Unite 5: Brokerage
When would a broker not be able to legally claim compensation regarding the use/no use of a contract?
A. A broker who causes or completes such an action without a contract or without having been promised payment is a volunteer and may not legally claim compensation. B. Courts may prevent the real estate broker from receiving a commission if the real estate broker knew the buyer was unable to perform.
What are the duties of a licensed personal assistant?
A. A licensed assistant can set up and host open houses, deal more extensively with clients, actively show houses, and assist in all aspects of a real estate transaction. In other words, a licensed assistant can perform any activity that any licensee is permitted to perform
What is a personal assistant? What are the various roles involved?
A. A personal assistant, also known as a real estate assistant or professional assistant, is often a combination office manager, marketer, organizer, and facilitator with a fundamental understanding of the real estate industry.
What is a policy and procedures manual?
A. A policy and procedures manual is a written document outlining the operation of the brokerage.
Who is considered a ready, and willing buyer?
A. A ready, willing, and able buyer is one who is prepared to buy on the seller's terms and ready to take positive steps toward the consummation of the transaction. B. Once a seller accepts an offer from a ready, willing, and able buyer, the real estate broker is entitled to a commission.
What is required from a broker by the federal government regarding SS and income taxes?
A. A sponsoring broker is required by the federal government to withhold Social Security tax and income tax from wages paid to employees.
What are the responsibilities of a sponsoring broker?
A. A sponsoring broker may authorize a managing broker to issue sponsor cards in the name of the sponsoring broker. B. Likewise, the sponsoring broker may delegate other duties, such as assigning the escrow account bookkeeping duties to a qualified company employee or independent contractor and delegating authorized individuals to sign on behalf of the sponsoring broker. C. Ultimately, the sponsoring broker is responsible for all activities, whether performed by him or delegated.
What rules must be followed in order to avoid additional fines from the CAN-SPAM Act?
A. Additional fines are provided for commercial e-mailers who violate the rules and do any of the following: • "Harvest" e-mail addresses from Web sites or Web services that have published a notice prohibiting the transfer of e-mail addresses for the purpose of sending e-mail • Generate e-mail addresses using a "dictionary attack"—combining names, letters, or numbers into multiple permutations • Use scripts or other automated ways to register for multiple e-mail or user accounts to send commercial e-mail • Relay e-mails through a computer or network without permission—for example, taking advantage of open relays or open proxies without notification. Licensees in Illinois are subject to additional regulation in their use of commercial e-mail, under the Illinois Electronic Mail Act.
Within how many hours, days must managing brokers notify IDFPR on any changes of business address?
A. All managing brokers must notify IDFPR on business letterhead of any change of business address for any of the offices they manage within 24 hours of any change. B. Change of address filing is required for all offices and branch offices.
What does the allocation of customers or markets refer to? What does it lead to/prevent?
A. Allocation of customers or markets involves an agreement among real estate companies to divide their markets and refrain from competing for each other's business. B. Allocations may be made on a geographic basis, with real estate companies agreeing to specific territories within which they will operate exclusively. C. The division also may occur by markets, such as by price range or category of housing. D. These agreements result in reduced competition.
Is a employment agreement between the sponsoring broker and managing broker required?
A. An employment agreement between the sponsoring broker and managing broker is also required even if the managing broker is the sole owner in the sponsoring brokerage and regardless of the type of entity.
What are treble damages when refereeing to penalties sustained from anti-trust laws?
A. An individual who has suffered a loss because of an antitrust activity may sue for threefold the damages sustained. This is known as treble-damages. B. In addition, the injured party may recover the cost of the suit, including reasonable attorney fees.
What are the duties of a unlicensed personal assistant?
A. An unlicensed assistant may perform duties ranging from clerical and secretarial functions to answering phones.
Can a sponsoring broker impose uniform commission rates?
A. Any attempt to impose uniform commission rates are clearly a violation of antitrust laws. A sponsoring broker, however, may set the minimum commission rate acceptable for his own company.
