Illinois Real Estate Regulation: Brokers, Special Accounts & Records

Instructor: Kyle Aken

Kyle is a journalist and marketer that has taught writing to a number of different children and adults after graduating from college with a degree in Journalism. He has a passion for not just the written word, but for finding the universal truths of the world.

There is a substantial amount of legislation for real estate brokers under the Illinois Real Estate Act. This legislation can differ from federal law, so it is important to understand local regulation.

Illinois Real Estate Act

There are various laws, rules, and regulations that can affect brokers in the state of Illinois. These regulations are set by the Illinois Real Estate Act. Let's examine some of these laws and regulations.

Managing Brokers

A managing broker is a broker who has supervisory responsibilities over another licensee or more than one licensee. There is quite a bit of legislation for managing brokers. Let's discuss some of the most important laws and regulations for managing brokers. First and foremost, any managing broker must have a special managing broker's license. If they have just become a managing broker, they have a maximum of ninety days to attain the managing broker's license. There is an initial fee of 150 dollars for this kind of license and then an annual fee of 100 dollars. One hundred and sixty five hours of educational credit are required to get a managing broker's license. After completing the education, an individual must apply for a license and examination. If they fail the exam, then they must retake the educational requirements to take the exam again. Managing brokers must also take six hours of continuing education yearly.

A managing broker that employs other managing brokers is known as a sponsoring broker and they must submit any and all managing broker certification numbers to the Division ('The Division' refers to the Illinois Department of Financial and Professional Regulation, Division of Real Estate).

A managing broker has several responsibilities as noted by the Illinois Real Estate Act:

  • Distribute sponsor cards (can delegate to another managing broker)
  • Notify about the loss of a managing broker within 15 days
  • Inform licensees of renewal applications in seven days by mail or ten days by signature restricted delivery service
  • Notify the Division of address changes
  • Indicate managing broker status in marketing/advertisements
  • Supervise activities of licensees and unlicensed assistants
  • Institute written office policy and oversee compliance
  • Have copies of license in any and all office buildings under the broker's management

These laws differ from national requirements. Though national and state requirements inherently protect the buyers and sellers, they differ in terms of things like grace periods, renewal procedures, and flexibility or statutes.

Special Accounts

Special accounts are covered under the Real Estate License Act of 2000 enacted by the Illinois Department of Financial and Professional Regulation. Any sponsoring broker who accepts escrow money must deposit it and maintain it in a special account, also referred to as an escrow account. This must be done totally separate from any and all other business or personal accounts and must be done through a federally insured depository. There can not be any interest earned on these accounts unless required by law or if the principal(s) to the account specify this in writing. Sponsoring brokers can manage more than one escrow account at a time.

Examination of Records

An Examination of Records is a thorough investigation of the title history of a property. This begins with assurance that the seller is the current title holder then an examination of the whole history of the title. This can include mortgages, leases, chain of deeds, wills, any other actions that resulted in a change of ownership, and any other restrictive agreements or instruments that affected the title. With this process, the broker will first abstract any instruments showing a title separately, creating a chain of title. This action is not required federally but is required to be included within the sales contract in the state of Illinois.

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