What You Should Know About the Business Brokers Act

IAR’s  Commercial/Industrial Committee has had several recent discussions about who needs to be in compliance with registration requirements of the Illinois Business Brokers Act.

The Business Brokers Act of 1995 requires any person living in Illinois to be registered as a business broker with the Illinois Secretary of State Securities Department (unless exempt under the law) if they:

  • Receive a commission or other compensation from another person to procure a business or assist in the procurement of a business.
  • Negotiate offers, buy, sell, or otherwise deal in options on businesses, or assists or directs the procurement of prospects intended to result in the purchase, sale, exchange of a business.
  • Advertises or represents themselves as a business broker.

There is a specific exemption in the Business Brokers Act that states that a licensed real estate broker is not required to register as a business broker as long as the business transactions take place on “an incidental basis.”

The Business Brokers Act also states that in any transaction in which real estate is the dominant element of the business transaction, a real estate brokerage license would be required to broker the transaction.

In the Administrative Rules of the Act (Section 140.51), the term “dominant element of a transaction” means:

  1. If 50 percent or more of the purchase price or 50 percent or more of the net asset value of the business being sold is real estate;
  2. If real estate is an integral part of the business being sold.
  3. If real estate is the single largest part of the transaction.

For more information:  http://www.cyberdriveillinois.com/departments/securities/busbroker.html

 

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About Jon Broadbooks

Jon Broadbooks is Director of Communications for the Illinois Association of REALTORS®. He supervises and carries out the implementation of the communications programs for the Association. He directs and supervises the Communications staff. He is responsible for coordinating and implementing the public relations and media relations efforts for the Association and acts as spokesperson and liaison to the statewide news media. He serves as editor of online and print content for IAR communications including the Illinois REALTOR® magazine and e-newsletters. He conducts IAR spokesperson training seminars and oversees the operation of website development for the Association.