The following outline highlights select changes to the recently published proposed rules that correspond to and clarify the Real Estate License Act (RELA). This is not a complete summary of the proposed changes. A full review of the proposed rules is necessary to understand all of the changes and their impact on the industry. It also is important to know the use of the term “offices” throughout the text means virtual and physical offices. Additionally, the use of the term “in writing” includes physical or electronic documents or signatures. 

Termination of Sponsorship (1450.115)

• Upon termination of a sponsorship by a sponsoring broker (“SB”), the SB shall immediately notify the terminated licensee, and within 24 hours notify the Division.
• If a licensee initiates termination from an SB, the licensee shall notify the Division within 24 hours, and immediately notify the SB.

Required Information of Applicant or Licensee to Division (1450.150)

• Each licensee shall provide the Division notice of change of physical office location or virtual office website or digital platform.

Residential Leasing Agents (“RLA”) (1450.220 and 1450.240)

• Application for RLA license by examination
  • Applications shall be submitted to IDFPR with proof of completion of the required examination.
  • Department shall issue/or deny application for residential leasing license within 30 days of receipt of application.
• Residential Leasing Agent Permit
  • Under RELA Section 5-5(d), a person engaging in leasing residential real estate may engage in residential leasing activities for a period of 120 consecutive days without being licensed if they first obtain a residential leasing agent permit.
  • A sponsoring broker associating with an RLA shall submit to the department all previously required information under this section and must also certify that the RLA will not work for more than 120 consecutive calendar days without being issued an RLA license.
  • A person shall not practice under an RLA permit more than one time.

Broker Continuing Education/Managing Broker Education (Section 1450.450 and Section 1450.540)

• Each broker is required to complete 12 CE hours during the current term of the license and the total may be taken any time during the renewal term.
  • Failure to comply with CE requirements shall subject a licensee to citation provisions under new Section 1450.960.
    • No hearing-CE will be completed or not.
    • Past due completion will require paying citation fine and proof of CE completion.
    • In event of an error, licensees will be allowed to provide proof of completion-no hearing required.
    • If licensee cannot or did not certify compliance with CE, they may submit evidence of compliance within 60 days along with paying a fine. A license will be inactive until evidence of compliance with CE requirements are submitted and all fines are paid to the Department.
    • If a licensee certified compliance of CE requirements with the Department and cannot prove compliance, they will be subject to the formal discipline process under Section 20-20 of the Act.

Licensing of Corporations, LLC’s, Partnerships and Limited Liability Partnerships (Section 1450.600)

• These entities shall not be granted a license if a non-participating owner, member, manager, partner or officer is currently barred from real estate practice because of a suspended or revoked license.

Places of Business, Offices and Virtual Offices (1450.610)

• (1450.610(a)) Licensee’s place of business shall be an office or business location of the licensee’s sponsoring broker (“SB”). The place of business may be in the SB’s physical office or may be a virtual office, i.e. a website.
• A SB must maintain a list of all office locations (physical or virtual) with the Department.
• Virtual Offices (1450.610(d))
  • To operate a virtual office (without a dedicated office space or fixed physical location) the SB must be able to demonstrate licensees are:
    • Engaged in licensed activities;
    • Offering real estate services;
    • Holding out to the public they are engaging in licensed activities;
    • Maintaining electronic files securely (including escrow records) in same format they were generated, sent or received;
    • Able to make secure electronic files accessible to Department for inspection;
    • Maintaining electronic files related to special accounts for a minimum of 5 years;
    • Backing up electronic files monthly.
• Virtual office shall have digital infrastructure to facilitate the transaction of business, communications, advertising and real estate services through a virtual office website, URL or other digital platform inviting general public to transact business. The virtual website, URL or digital platform shall:
  • Be registered with the Division,
  • Display current registry of all sponsored licensee and license numbers (see Section 1405.730),
  • Display city/geographic location and state where real estate services are offered,
  • Display contact information for Designated Managing Broker (DMB) (name, phone number, email address)
  • If a sponsoring broker has multiple DMBs the contact information must be provided for each as well as names /license numbers of the licensees, they supervise,
  • Maintain a secure intranet or secure portal accessible by employees, independent contractors, licensees and upon request the Division:
    • The intranet/portal must include electronic records (including escrow) securely stored in same format they were generated, sent or received,
      • Physical documents converted to electronic records may not be altered in content,
    • Must include an updated registry of sponsored licensees, their DMB’s, identification of additional office locations, and licensees associated with those offices.
• Virtual offices must comply with all advertising requirements under Section 1450.715 and 1450.720. 