What are the 2 types of licenses that will be issued?
A. Broker B. Managing broker
What happens if an employee (unlicensed personal assistant) does not meet safe harbor provisions of an independent contractor?
A. By definition, the unlicensed personal assistant does not meet the safe harbor provisions of an independent contractor and would likely need to be paid as a regular employee. B. If the safe harbor provisions do not apply, then the employer should review the IRS test, with the advice of a tax professional, to determine if the worker meets the criteria.
What are the different ways a licensee is compensated for their services?
A. Compensation can be in the form of a commission (computed as a percentage of the total sales price), a flat fee, or an hourly rate. B. The amount of a broker's commission is negotiable in every case.
Effective May 1, 2012, all managing broker licensees who are named as managing brokers with the Division must indicate what in their advertising?
A. Effective May 1, 2012, all managing broker licensees who are named as managing brokers with the Division must indicate this status on all advertising that includes their name. B. Those who are not named as managing broker with the Division, are not required to include their names. C. They may not represent or indicate that they are managing brokers, only brokers affiliated with the sponsoring broker.
What are the provisions associated with the Junk Fax Prevention Act?
A. Following are the provisions of the fax law: • Sets out guidelines for what constitutes an established business relationship (EBR) and reaffirms that EBR when customers pose exceptions to the ban on unsolicited commercial faxes • Does not place time limitations on EBRs • Requires companies to offer a free method by which fax recipients may opt-out of receiving future fax communications. The opt-out method must be available at any time of day, every day; and the opt-out information must be made available on the first page of the fax • Requires businesses to receive the customer's written or oral consent to send fax advertising, or in the case of new business relationships, to send only to those customers who have provided their fax numbers willingly to some other source with permission for such use by other parties (including the sender) • Permits businesses to send faxes to numbers that they had access to via an EBR prior to July 9, 2005, when the act became law • Requires businesses to receive direct consent from EBR customers for whom they did not already have fax numbers prior to the effective date of the legislation, or to obtain these numbers via some other source to which the EBR customer willingly provided them with permission for such use by other parties (including the sender)
Are licensees not allowed to contact anyone on the do not call registry? What are the exceptions? After how many months would they be able to continue making calls?
A. Fortunately, the law establishes specific guidelines for when licensees may contact consumers, even when they are listed in the National Do Not Call Registry. B. Licensees are permitted to call consumers with whom they have an established business relationship up to 18 months following the consumer's last payment, purchase, or delivery.
What is group boycotting?
A. Group boycotting occurs when two or more businesses conspire against another business or agree to withhold their patronage to reduce competition. Group boycotting is illegal under the antitrust laws.
What would occur after the death of a self sponsored broker? Can the brokerage still remain active?
A. IDFPR will allow the court to appoint a legal representative for the sole purpose of closing out the affairs of a deceased or disabled broker who was self-sponsored. B. The court order is honored until the real estate brokerage operation is closed but does not allow the brokerage to actively engage in the brokerage business.
What happens if a broker, leasing agent, licensed personal assistant terminate employment with the sponsoring broker?
A. If a broker, leasing agent, or licensed personal assistant terminates employment with the sponsoring broker for any reason, the licensee must obtain his license from the sponsoring broker, or managing broker, if so designated by the sponsoring broker. B. The sponsoring broker signs and dates the license, which indicates that the relationship has been terminated.
What would happen if a sponsored licensee had earned a commission but his employment had been terminated prior to the payment of the commission?
A. If a sponsored licensee had earned a commission but his employment had been terminated prior to the payment of the commission, the former sponsoring broker may pay the commission directly to the former associate, even if that former associate has a new sponsoring broker.
What request may be made to the IDFPR is a sponsoring/managing broker does or leaves a branch office?
A. If a sponsoring and/or managing broker dies or a managing broker leaves a branch office unexpectedly, a request may be made to IDFPR within 15 days of this development to grant an extension for continued office operations.
