Thursday, October 31, 2013

Year-End To-Do List

By Steve Bochenek, IAR Chief Legal Counsel

As this edition of the D.R. Legal News is the last one for 2013 it seemed appropriate to review some items that will be important for brokerage companies and their managers as of 2013 year-end. As part of their regular routine most companies look at year end issues and look ahead to what issues need to be addressed for the next year. Hopefully this article will help supplement some of those items that are already on your “to-do” list.

#1: Community Association Management
As the year-end approaches one of the first items you need to review is whether your company participates in community association management. If so, one or more of those licensees sponsored by your company or employed at your company already has a community association manager license. This is the license required by the Community Association Manager Licensing and Disciplinary Act if an individual or entity participates in community association management for a third party and for compensation. Community associations can be a condominium complex, cooperatives, townhouse association, single family residential subdivision or developments that encompass a mix of these. In particular, a community association is an association established which an owner of a unit is required to belong as a condition of ownership and which association has the authority to impose assessments or other costs that could become a lien on a unit. As indicated, this could be a condominium association, a homeowner’s association in a subdivision, a townhouse association or lake or recreational area association. In addition, the association must have more than 10 units within the association or there is an exemption for the individual or entity managing such an association.

The Illinois General Assembly adopted legislation during 2013, subsequently signed by the Governor, which is now Public Act 098-0365. This Public Act amends the Community Association Manager Licensing and Disciplinary Act (“CAM Act”). One of the principal amendments to the CAM Act is to require any entity that provides community association management services to have an individual or individuals who have a “supervising community association manager” license. The term “supervising community association manager” is defined by the CAM Act to mean “. . . an individual licensed as a community association manager who manages and supervises a firm.”
The supervising community association manager license is required to be obtained by an individual acting for an entity by January 1, 2014. The amendments to the CAM Act do not appear to require an individual who is a sole proprietor to obtain the supervising community association manager license.

The amendments to the CAM Act generally require that an additional 10 hours of education is required prior to obtaining this license. However, this additional education requirement is excused for an individual “. . . holding a real estate manag(ing) broker license in good standing issued under the Real Estate License Act of 2000.” Generally, an application must be filed, a fee paid and an examination passed in order to obtain the supervising license. However, there is a provision in the amendments to the CAM Act that indicates that a person can bypass the examination requirement if they can provide “. . . satisfactory evidence to the Department of qualifying experience or education, as may be set forth by rule, including without limitation, evidence that he or she has practiced community association management for a period of 7 years.”  As of the drafting of this article, there is no indication on the website for the Illinois Department of Financial and Professional Regulation that the rules dealing with qualifying by experience or education have been promulgated.

The amendments to the CAM Act go on to provide that no “. . .corporation, partnership, limited liability company, or other legal entity. . .” can provide community association management services without completing the appropriate application, paying the fee and providing evidence that the firm has a licensed supervising community association manger “. . .to supervise and manage the firm.”  In addition, the amendments provide that no supervising community association manager can act for more than one firm.

#2: Broker License Renewal Deadline April 30, 2014
The second licensing issue for consideration is more routine, but no less important. As I am sure you are well aware the broker license renewal under the Real Estate License Act of 2000 (“RELA”) is required by April 30, 2013. Obviously, this will be an item for you to educate your sponsored licensees on as to their responsibility to obtain the renewed license. It is surprising the number of individuals who believe that simply obtaining the required continuing education in a timely manner results in a renewal of the license. The appropriate application and payment of fees still needs to be made to the Department in order for your sponsored licensees to renew their licenses. For further information, the Illinois Association of REALTORS® (“IAR”) has a page on its website that lists the requirements for renewal of a broker’s license. Link here for the 2014 Broker Renewal Checklist and Q&A.

#3: Termination Date for Brokerage Agreements
Another items for year-end consideration is a slight change made to the RELA affecting the termination date for brokerage agreements. In particular, if your company has commercial listing agreements, property management agreements or farm management agreements you will want to take note of this change. Oftentimes these types of agreements roll over from year to year unless terminated by one of the parties. However, the RELA requires brokerage agreements, such as these, to have a definite termination date. A legislative change made to the RELA, which is effective January 1, 2014, provides that in lieu of an automatic termination date a brokerage agreement can provide that the brokerage agreement will automatically renew unless the owner gives written notice to the broker within 30 days prior to any contract year end that the owner wishes to terminate the brokerage agreement. If you have agreements such as the commercial listings, property management or farm management agreements you may wish to review those and determine whether a change is appropriate to come into compliance with this new provision of the RELA.

#4: Hands-Free Cell Phone Use while Driving
As of January 1, 2014 only hands-free cell phone use is permitted while driving a motor vehicle. Many of your sponsored licensees and employees may already use hands free cell phones while driving. However, you may well want to consider including in your office policies a requirement that your employees and sponsored licensees comply with this new statutory requirement. For those individuals not already using hands-free cell phones while driving you may want to make them aware of methods to use that will allow hands-free cell phone use or software that may be available that will allow for hands-free sending and receiving of such communications as e-mails and text messages.

#5: Concealed Carry
The concealed carry law in Illinois is already in effect but the right to carry concealed firearms was delayed to allow the Illinois State Police six months to adopt rules and to allow for training and obtaining permits for concealed carry. There are issues that you will need to consider in connection with this new legislation. One consideration for you in the operation of your business is whether you will allow concealed carry in your office or offices. The statute is clear that if you own the property in which your office is located that you can prohibit concealed carry in your office. It is not clear from the statute that a lessee can prohibit concealed carry within their office.

If you are a lessee of the building in which your office is located and want to prohibit concealed carry you should post the required signage at the entrance to your building or office space. If someone wants to question your authority to post such a sign that would be an issue that would then need to be dealt with at a later date. Also, you may want to have a discussion with your sponsored licensees as regards their discussing this issue with the owners of properties listed with your company.

The question will be whether the owner prohibits or allows concealed carry on the property they own. A form of sign has been published which indicates that an owner of property does not permit concealed carry on their property. Although residential owners do not need to post such a sign they may choose to do so just to inform third parties that you may be showing through the property. Also, you may want to consider including a note or a comment on the multiple listing service information indicating whether concealed carry is permitted.

#6: Insurance Coverage
There are always clean-up issues at year end that you or your company needs to address. One of these may be insurance coverages for your company. In particular, you may be reviewing errors and omissions insurance for your company. You should note that CNA, through Capital Professional Insurance Managers, is offering a new policy form effective November 1, 2013. You may well want to check that new policy form to determine what coverages are available or have been added. In addition, IAR hosted a legal webinar on October 24 discussing some of the aspects of the new policy. If you missed that webinar, it is also available on the Association website for your consideration.

#7: Policy Review: Document Retention, Destruction & Electronic Information
One last item you also ought to consider is what documents can be destroyed. In this regard you need to be aware of your company’s policy on document retention or destruction. It is a good practice to have such a policy and not to retain document or files that can be destroyed. At the same time it would be wise to look at what policies your company has in place regarding the protection of electronic information. As more and more information is stored electronically the easier it often becomes for that information to fall into the wrong hands. This is particularly the case if sensitive information or client information is stored on portable devices such as smart phones, laptops and thumb drives.

The items mentioned in this article are not exhaustive but hopefully they provide you with some useful suggestions as to matters you will want to deal with prior to year end. 

Copyright Illinois Association of REALTORS®. This content cannot be reprinted in parts or in its entirety without expressed written consent to the Illinois Association of REALTORS®.

 

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