Who Needs to Be Licensed? (Section 1-10)
It is illegal for anyone to act as a broker, managing broker, sponsoring broker or residential leasing agent without a real estate license issued by the Department. Any broker who performs any of the following services, either directly or indirectly, whether in or through any media or technology, for another and for compensation must have a real estate license:
- Sells, exchanges, purchases, rents, or leases real estate
- Offers to sell, exchange, purchase, rent, or lease real estate
- Negotiates, offers, attempts, or agrees to negotiate the sale, exchange, purchase, rental, or leasing of real estate
- Lists, offers, attempts, or agrees to list real estate for sale, lease, or exchange
- Buys, sells, offers to buy or sell, or otherwise deals in options on real estate or improvements thereon
- Supervises the collection, offer, attempt, or agreement to collect rent for the use of real estate
- Advertises or represents herself as being engaged in the business of buying, selling, exchanging, renting, or leasing real estate
- Assists or directs in the procuring or referring of leads or prospects intended to result in the sale, exchange, lease, or rental of real estate
- Assists or directs in the negotiation of any transaction intended to result in the sale, exchange, lease, or rental of real estate
- Opens real estate to the public for marketing purposes
- Sells, leases, or offers for sale or lease real estate at auction
- Wholesaling
Real Estate Wholesaling and the Law in Illinois
What is Wholesaling?
When a buyer enters into a purchase agreement with a seller, then the buyer sells the property or assigns the contract to another buyer at a higher purchase price before the first transaction closes, this is wholesaling. When the transaction closes, the first buyer profits on the difference of the transaction without any risk or ownership.
You now must have a real estate license in order to sell any equitable interest the agent has in the transaction. A real estate licensee must disclose to the seller of the property that they will assign the purchase agreement on the property to another buyer for a profit.
An individual or entity will need a broker’s license or a managing broker’s license if engaged in this pattern of business at least twice in a 12-month period.” (The full paragraph is in the IDFPR “Updates to the Real Estate License Act.
This is not the same as flipping houses. Flipping is when someone buys a property and takes ownership of the property. After doing some repairs or upgrades, the owner places the property back on the market. A real estate license is not required for flipping houses.
Unlicensed Agent Act (Section 20-22) Violations
Any person who is found working or acting as a managing broker, broker, or residential leasing agent or holding himself or herself out as a licensed sponsoring broker, managing broker, broker, or residential leasing agent, without being issued a valid active license is guilty of a class A misdemeanor and, on conviction of a second or subsequent offense, the violator shall be guilty of a class 4 felony. Effective August 9, 2019.
License Requirement Exemptions (Section 5-20)
The requirement for holding a broker, managing broker, sponsoring broker or residential leasing agent license does not apply to the following:
- 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 Article 1 definitions (This applies in the course of the management, the sale, or other disposition of their own [or their employer’s] property.)
- acting under duly executed and recorded power of attorney to convey real estate from the owner or lessor
- The services rendered by an attorney at law in the performance of 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 managing the property, if the apartment is her primary residence and if she is engaged in leasing activities of the managed property
- State and federal officers and employees or state government or political subdivision representatives performing official duties
- Any resident lesse of a residential dwelling unit who refers for compensation to the owner of the dwelling unit, or to the owner’s agent, prospective lessees of dwelling units in the same building or complex as the resident lessee’s unit, but only if the resident lessee (i) refers no more than 3 prospective lessees in any 12-month period, (ii) receives compensation of no more than $5,000 or the equivalent of 2 months’ rent, whichever is less, in any 12-month period, and (iii) limits his or her activities to referring prospective lessees to the owner, or the owner’s agent, and does not show a residential dwelling unit to a prospective lessee, discuss terms or conditions of leasing a dwelling unit with a prospective lessee, or otherwise participate in the negotiation of the leasing of a dwelling unit.
- A hotel operator who is registered with the Illinois Department of Revenue and pays taxes under the Hotel Operators’ Occupation Tax Act and rents a room or rooms in a hotel as defined in the Hotel Operators’ Occupation Tax Act for a period of not more than 30 consecutive days and not more than 60 days in a calendar year or a person who participates in an online marketplace enabling persons to rent out all or part of the person’s owned residence. Notwithstanding any provisions to the contrary, the Department and its employees shall be exempt from education, course provider, instructor, and course license requirements and fees while acting in an official capacity on behalf of the Department. Courses offered by the Department shall be eligible for continuing education credit.
Should a sponsoring broker’s license be revoked or rendered inactive, all licensees under that sponsoring broker will be considered inactive until such time as the sponsoring broker’s license is reinstated or renewed or the licensee changes employment. Expiration dates and renewal periods for each license are set by rule, and licenses can be renewed within 90 days prior to expiration upon completion of CE and payment of the required fees.
