10 ways to know if you need a real estate license to manage property in Illinois

IAR gets thousands of calls a year for legal guidance. One hot topic off the association’s Legal Hotline was property management, which, when you do it for another person and for compensation, requires a properly sponsored real estate license.

The question: Must I have a real estate license to engage in property management activities?

The answer: To the extent that those activities are included in the Illinois Real Estate License Act of 2000 (the Act) at Section 1-10 under the definition of “Broker,” and you are doing the activities for another and for compensation, you will be working within the scope of your real estate license.

The list of activities taken from the definition of Broker under the Act is:
(1) . . . rents or leases real estate.
(2) Offers to . . . rent or lease real estate.
(3) Negotiates, offers, attempts or agrees to negotiate the . . . rental or leasing of real estate.
(4) Lists, offers, attempts or agrees to list real estate for . . . lease . . .
(6) Supervises the collection, offer, attempt or agreement to collect rent for the use of real estate.
(7) Advertises or represents himself or herself as being engaged in the business of . . .  renting or leasing real estate.
(8) Assists or directs in procuring or referring of leads or prospects, intended to result in the . . . lease or rental of real estate.
(9) Assists or directs in the negotiation of any transaction intended to result in the . . . lease or rental of real estate.
(10) Opens real estate to the public for marketing purposes.
(11) . . . leases or offers for . . . lease real estate at auction.

Read the Legal Hotline Top 5.

What typical property disclosure forms are required for sales and lease transactions?

Don’t leave anything out when you are preparing an owner to sell a property. There are several forms required under various statutes. Here’s a rundown on the basic forms you need to be aware of.

  • One is the property disclosure form required under the Illinois Residential Real Property Disclosure Act which needs to be completed by the owner of residential property (from one to four dwelling units) to be sold in a transaction that is not otherwise exempt. This disclosure must be made even if the owner does not occupy the property.

The first question on the form asks if the owner has occupied the residence in the last 12 months. If the answer is “no,” it provides an indication to the prospective buyer as to the owner’s knowledge, or lack thereof, about the other conditions disclosed on the form.

The property disclosure form is not required in lease transactions. The key for licensees with this disclosure is to make sure the owner is aware of the form and his or her obligation.  Licensees should not be answering the questions on the form.

  • Another disclosure that must be made under federal law is the lead paint disclosure. This disclosure is required for sale or lease transactions of pre-1978 housing. There are very few exceptions if the property was built before 1978 and contains residential units.
  • The third type of required property disclosure is for radon in most residential sale and some residential rental transactions. The major exception for sale transactions is if the residential unit is on the third floor of a building or above.  Radon disclosure applies to residential properties containing four or fewer units.

In rental transactions, the radon disclosure does not need to be made unless there has been a radon test showing the existence of a radon hazard which has not been remediated. Once there has been a test showing that there is a radon hazard, then remediation by either the party that occupies the unit or by the owner would mitigate against any future radon disclosure.

For more questions and answers, check out the September edition of D.R. Legal News.

Seven facts REALTORS® should know about Illinois’ medical marijuana law

Do you know how the state’s pilot medical marijuana law will affect you and other members of your community?

You can get plenty of useful information from a September article in the D.R. Legal News, written by Lisa Harms Hartzler of Sorling Northrup Attorneys.  Hartzler examines a variety of aspects of the law that took effect Jan. 1, known as the “Compassionate Use of Medical Cannabis Pilot Program Act.”

Though you may hunger for more of her insights, you can whet your appetite with these seven tidbits:

Fact number 7 – Local governments can’t unreasonably interfere with the cultivation, dispensing and use of medical marijuana. However, the act allows reasonable local zoning ordinances that do not conflict with the law.

Fact 6 – Illinois law prohibits the location of a growing facility within 2,500 feet of a school or day care or residential zone.

Fact 5 – The medical marijuana business is expensive. A cultivation center state permit costs $200,000 and applicants must obtain a $2 million surety bond or escrow account. Add to this the costs of staffing, utilities and locating a facility for growing and processing.

Fact 4 – To legally use medical marijuana, individuals must have one of 40 debilitating diseases and obtain an ID card from the Illinois Department of Public Health.

Fact 3 – Landlords and property managers cannot refuse to lease or penalize a person who is legally authorized to purchase and use marijuana for medical purposes.  However, landlords and property managers can prohibit marijuana smoking consistent with existing smoke-free laws.

Fact 2 – Employers can’t refuse to hire an individual because he or she is a registered medical marijuana patient.

Fact 1 – Even with the change in Illinois law, the use of medical marijuana in “public” places is illegal.

What happens if I’m the designated buyer’s agent for two people seeking the same property?

Article 15 of the Real Estate License Act provides that a disclosure needs to be given by a designated agent to two or more buyers when contemporaneous offers are being made for the same property. This would apply both in a lease situation and in a purchase transaction. The policy behind this is that if a designated agent is representing two or more prospective buyers or tenants interested in making an offer on the same property at about the same time, then those prospective buyers or tenants have a right to know the designated agent is involved in both offers. The parties may then choose to continue to work with the designated agent or they can ask for other representation.

Check out other questions from the Legal Hotline’s Top 5.

Remember to join us tomorrow for Legal Webinar

If you’re available to listen, please join IAR Assistant Director Government Affairs Mike Scobey and Legal Hotline Attorney Betsy Urbance at 9:30 a.m. Tuesday for the Legal Webinar titled “What’s up in your backyard?”

Discussion will revolve around local government property rights, inspections, landlord licensing, business licensing and fair housing. Space for the presentation will be limited. Access it live through this link. Or, if you’re not able to listen to the live presentation, you can listen to a recording within 48 hours of its completion. Note: member login is required.