11-11.5
Licensees should be aware that records of escrow account transactions and reconciliations must be kept on file for at least
5 years
occurs when the licensee should have known that a statement about a material fact was false. If the buyer relies on the licensee's statement, the licensee is liable for any damages that result. Similarly, a licensee who accidentally fails to perform some act for instance, forgetting to deliver a counteroffer, may be liable for damages that result from such a negligent omission.
A negligent misrepresentation
The body of law on which Illinois agency is based is
Article 15 of the Real Estate License Act of 2000, as amended in 2010.
interpret the relationship between real estate licensees and their clients.
Both contract law and real estate licensing laws — in addition to the law of agency
The six common-law fiduciary duties may be remembered by the acronym COLD AC:
Care, Obedience, Loyalty, Disclosure, Accounting, and confidentiality
At the state level, ______ ___ is a general name for laws requiring law enforcement authorities to make information available to the public regarding registered sex offenders.
Megan's law ate level.Individual states decide what information will be made available and how it is to be disseminated. Commonly included information includes the offender's name, picture, address, incarceration date, and nature of crime. The information is often displayed on public sites but can also be published in newspapers and pamphlets or disseminated through various other means.
form shifts the responsibility for full disclosure from the real estate agent to the seller. It requires that sellers of one to four unit residential properties fill out property disclosure forms revealing any material defects they are aware of in the real estate for sale. The completed forms shall be given to buyers before an offer is made.
The Illinois Residential Real Property Disclosure form
Most states' license laws require that agents periodically report the status of all funds or property received from or on behalf of the principal. Similarly, most state license laws require that licensees give accurate copies of all documents to all affected parties and keep copies on file for a period of time. Illinois licensees are required to deliver true copies of all executed sales contracts to the people who signed them within __ hours. In Illinois, all funds entrusted to a licensee must be deposited in a special escrow account by the ____ business day following the signing of a sales contract or lease.
accounting, 24, next
A relationship in which a consumer has given consent (express or implied) to a real estate licensee to represent the consumer in a real property transaction. Consent may be given to a licensee directly or through an affiliated licensee.
agency
The individual who is authorized and consents to represent the interests of another person. In the real estate business, a firm's sponsoring broker is the agent and shares this responsibility with the licensees who work for them.
agent
An agent may not disclose personal, confidential information about her principal. However, known material facts about the property's physical condition or its environs must
always be disclosed
It is the licensee's duty to discover any material facts that may affect the property's value or desirability, whether or not they
are known to or disclosed by the seller. Any such material facts discovered by the licensee must be disclosed to prospective buyers. If the licensee should have known about a substantial defect that is detected later by the buyer, the licensee may be liable to the buyer for any damages resulting from that defect. The statute of limitations is one year for buyer action.
If a contract to purchase real estate is obtained as a result of fraudulent misstatements, the contract may
be disaffirmed or renounced by the purchaser. In such a case, the licensee not only loses a commission but can be liable for damages if either party suffers loss because of the misrepresentation. If the licensee's misstatements were based on the owner's own inaccurate statements and the licensee had no independent duty to investigate their accuracy, the licensee may be entitled to a commission, even if the buyer rescinds the sales contract.
An agreement, made verbally or set out in writing, for an agent or firm to provide brokerage services to a consumer and to receive compensation for providing those services.
brokerage agreement
Just as the agent owes certain duties to the principal, the principal has responsibilities toward the agent. The principal's primary duties are to comply with the brokerage agreement and cooperate with the agent. The principal must not hinder the agent and must deal with the agent in good faith. The principal also must compensate the agent according to the terms of the?
