September 2012 | D.R. Legal News
Special Report for IAR Members from the Illinois Department of Financial and Professional Regulation (IDFPR), www.idfpr.com
1. Licensees (and company) properly licensed. The sponsoring broker is to ensure that the correct type of licensure is obtained for their business as a sole proprietor; branch office; corporation; limited liability company; partnership. The sponsoring broker is also required to provide IDFPR with the appropriate documentation regarding the sponsorship of licensees for that business which would include the submission of a 45-day permit for those currently sponsored or copy of the terminated license for licensees no longer with that company. Statutory References: Act: Sections 5-15; 5-40; 20-20(a)(6) & 20-22; Rules: Section 1450.110
2. Written employment agreement with all sponsored licensees. The sponsoring broker must a have a written employment agreement with all sponsored licensees. All agreements are to be signed and dated by all parties. Each agreement shall include duties, supervision guidelines, compensation, duration and termination. The managing broker of the company is required to have an employment agreement with the corporation, limited liability company or partnership. A managing broker of a sole proprietorship is not required to have an employment contract. Statutory References: Act: Section 10-20(c); Rules: Section 1450.735
3. Brokerage Agreements/Listing Agreements – Includes defined termination date without automatic extension. The brokerage agreement shall have a defined date of termination with no condition for an automatic extension. Any written brokerage agreement containing such a provision for automatic extension shall be void. This includes commercial properties; property management agreements; lease agreements. Statutory References: Act: 10-25; Rules: Section 1450.770(d)
4. All advertising is accurate and truthful. The managing broker is responsible for supervising all forms of advertising. All advertising should be clear and not misleading. The managing broker is to ensure that all listing advertisements (including Internet) are updated according to the terms (or changes) to the agreement. Sold, closed, terminated or expired listings are to be removed within a reasonable amount of time. Statutory References: Act: Sections 10-30; 10-35; 20-20(a)(9)&(10); Rules: Sections 1450.715 & 1450.720
5. Dual agency – Prior informed written consent from buyer/tenant. A licensee may act as a dual agent only with the informed written consent of all clients. A licensee acting in a dual agency capacity in a transaction must also obtain a written confirmation from the licensee’s clients of their prior consent for the licensee to act as a dual agent in the transaction. Oftentimes the consent from the buyer/tenant is not obtained during this process. The managing broker is to ensure that for each transaction there is written (1) consent from seller/landlord; (2) consent from buyer/tenant; and (3) confirmation of previous consent from both seller/landlord and buyer/tenant. It is also important to note that a licensee may not serve as a dual agent in any transaction to which he or she or an entity in which he or she has an ownership interest is a party to the transaction. Statutory References Act: Section 15-45; Rules: Section 1450.820
6. Escrow – Reconciliation compares bank statement to journal and ledgers. For each escrow account, the managing broker is to maintain a journal with running balance; property ledger cards; broker’s fund ledger card (if applicable); and monthly reconciliation work sheets. Special accounts must have accurate reconciliation work sheets which compare the reconciled bank balance to the journal and open ledgers. The most helpful tool for the licensee who has deficiencies with special accounts is a booklet entitled “Escrow Account & Record Keeping Requirements”. This booklet contains samples of a journal, ledger card and reconciliation work sheet. Statutory Reference: Rules: Section 1450.750.