Why occurs between real estate listing and selling offices during a cooperative commission?
A. If another real estate office "brought in" the buyer, the concept of cooperative commission allows the listing broker to pay the selling broker the amount of cooperative commission advertised in advance on the multiple listing service (MLS) listing. B. This check is issued by the listing broker's office to the selling broker's office, and checks then are cut by each of these sponsoring brokers to any respective salespersons (or other brokers working within the firm) who were directly involved in the transaction.
If a commission is from a listing that has sold, who is paid first? Why whom?
A. If the commission is from a listing that has sold, the sponsoring broker of the listing firm is first paid by the seller. B. Then the sponsoring broker pays the sponsored licensee involved at the listing office and also pays the cooperating sponsoring broker at any other firm involved in the transaction. C. The cooperating sponsoring broker in turn issues the appropriate amount to the sponsored licensee involved at his office, based on their agreed-upon split.
What are the steps that need to be taken if a licensee is simply changing brokers? How many days is the permit valid for?
A. If the licensee is simply changing brokers, the new sponsoring broker must immediately complete a sponsor card (45-day permit) for the licensee to carry until a new license and pocket card (with the new firm's name indicated as a sponsor) arrives. B. The sponsoring broker prepares and sends a duplicate sponsor card to IDFPR for this transition period, along with the original endorsed license from the previous sponsoring broker within 24 hours of sponsorship along with the required fee.
What would occur if a transaction is not consummated, would the broker still be entitled to a commission? How?
A. If the transaction is not consummated, the real estate broker may still be entitled to a commission if the seller • had a change of mind and refused to sell, • had a title with uncorrected defects, • committed fraud with respect to the transaction, • was unable to deliver possession within a reasonable time, • insisted on terms, not in the listing, or • had a mutual agreement with the buyer to cancel the transaction.
In 2008, what additional clarifications did the FCC add to the Junk Fax Prevention Act?
A. In 2008 the FCC added the following clarifications to the law: • Senders have met the consent requirement if they buy the fax number(s) from companies who have obtained the information from published sources; however, if there are errors in the list, the sender could be held liable. • Senders must make a reasonable effort to ascertain whether recipients have given consent. • Senders are permitted to provide a Web site, which must be easily accessible and usable, through which recipients may opt-out of receiving fax communications.
In Illinois, it is illegal for a sponsoring broker to pay a commission to anyone other whom?
A. In Illinois, it is illegal for a sponsoring broker to pay a commission to anyone other than • licensees under that same sponsoring broker; or • another firm's sponsoring broker (cooperative commission) who then pays his own sponsored licensees involved. B. Fees, commissions, or other compensation cannot be paid to unlicensed persons for services that legally require a real estate license.
What are the benefits a employee might enjoy from a sponsoring broker?
A. In addition, employees might receive benefits such as health insurance, profit-sharing plans, or workers' compensation.
What type of information needs to be included in advertising's and marketing for emails?
A. In addition, the REALTOR® Code of Ethics requires REALTORS® to present a true picture in their advertising, marketing, and other representations including URLs and domain names. B. The obligation to present a true picture in representations to the public includes information presented, provided, or displayed on Web sites and that the information be current.
What are the responsibilities of a managing broker?
A. In any event, the managing broker is responsible for the supervision of all real estate activities performed by affiliated licensees. B. Additionally, each managing broker is responsible for record-keeping, maintenance of the employment agreements entered into with each sponsored licensee, and if escrow monies are maintained, the managing broker must comply with the laws governing that.
How is the sponsored licensee compensated during a cooperating transaction?
A. In cooperating transactions (usually stated as "co-op: X%" on the MLS sheet), the commission is paid by the sponsoring broker of the "list side" to the sponsoring broker of the "sell side," and then paid to the sponsored licensee who worked for or with the buyer. B. The listing sponsored licensee is similarly paid by the listing sponsoring broker.
In most cases, who would take over the management of the office during a sponsoring brokers death/leave?