brokerage agreement
Agents must exercise a reasonable degree of ____ while transacting the business entrusted to them by the principal. Principals expect the agent's skill and expertise in real estate matters to be superior to that of the average person. The agent should know all facts pertinent to the principal's affairs, such as the physical characteristics of the property being transferred and the type of financing being used. If the agent represents the seller, care and skill include helping the seller arrive at an appropriate listing price, discovering and disclosing facts that affect the seller, and properly presenting the contracts that the seller signs. It also means properly marketing the property and helping the seller evaluate the terms and conditions of offers to purchase. An agent who represents the buyer is expected to help the buyer locate suitable property and evaluate property values, neighborhoods and property conditions, financing alternatives, and offers and counteroffers with the buyer's interest in mind. An agent who does not make a reasonable effort to properly represent the interests of the principal could be found by a court to have been negligent. The agent is liable to the principal for any loss resulting from the agent's negligence or carelessness. The standard of _____ will vary from market to market and depends on the expected behavior for a particular type of transaction in a particular area.
care
Under the common law of agency, an agent owes the principal the duties of
care, obedience, loyalty, disclosure, accounting, and confidentiality.
The agent's fiduciary relationship of trust and confidence means that the real estate licensee owes the principal.These ______ were not simply moral or ethical; they formed the common law of agency and now are the basis for statutory laws governing real estate transactions.
certain duties, duties
The person or entity that a licensee represents in a real property transaction.
client
the ______is the principal to whom her agent gives advice and counsel and a written agency agreement has been signed by the client and agent. The agent is entrusted with certain confidential information and has fiduciary responsibilities (sometimes called statutory responsibilities) to the principal.
client
In Illinois, all funds entrusted to a licensee must be deposited in a special escrow account by the next business day following the signing of a sales contract or lease. Commingling such monies with the licensee's personal or general business funds is illegal
commingaling
llinois no longer recognizes
common law agency.
The buyer's agent is the one to suggest the highest range of prices the buyer should consider, based on
comparable values and current market.
payment (monetary or otherwise) made to a person or entity for executing services for a client or customer.
compensation
is a key element of fiduciary duties. Client information obtained during the term of the brokerage agreement must be kept confidential. For example, when the principal is the seller, the agent may not reveal such things as the principal's willingness to accept less than the listing price or urgency to sell, unless the principal has authorized the disclosure. If the principal is the buyer, the agent may not disclose that the buyer will pay a higher price, is under a tight moving schedule, or other facts that might harm the principal's bargaining position.
confidentiality
A person or entity for whom an agent provides services, which are only to be provided by a licensee, or a person or entity who seeks such services from a licensee.
consumer
the practice of using those escrow funds as the licensee's own money, is illegal as well.
conversion
A person or entity for whom a licensee is providing services (excluding ministerial acts) but who is not represented by the licensee in an agency relationship.
customer
In contrast to a client , the ________ is entitled to factual information and honest dealings as a consumer but never receives advice and counsel or confidential information about the principal. The real estate licensee may provide ministerial acts to the customer but, as an agent, works for the client.
customer
The seller's disclosure form is a good guide to follow for what must be
disclosed to all parties by the listing side of a transaction.
It is the agent's duty to keep the principal informed of all facts or information that could affect a transaction. Duty of __________ includes disclosure of relevant information or material facts that the agent knows or should have known. The agent is obligated to discover facts that a reasonable person would feel are important in choosing a course of action, regardless of whether those facts are favorable or unfavorable to the principal's position. The agent may be held liable later for a mistake on these issues. .
disclosure
Furthermore, if the seller learns of a new problem after a contract is signed and up until closing,
disclosure must be made in writing to the buyer.
Illinois now recognizes both a seller agency agreement and a buyer agency agreement whereby one agent has a
fiduciary relationship with the seller and another agent has a fiduciary relationship with the buyer.
Any action brought under Article 15 must commence within two years after the person bringing the action knew or should have known of such act or omission. In no event can the action be brought more than
five years after the date on which the act or omission occurred. If the person entitled to bring the action is under the age of 18 or under legal disability, the period of limitation shall not begin to run until the disability is removed.
is the intentional misrepresentation of a material fact in such a way as to harm or take advantage of another person. That includes not only making false statements about a property but also intentionally concealing or failing to disclose important fa
fraud
These statutory duties, based on (but replacing) common-law duties, are set forth in
in Article 15 of the Real Estate License Act of 2000.
