In Illinois, the listing contracts most commonly in use are prepared by local REALTOR® associations and their attorneys. These forms may vary slightly from area to area.

Illinois law requires that the following disclosures be included with listing contracts.

  • Disclosure of material facts A broker must not withhold material facts concerning a property of which she has knowledge from any purchaser, prospective purchaser, seller, lessee, lessor, or other party to the transaction. Material facts are any facts on which a reasonable person would base a contractual decision.
  • Disclosure of interest A broker must disclose in writing to the parties to the transaction her status as a broker and any direct or indirect interest she has or may have in the subject property. For example, if the buyer or seller is a licensed broker, this must be clearly stated in the contract.
  • Disclosure of special compensation A broker is prohibited from accepting “any finder fees, commissions, discounts, kickbacks, or other compensation from any financial institution, title insurance company, or any other person other than another licensee, without full disclosure in writing of such receipt to all parties to the transaction.” Sponsored licensees receive any such compensation only through their respective sponsoring brokers.
  • Earnest money and purchaser default When any written listing includes a provision that the seller will not receive the earnest money deposit if the purchaser defaults, this fact must appear emphasized in letters larger than those otherwise used in the listing agreement.
  • Disclosure of property condition Seller disclosure of property conditions is required by law in Illinois. These disclosures normally cover a wide range of structural, mechanical, and other conditions that a prospective purchaser should know about to make an informed decision.
  • A Property Disclosure Report must be given to the buyer before an offer is made and accepted or the buyer will have three days in which to rescind the contract, based on any negative disclosures. In addition, a lead paint disclosure is required on any property built before 1978, and a radon disclosure is required of the seller.

Once a long-lasting agreement has been finalized and signed by the broker and seller, Illinois law prohibits the broker from making any addition to, deletion from, or alteration of the written listing without the written consent of the principal. The broker must return a true copy of the listing agreement, signed by the seller and by the sponsoring broker or managing broker, to the principal within 24 hours of execution.

Listing Agreement Content

There is no required state form for any real estate contract in Illinois. However, all written exclusive listing agreements must include;

  • the list price of the property,
  • the agreed-upon amount of commission and the time of payment,
  • the duration of the agreement, with a definite termination date clearly set forth,
  • the names of the broker and seller,
  • signatures of both broker and seller,
  • the identification of the property involved (address or legal description),
  • the duties of the listing broker,
  • a statement of nondiscrimination, and
  • a statement regarding antitrust.

Licensees may not permit blank spaces on their signed brokerage agreements. Where no information is to be inserted into the blank space, the Licensee should insert NA or draw a line through the blank space.

Type of listing agreement
The contract may be an exclusive-right-to-sell listing (the most common type), an exclusive-agency listing, an open listing, or a net listing (the last not recommended). The type of listing agreement determines the extent of a broker’s authority to act on the principal’s behalf. Most MLSs do not permit open listings to be posted in their systems.

Broker’s authority and responsibilities
The contract should specify whether the broker may place a sign on the property and advertise and market the property or utilize social networking through Facebook or other similar sites.

Another new major consideration, since the inception of Buyer Broker Representation in Illinois, is whether the broker is permitted to authorize buyers’ broker’s marketing efforts through an MLS and the Internet.

It should also address whether or not the broker may accept earnest money on behalf of the seller and the responsibilities for holding the funds.

Names of all parties to the contract
Anyone who has an ownership interest in the property must be identified and must sign the listing to validate it. If the property is owned under some form of co-ownership, that fact should be clearly established.

If a married couple is living in the listed property, both spouses must sign the listing, even if only one owns the property, in order to release homestead rights. If the property is in the possession of a tenant, that should be disclosed and instructions given on how the property is to be shown to a prospective buyer.

Brokerage firm
The brokerage company name, the sponsoring broker, and the designated agent of the sponsoring broker must all be identified.

Evidence of ownership
A warranty deed, title insurance policy, or abstract of title with an attorney’s opinion can be used for proof of title.

Listing price
This is the proposed gross sales price. The seller’s proceeds will be reduced by unpaid real estate taxes, special assessments, mortgage or trust deed debts, and any other outstanding obligations.

Real property and personal property
Any real property to be removed from the premises by the seller and any personal property to be included in the sale for the buyer should be noted and be explicitly identified in the subsequent purchase contract. Some items that may later become points of negotiation might include major appliances, swimming pool and spa equipment, fireplace accessories, storage sheds, window treatments, stacked firewood, and stored heating oil.

Leased equipment
It must be determined if leased equipment security systems, cable television boxes, water softeners, special antennas will be left with the property. If so, the seller is responsible for notifying the equipment’s lessor of the change of property ownership.

Description of the premises
In addition to the street address, the legal description, lot size, and tax parcel number (property index number or PIN) may be required for future insertion into a purchase offer.

The street address of the property (street address and unit number for a condo) is sufficient for listing agreements to be valid and enforceable under Illinois law. However, it is advisable to include the parcel number (or property index number, or PIN), and most listing agreements include a blank for it. This number can be acquired from the tax database.