A. In most cases, a licensed managing broker assumes the management of the office. B. The appointed licensee must sign a written promise to personally supervise the office operations and accept responsibility for the office until a permanent replacement is located.
What is the schedule, responsibilities of an independent contractor like compared to a en employee?
A. Independent contractors might operate on a more flexible schedule than that of employees, and a broker may determine what the independent contractors do (especially because the contractors represent the broker as the broker's agents) but cannot dictate how they do it. B. An independent contractor's income usually is commission based. Independent contractors are responsible for paying their own income taxes and Social Security taxes.
A licensee must meet three criteria set out by the IRS to be treated as an independent contractor for federal tax purposes, what are they?
A. Individual must hold an active real estate license; B. Individual must agree in writing not to be treated as an employee for federal tax purposes; and C. At least 90 percent of the individual's income must be derived from sales rather than hours worked.
What entity manages the do not call registry?
A. It is managed by the FTC and is enforced by the FTC, the FCC, and state officials. The registry applies to any plan, program, or campaign to sell goods or services through interstate phone calls. B. The registry does not limit calls by political organizations, charities, collection agencies, or telephone surveyors.
When are sales commissions generally payed out?
A. Most sales commissions are payable when the sale is consummated by delivery of the seller's deed. This provision is generally included in the listing agreement.
What are the two types of brokers that collect commission that then share it with licensees?
A. Only a licensed managing or sponsoring broker may collect a commission in Illinois; the managing or sponsoring broker then may share it with any licensees who are directly involved in or responsible for a given transaction.
Why is a policy and procedures manual beneficial?
A. Policies and procedures are extremely beneficial for the following reasons: • Establishing a clear understanding of the relationship between broker and sponsored licensees as well as administrative functions versus staff functions • Working to resolve conflicts before they come up • Building confidence that everyone knows what the rules are and how the company is supposed to operate • Giving guidance for many of the situations licensees face on a day-to-day basis
What is price fixing? Is it legal?
A. Price-fixing is the practice of setting prices for products or services rather than letting competition in the open market establish those prices. B. In real estate, price-fixing occurs when competing real estate companies agree to set standard sales commissions, fees, or management rates or if they attempt illegal tying arrangements. C. Price-fixing is illegal.
What is the right way for real estate companies to set their fees and commission rates? What would this be based on?
A. Real estate companies must independently determine any minimum commission rates or minimum fees. B. These decisions must be based on a company's business judgment and revenue requirements without input from other real estate companies.
What are referral fees?
A. Referral fees paid between managing or sponsoring brokers for "leads," which are legal as long as the individuals are licensed.
Are real estate companies required to have a policy for do not call registry? Hay would be the penalty for not having this policy?
A. Regulators say that brokerage companies must have a do-not-call policy even if they do not engage in cold calling. B. A company that is a seller or telemarketer could be in violation of the law for placing any telemarketing calls (even to numbers not on the do-not-call registry) if the company does not have a policy for access to the registry.
Are licensees required to pay for advertised listings? How does this work?
A. Some sponsoring brokers require that sales staff pay all or part of the expenses of advertising listed properties; this may be subtracted from commissions by agreement or be billed separately to the licensee.
What are the fees that a sponsored licensed pays when they receive 100% of their commission?
A. Sponsored licensees in these offices pay a monthly service charge or desk fee to their sponsoring brokers to cover the costs of office space, telephones, and supervision in return for keeping 100 percent of the commissions from the sales they negotiate. B. The 100 percent commission sponsored licensee pays all of his own expenses.
What are the responsibilities of the sponsoring broker towards the IDFPR regarding employed brokers?
A. Sponsoring brokers are required to notify IDFPR in writing of the names and license numbers of all managing brokers employed by the sponsoring broker and the office or branch offices for which each managing broker is responsible.
How may a sponsoring broker pay their sponsored licensees commission?