The seller has a duty to disclose any known ______ ______ that threaten structural soundness or personal safety.
latent defect
uyers have been able to either rescind the sales contract or receive damages when a seller fails to reveal known
latent defects
In Illinois, the ___ __ ______ defines the rights and duties of the principal and the agent. It applies to a variety of business transactions.
law of agency
refers to a strict, defined legal relationship.
legal agency
Disclosure forms are usually completed by the seller before he signs the
listing agreement or at the time of signing. Regardless of the seller's completion of the disclosure form, the seller's agent is required to disclose all material defects known to her, including in cases where the agent knows that the seller has misrepresented the extent or existence of property defects or has not fully disclosed them. An agent for a buyer must disclose deficiencies of a property as well.
The principal's interests come first, even above the self-interest of the agent. Agents must not consider how the result of negotiations will serve their own interests (for instance, by providing them with a higher commission); each agent must perform all services with the goal of promoting the principal's interests. By law, in all fifty states, agents are not permitted to buy property listed with them for their accounts or buy or sell property in which they have personal interest unless they have made that interest known to the principal or purchaser and received that party's consent. Illinois license law prohibits an agent from acting as a dual agent in any transaction to which the agent is a party (Buyer or Seller). The agent must be particularly sensitive to any possible conflicts of interest.
loyalty
is any fact that, if known, might reasonably be expected to affect the course of events.
material fact
Informative or clerical service provided by a licensee to a consumer; providing __________ ____ is not equivalent to active representation.
ministerial acts
The fiduciary relationship obligates the agent to act in good faith at all times, _______ the principal's instructions in accordance with the contract. However, that obedience is not absolute. The agent may not obey instructions that are unlawful or unethical. On the other hand, an agent who exceeds the authority assigned in the contact will be liable for any losses that the principal suffers as a result.
obeying, Obedience
In addition to the seller's duty to disclose latent defects, the seller's licensed real estate agent has an independent duty to conduct a
reasonably competent and diligent inspection of the property.
Insofar as real estate is considered, Illinois is a _________ ______ state that has replaced common-law duties with statutory duties.
statutory agency,
gency relationships in Illinois are governed under
statutory law
are those properties that society has branded undesirable because of events that occurred there. Stigma is the continuing negative association with or feeling about the property.
stigmatized property
Additionally, Illinois no longer allows the use of ___-______ in real estate transactions, where the representative of the buyer was a sub-agent of the seller
sub-agency
Article 15 of the Real Estate License Act of 2000 states that in dealing with specific situations related to disclosure, "no cause of action shall arise against a licensee for the failure to disclose:
that an occupant of that property was afflicted with HIV or any other medical condition or that the property was the site of an act or occurrence which had no effect on the physical condition of the property or its environment or the structures located thereon." no cause of action shall arise against a licensee for the failure to disclose a fact situation on property that is not the subject of the transaction." no cause of action shall arise against a licensee for the failure to disclose physical conditions, located on property that are not the subject of the transaction, that do not have a substantial adverse effect on the value of the real estate that is the subject of the transaction."
In Illinois, the ____ ______ _______ ___ __ _____ is given precedence in defining legal real estate agency concepts.
the Real Estate License Act of 2000
At the federal level, Megan's Law is known
the Sexual Offender Act of 1994 and requires persons convicted of sex crimes against children to notify local law enforcement of any change of address or employment after release from custody (such as prison or a psychiatric facility). The notification requirement may be imposed for a fixed period of time, usually at least ten years, or permanently.
Confidential information - Information given by a client to a licensee during the term of a brokerage agreement that :
the client requests (in writing or verbally) the licensee keep in confidence, relates to the client's negotiating position; could do damage to the client's negotiating position
The agency agreement usually authorizes the real estate licensee to act for
the principal
If the disclosure form is delivered after the offer has been accepted and if it has any negative disclosures, the buyer has
three days to cancel the contract.
Listing agents have no legal duty to disclose that a known sex offender resides in a property near a listed home, but skilled buyer's agents should be watchful for any signals of hard-to-identify issues. Sex offender location lists are public information, and a buyer's agent should refer a buyer client to such lists if asked. t/f
true