Proposed dates for the closing and the buyer’s possession
These dates should be based on an anticipated closing date. The listing agreement should allow adequate time for the paperwork involved (including the buyer’s qualification for any financing) and the physical moves to be arranged by the seller and the buyer.

The closing
An attorney, title company, or escrow company should be considered and retained as soon as possible. A designated party will be needed to complete the settlement statements, disburse the funds, and file the proper forms, such as documents to be recorded and documents to be sent to the IRS.

In Illinois, the attorney, title company, and lender dominate closing issues.

All liens must be paid by the seller or be assumed by the buyer at the closing. Identify as much information as possible about existing loans, such as the name and address of each lender, the type of loan, the loan number, the loan balance, the interest rate, the monthly payment, and if the loan can be prepaid without penalty. Determine if the buyer can assume the present loan, and if so, under what circumstances and if there is any possibility of seller financing.

Physical encroachments on the property (such as a fence) and their legal implications are questions best referred to an attorney, even if they were noted in the listing file.

Identify current zoning for the property.

Property taxes
Ask about current (or most recent year’s) property taxes and determine the amount of any outstanding special assessments and whether they will be paid by the seller or assumed by the buyer.

Home warranty program
In some situations, it may be advisable to offer a “home warranty” with the property. Skillful brokers are able to explain these warranties that often benefit both the seller and the buyer.

The circumstances under which a commission will be paid must be specifically stated in the contract. Negotiation of commission is a key discussion point in creating a listing contract. The commission amount is fully negotiable between parties.

By Illinois law, written listing agreements in Illinois must state that no change in the amount of the commission or time of payment will be valid or binding unless the change is made in writing and signed by all parties.

Antitrust wording
Any assertion that a “set” or “standard” commission exists violates antitrust laws. Any sponsoring broker is free to set a minimum commission that will be accepted within a given office, but there is no such thing as a standard commission. The contract should indicate that all commissions have been negotiated between the seller and the broker. It is illegal for commissions to be set by any regulatory agency, trade association, or other industry organization.

Termination of the contract
A contract should provide some way for the parties to end it and under what circumstances will the contract terminate?

In Illinois, if a listing agreement provides that, in the event of a default by a buyer, the broker’s full commission or fees will be paid out of an earnest money deposit, with the remainder of the earnest money to be paid to the seller, the provision shall appear in the listing agreement in letters larger than those generally used in the listing agreement.

Broker protection (“carryover”) clause
Brokers are well advised to protect their interests against possible fraud or a reluctant buyer’s change of heart. There are various circumstances under which a broker is entitled to a commission, for a specified amount of time, after an agreement terminated.

Warranties by the owner
The owner is responsible for certain assurances and disclosures that are vital to the agent’s ability to market the property successfully.

Indemnification (“hold harmless”) wording
The seller and the broker may agree to hold each other harmless (i.e., not to sue one another) for any incorrect information supplied by one to the other. Indemnification may be offered regardless of whether the inaccuracies are intentional or unintentional.

A client shall not be vicariously liable in Illinois, for the acts or omissions of a licensee in providing brokerage services for or on behalf of the client.

Nondiscrimination (equal opportunity) wording
The seller must understand that the property will be shown and offered without regard to the race, color, creed, or religious preference, national origin, family status, sex, age, or disability of the prospective buyer. Federal, state, and local fair housing laws protect a variety of different groups and individuals. For instance, on the state and local level, sexual orientation and source of finances are also often protected.

All Illinois written listing agreements must clearly state that it is illegal for either the owner or the broker to refuse to sell or show property to any person because of race, color, religion, national origin, sex, familial status, ancestry, citizenship status, age 40 and over, marital status, physical or mental disability, military service, unfavorable military discharge, sexual orientation, and order of protected status.

Minimum Services
All exclusive brokerage agreements must specify that the sponsoring broker, through its sponsored licensees, must provide the following required minimum services:

  • Accept delivery of and present to the client all offers and counteroffers to buy, sell, or lease the client’s property or the property the client seeks to purchase or lease
  • Assist the client in developing, communicating, negotiating, and presenting offers, counteroffers, and notices that relate to the offers and counteroffers until a lease or purchase agreement is signed and all contingencies are satisfied or waived
  • Answer the client’s questions relating to the offers, counteroffers, notices, and contingencies

This applies to listing (seller) agreements as well as buyer agency agreements

The signatures of the parties
All parties identified in the listing contract must sign the contract, including all individuals who have a legal interest in the property.

The date the contract is signed
This date may differ from the date the contract actually becomes effective (e.g., if a sponsored licensee takes the listing and then must have the sponsoring broker sign the contract to accept employment under its terms).

Additional information
Although not required on the listing agreement, the listing broker should also obtain any additional information that would make the property more appealing and marketable, such as neighborhood amenities. Such amenities might include information about schools, parks and recreational areas, places of worship, and public transportation.