A. Sponsoring brokers may pay their sponsored licensees their commissions directly or a licensee may form a solely owned corporation for the purpose of receiving compensation. B. That one-shareholder corporation cannot be licensed by the IDFPR. However, the licensee must file a copy of the certificate of incorporation issued by the Secretary of State with IDFPR.
What is the CAN-SPAM Act of 2003?
A. The CAN-SPAM Act of 2003 (Controlling the Assault of Non-Solicited Pornography and Marketing Act) governs correspondence by email and details consumers' rights regarding such emails. B. The CAN-SPAM Act targets e-mail used to promote or advertise products and services for commercial purposes.
What are the 3 categories of statutory non-employees?
A. The IRS has three categories of statutory nonemployees: direct sellers, licensed real estate agents, and certain companion sitters.
What are the 2 IRS requirements for statutory non-employees?
A. The IRS has two requirements for the statutory nonemployee category: • Payment or compensation for the service must directly relate to sales or other work output and not on the number of hours worked. • The workers have contracts specifying that they will not be treated as regular employees for tax purposes. B. Workers who meet these two requirements will be treated as self-employed or independent contractors.
What is the Junk Fax Prevention Act? What is the exception?
A. The Junk Fax Prevention Act of 2005 does not legalize unsolicited fax advertisements or solicitations but does allow for an established business relationship exception. B. As a general rule, a real estate licensee could not legally send an unsolicited commercial fax message without express written consent or without an established business relationship with the recipient.
What is the do not call registry?
A. The National Do Not Call Registry is a list of phone numbers of consumers who do not want to be contacted by commercial telemarketers.
What topics are included within the policy and procedures manual?
A. The Real Estate License Act of 2000 requires that "every brokerage company or entity, other than a sole proprietorship with no other sponsored licensees, shall adopt a company or office policy dealing with topics" such as; • the agency policy of the entity; • fair housing, nondiscrimination, and harassment; • confidentiality of client information; and • advertising.
What is a written employment agreement?
A. The agreement defines the employment and provides information about the relationship. The employment agreement must be dated and signed by both parties.
What determines the amount of compensation a licensee receives? Where can this amount be found under?
A. The amount of compensation a licensee receives from a sale is set by mutual agreement between the affiliated licensees and their sponsoring brokers. B. This compensation agreement is included in the employment agreement.
When is a sales commission usually earned?
A. The commission is usually earned when • a completed sales contract has been executed by a ready, willing, and able buyer; • the contract has been accepted and executed by the seller; and • copies of the contract are in possession by all parties.
How long is the extension granted by the IDFPR in case of death of managing broker? Who would be able to operate the office during that time?
A. The extension may be granted for up to 60 days. In the case of an owner's death, a representative of the estate could operate the office for up to 60 days.
What are the state license laws? How do they regulate the profession and protect the public? What is the purpose of these laws?
A. The laws achieve this goal by; • establishing basic requirements for obtaining a real estate license and, in many cases, requiring continuing education to keep a license; • defining which activities require licensing; • describing the acceptable standards of conduct and practice for licensees; and • enforcing those standards through a disciplinary system. B. The main objective of these laws is to make sure that the rights of purchasers, sellers, tenants, and owners are protected from unscrupulous or sloppy practices.
What are examples of common anti-trust laws?
A. The most common antitrust violations are price-fixing, group boycotting, allocation of customers or markets, and tie-in agreements, which are all prohibited by the Sherman Antitrust Act.
What are the penalties for violating anti-trust laws?
A. The penalties for violating antitrust laws are severe. For example, under the Sherman Antitrust Act, people who fix prices or allocate markets may be subject to a maximum $1 million fine and up to 10 years in prison. B. For corporations, the penalty may be as high as $100 million.
What is the term used to describe the relationship of a a sponsoring broker and an employee according to the IRS?
A. The relationship between the sponsoring broker and the person who performs services for that broker is viewed by the Internal Review Service (IRS), Employer's Supplemental Tax Guide, as a statutory nonemployee.
