reference email addresses, however it does mandate a "true picture" in all representations. Cases such as these would obviously be decided by a hearing panel, should a complaint me filed.

My company name is "Realty Connections".   Is putting "www.RealtyConnections.com" in an ad sufficient to cover me for showing the company name in said ad?

According to DFPR, the answer is "NO"

A licensee, who wishes to do some "flipping" wants to advertise "I buy homes". This venture is not in conjunction with the sponsoring broker- it is done on his own. Would the advertisement require disclosure that he is a licensee?

Yes! There would need to be some sort of disclosure of the licensee's status. Refer to section 10-30 c-2-B of License Law

Can I put a "www.bobjones.com" bumper sticker on the back of my car to advertise my website, without using my broker's name?C

According to my sources at DFPR, this would probably be ok, as long as there is no indication that he is offering real estate services. However, remember that when licensees engage in practices that are new, on the edge, or provocative, it often draws the attention and scrutiny of their colleagues. Thus, complaints may be filed, although unfounded. For those reasons, many may opt to take the path of least resistance and include the sponsoring broker's business name.

DISCLOSURE ISSUES

If a transaction falls through based on an inspection, are the seller and listing agent required to reveal those defects to a subsequent buyer?

Yes. The sellers should adjust the seller disclosure sheet, unless they have the problems repaired.
If the problems are NOT repaired, the listing agent MUST disclose those items, even if the seller doesn't.

A buyer has a home inspected and that inspection reveals lots of problems. The buyer wants out of the transaction, based on the report, so a copy is given to the seller. The seller puts the house back on the market and reveals the defects. Can the seller show a subsequent buyer the report, or is it "owned" by the first buyer?

Per Betsy Urbance: "If a buyer gives the seller a copy of the report, I assume the seller can use it for his information. However, my guess is that the inspector has limited the scope and permissible use of the report to the buyer who paid for it, and there will be language in the report to that effect. That is one concern. In addition, it is quite possible that the inspector has a copyright on the report, either at common law or by registration. Thus, if the seller were to copy or in some way distribute this report without the consent of the inspector, he may be violating the inspector's copyright."

Some agents are putting in their listing remarks "No Internet Lenders". Is this legal?

Response from Betsy Urbance: I do not think this is something that the listing agent could legally require by adding in the MLS remarks section. If the listing agent is suggesting to his seller client that Internet lenders not be used, he should be careful that he is presenting information to his client accurately and fairly with non-biased information. It is the seller's decision. So, if a remark like this appears in the MLS, it should be at the seller's direction and not according to the listing agent's discretion. Sellers are typically not bound by the license law or REALTOR Code of Ethics (unless of course they are actually licensees/REALTOR members).

REFERRAL FEES

Is it ok to send a gift card to someone unlicensed who sends me a lead that buys or sells?  Or, instead of sending them anything, they ask that I make a donation to their favorite charity

The answer is "NO" to the first question.

Someone can donate to charity all they want, but if the amount donated is tantamount to an unpaid referral fee, it simply cannot be done. 

Can a leasing agent receive a referral fee for referring a prospective home purchaser or seller to a salesperson or broker?

No. They could only receive referral fees for referring prospective residential tenants to other leasing companies or landlords. That fee would also have to be paid through the sponsoring broker.

Is it legal to give away prizes, food and hold drawings to increase my attendance at a broker open house?

This is a tough question and I can't even get DFPR and legal counsel to agreed! The issue is whether attendance at a broker open house constitutes a "licensed activity". If it does, then technically all compensation must flow through the sponsoring broker. My advice: stick to giving out food. If you have a cash drawing, the safe way is to make the check payable to the sponsoring broker.

For certain, there could also be a problem with drawings under Illinois gaming laws. The risk is probably minimal as long as the prize is small.

LICENSING AND RENEWAL

I am working for a property manager doing leasing activities. Do I need a license?

Maybe. If you are an employee of the owner of the property, you would be exempt. Also, if you are an employee of a property manager AND live on the premises you help manage, you are exempt as a resident manager. Note that you have to be an EMPLOYEE, not an independent contractor.

If you do need a license, you could get a regular salesperson license (45 hours of class), or you could also get a leasing agent license (15 hours of class), which allows you to do just residential leasing activities. I offer both classes in Bloomington. Check my schedule under "Prelicense".

 

Can I have an Illinois real estate license, working for broker A, and also have a license in another state, working for broker B?

According to DFPR, the answer is yes, you could work for different brokers in different states, according to Illinois law. You should check with the other state involved, to be sure their law allows it.

 

An agent says he lists and sells a lot of lower priced homes. He thinks some lenders in the area aren't reputable and would like to have a list to give to buyer's agents saying "Buyers must use one of the following lenders". Or, "here is a list of our company's "approved" home inspectors. You must use one of these"

Response from Betsy Urbance: There are all kinds of potential issues here. If the agent is the listing agent only, then he should not be recommending these services to buyers anyway. If he is a dual agent, he might offer some suggestions if he has knowledge about reputable lenders and/or home inspectors. This is true if he is only the buyer's agent too.

If he is REQUIRING the use of particular service providers, then he is likely taking on a host of potential liability issues. If his brokerage business is affiliated with any of these services, he would also have RESPA issues if he were REQUIRING these services. Suppose, for example, the buyer agent requires that Home Inspector Z be use. Z misses a big defective condition and buyer is looking to sue someone. I would think the agent who required the use of Z would be buying into more potential liability than he should in the prudent practice of real estate brokerage. This does not mean that you can't make recommendations to reputable providers.

 

Should a company pay another brokerage company a co-op fee, if they discover that the agent who brought the offer was not properly licensed at the time?

If it is a FACT the agent was not licensed at the time, you would not pay their sponsoring broker on the theory that you would be knowingly aiding and abetting the unlicensed practice of real estate, which is illegal. If the facts aren't totally clear, time to contract DFPR!

 

Can Agent A be licensed in Illinois and also in another state, such as Arizona, by different brokers? Who would get referral fees if Agent A referred business out?

Yes, as long as Agent A is not licensed by reciprocity, he could be licensed in another state by different broker.Regarding the referral fees, I think you would have to look at where the agent was "working" at the time of the referral. It could also be handled through the broker's independent contractor agreement.

ENVIRONMENTAL

Is it true that Illinois has a radon disclosure law?

Yes. It went into affect January 1, 2008 and mirrors the lead base paint law. Sellers have to complete a form, disclose any test results and give an informational pamphlet on radon. There is NO requirement under this act to test or mitigate.

Is there a carbon monoxide detector law in Illinois?

The law toook effect on January 1, 2007 and generally requires a detector within 15' of all sleeping areas in dwellings that have any type of gas appliance. It will affect owner-occupants as well as tenants. Click here to see the full text of the new law.

Does Illinois have a Lead Based Paint Law?

Yes and there were some revision in 2007. It sets in place ways that some tenants can have their units tested by public healtofficials and requires posting of warning signs in the lobbies of buildings that have had mitigation notices issued. Click here for the complete story.

ESCROW

At closing, does the earnest have to go back to the buyer?

No. According to Rules section 1450.175-g, the money should be dispersed according to "the written direction of the principals" in the transaction. The settlement sheet would be considered "written direction" when signed by the buyer and seller. Thus, the money could go to whomever is agreed to by the parties.

 


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