The Real Estate Recovery Fund provides a means of compensation for actual monetary losses (as opposed to losses in market value) suffered by any person as a result of actions by a licensee or a licensee’s unlicensed employee:
- a violation of the Real Estate License Act of 2000, its rules and regulations, or
- act of embezzlement of money or property,
- obtaining money or property by:
- false pretenses,
- artifice,
- trickery,
- forgery,
- fraud,
- misrepresentation,
- deceit,
- discrimination.
Reimbursement from the Recovery Fund applies to situations causing cash losses (rather than the loss of market value) to the harmed party.
The fund may pay out a maximum sum of $25,000 to the wronged person, as ordered by the relevant county’s circuit court. This amount can include an additional payment for legal costs and attorneys’ fees of up to 15 percent of the total amount ordered as recovery for the improper conduct. The maximum fund liability of $100,000 must be spread equally among all co-owners. Interest is not paid on the recovery amount. Recovery sums will only be paid out in cases where valid judgments have been made and will not be paid out for violations of the Land Sales Act or the Time-Share Act.
If the licensee wishes to have their license reinstated, the licensee must reimburse the fund all fees plus interest. The interest rate is established by state statute.
Collection from the Recovery Fund (Section 20-90)
When a lawsuit may result in a claim against the Real Estate Recovery Fund, the Department must be notified in writing by the aggrieved person at the time the action is commenced against the licensee, specifically, within seven days of filing a suit against the licensee. Failure to notify the Department of the potential liability precludes any recovery from the fund. If the plaintiff is unable to serve the defendant with a summons, the Secretary may be served instead, and this service will be valid and binding on the defendant. Additionally, legal action must have commenced no later than two years after the aggrieved person knew of the acts or omissions that gave rise to possible right of recovery from the fund.
If a claimant recovers a valid judgment in any court against any licensee or unlicensed employee for damages resulting from an act or omission qualifying for coverage under the fund, the Department must receive written notice of the judgment within 30 days. The Department is also entitled to 20 days’ written notice of any supplementary proceedings, in order to permit the Department to participate in all efforts to collect on the judgment.
For a claimant to obtain recovery from the fund, all proceedings (including all reviews and appeals) must be completed. In addition, the claimant must show that she has attempted to recover the judgment amount from the licensee or unlicensed employee’s real or personal property or other assets and was either unable to do so or the amount recovered was insufficient to satisfy the judgment. The names of all licensees and other parties that are in any way responsible for the loss must have been named in the suit. If they were not, it may preclude recovery from the fund. Finally, the claimant must show that the amount of attorney’s fees being sought is reasonable.
When a judgment amount is paid from the Recovery Fund, the Department takes over the rights of the aggrieved party on this issue. She is required to assign all right, title, and interest in judgment to the Department. By this subrogation, any funds recovered on the judgment will be deposited back in the Recovery Fund.
Fund Losses Held Against the Licensee (Section 20-90)
When payment is made from the recovery fund to settle a claim or satisfy a judgment against a licensed broker, managing broker, or unlicensed employee, the license of the offending broker or managing broker is automatically terminated. The broker, or managing broker, may not petition for the restoration of her license until she has made repayment in full to the recovery fund of all awards made due to her actions, plus interest at the statutory annual rate. A discharge in bankruptcy does not relieve a person from the liabilities and penalties provided for in the Illinois Real Estate License Act of 2000.
Statute of Limitations (Sections 20-90 and 20-115)
A suit that may ultimately result in collection from the fund must be commenced within two years after the date the alleged violation occurred. The Department must initiate any action it plans to take against an individual licensee within five years of the violation.
Financing the Recovery Fund (Sections 25-35)
If at any time during the year the fund slips below $750,000, the Real Estate License Administration Fund is utilized to upgrade the level to a minimum balance of $800,000.
All recovery fund monies received from applications, renewals, and fines and penalties are deposited into the Real Estate Recovery Fund, and its sums may be invested and reinvested.