What is required from a sponsoring broker regarding unemployment compensations for an employee?
A. The sponsoring broker is also required to pay unemployment compensation tax on wages paid to one or more employees as defined by state and federal laws.
What is a sponsoring broker?
A. The sponsoring broker is the entity holding the company real estate license, whether the entity is an individual who operates as a sole proprietorship, partnership, limited liability company, corporation or registered limited liability partnership.
The sponsoring broker must send the Illinois Department of Financial and Professional Regulation (IDFPR) a copy of the terminated license within how many days?
A. The sponsoring broker must send the Illinois Department of Financial and Professional Regulation (IDFPR) a copy of the terminated license within two days of the termination or be subject to discipline for failure to do so.
What are anti-trust laws?
A. These laws prohibit monopolies and any contracts, combinations, and conspiracies that unreasonably restrain trade—that is, acts that interfere with the free flow of goods and services in a competitive marketplace.
What are the supervisory duties of a managing broker?
A. These supervisory duties include the following: • Implementation of office policies and procedures established by the sponsoring broker • Training of licensees or unlicensed assistants • Assisting licensees as necessary in real estate transactions • Supervising escrow accounts over which the sponsoring broker has delegated responsibility to the managing broker in order to ensure compliance with the escrow account provisions of the Act • Supervising all advertising of any service for which a license is required • Familiarizing sponsored licensees with the requirements of federal and state laws relating to the practice of real estate • Compliance with the rules for licensees and offices under his supervision
What are tie-in agreements?
A. Tie-in agreements are agreements to sell one product only if the buyer purchases another product as well. B. The sale of the first (desired) product is "tied" to the purchase of a second, less desirable, product. C. The penalties for violating antitrust laws are severe.
What needs to occur in order to be considered the procuring cause of a sale?
A. To be considered the procuring cause of a sale, the broker must have started or caused a chain of events that resulted in the sale. B. For example, activities such as conducting open houses, placing advertisements in the newspaper, and showing the house to the buyer are considered procuring cause.
What is needed in order to be eligible to receive a sales commission?
A. To be entitled to a sales commission, an individual must be • a licensed real estate broker, • the procuring cause of the sale, and • employed by the buyer or the seller under a valid contract.
What must be done in order to avoid getting penalized for the do not call registry?
A. To successfully avoid penalties ("safe harbor"), the seller or telemarketer must have the following: • It has written procedures to comply with the do-not-call requirements. • It trains its personnel in those procedures. • It monitors and enforces compliance with these procedures. • It maintains a company-specific list of telephone numbers it may not call. • It accesses the national registry every 31 days before calling any consumer and maintains records documenting this process. • It must show that any call made in violation of the do-not-call rules was the result of an error.
Since April 30, 2012 who is considered a sponsored licensee?
A. Until April 30, 2012, sponsored licensees may include those holding a salesperson's license or a broker's license.
When must the managing broker inform the licensee about a renewal? What would happen to any undelivered renewal forms?
A. When a managing broker receives a renewal application form from IDFPR, the managing/sponsoring broker must notify the licensee of the receipt in person within seven days or by registered or certified mail or some other form of signature delivery within ten days. B. The notice will inform the licensee that any undeliverable renewal form will be returned to IDFPR.
Is a real estate assistant required to have a real estate license?
A. While an assistant does not need to have a real estate license, she is allowed to perform many more duties if holding a real estate license.
What are the requirements for the CAN-SPAM act?
A. • False or misleading header information is banned. An e-mail's "From," "To," and routing information—including the original domain name and e-mail address—must be accurate and identify the person who initiated the e-mail. • Deceptive subject lines are prohibited. The subject line cannot mislead the recipient about the contents or subject matter of the message. • E-mail recipients must have an opt-out method. You must provide a return e-mail address or another Internet-based response mechanism that allows a recipient to ask you not to send future e-mail messages to that e-mail address and requests must be honored. • Commercial e-mail must be identified as an advertisement and include the sender's valid physical postal address.