DMB Responsibilities and Supervision (1450.705)

• DMB’s shall notify Division within 24 hours of any change of business offices they manage.
• General DMB responsibilities include:
  • Implementing and training on company policies and procedures of the DMB,
  • Training sponsored licensees and unlicensed assistants,
  • Supervising and assisting licensees in real estate transactions,
  • Supervising any special accounts for they have been delegated responsibility,
  • Supervising all advertising,
  • Familiarizing sponsored licensees with federal and state laws/ordinances that relate to licensed real estate activities,
  • Compliance with Section 1450.705 by office, licensees, unlicensed assistants under their management.
• DMB supervisory duties related to new broker licensees who have not completed 45 hours of post-license education:
  • Direct oversight and management of escrow moneys (including earnest money and security deposits).
    • DMB must have an established procedure for delivery from new broker licensee to DMB or with DMB’s oversight, to DMB’s accountant or office manager so that escrow money will be deposited by the next business day following the transaction or after receipt according to the terms of the contract,
    • DMB is directly responsible for handling and oversight of electronic funds transfers.
  • Direct involvement and oversight during contract negotiations:
    • Allowing for oversight by physical or electronic means that can be demonstrated to the Department in event of audit or investigation.
  • Direct supervision/approval of advertising or marketing by new broker licensee:
    • Allowing for oversight by physical or electronic means.
  • New broker licensees who have not completed 45-hour post-license education must not bind sponsoring broker to contracts, including brokerage agreements.

Advertising (Team Names) (1450.715)

• Inherently misleading team names that imply a stand-alone company as opposed to a team are prohibited (including but not limited to): “company”, “realty”, “real estate”, “agency”, “associates”, “brokers”, “properties” and “property”. However, if these terms are followed by the word “team” they could be used.
• Advertising must contain the SB’s legal name or assumed name and it must be as large or larger than the team name or that of a sponsored licensee.
• Advertising that meets the following “tests” shall be considered compliant with this section:
  • The font size used for the letters in the SB’s name is as large or larger than the letters used in the team name or individual licensee name,
  • The area, in terms if height and width containing the SB’s name, is as large or larger than the area, in terms of height and width, than that if the team name or individual licensee name, or
  • Any logo, emblem, label, trademarked image, or similar identification incorporating the SB’s name, is as large or larger than that of the team name or individual licensee name.

Digital or Electronic Advertising and Communication (1450.720)

• Note that all electronic advertising has added language that requires posting the city and state of a physical office or a direct link to the SB’s virtual office website or digital platform.
• A URL or domain name is not considered advertising, but it must not be used for improper purposes such as phishing or misdirecting traffic in order to mislead consumers.

Office Registry Requirements (1450.730) 

• Proof of licensure for all sponsored licensees must be readily available to the public in the SB’s physical office or available through electronic means provided by the SB,
• For virtual offices this requires prominently displaying a registry of all sponsored licensees on the virtual website or digital platform.

Employment/ Independent Contractor Agreement (1450.735)

• SB’s must have signed and dated written employment or independent contractor agreements for every sponsored licensee that are also provided in physical or electronic format to the sponsored licensee.
• Employment or independent contractor agreements must be maintained for five years after the broker licensee is no longer with the SB (1450.755(a)(4)).

Unlicensed Assistants (“UA”) 1450.740

• Updates to list of activities which a UA can engage in found in this section; also making it clear that a UA cannot perform licensed activities (as defined by term “broker” in RELA Section 1-10).  

Escrow Records (1450.750) 

• SB must report loss or destruction of escrow records to the Department within 48 hours by mail or email.

Disclosure of licensee status (1450.765)

• Licensee must disclose prior to initiating a transaction.

Unprofessional conduct (1450.900)

• Expanded to include accessing a property or granting permission to access a property without proper authorization. 

Continuing Education Licenses (1450.1145)

• A CE instructor who holds a CE instructor license may only teach elective courses. A pre-license instructor may teach pre-license, broker management or any elective CE courses.

Citations for non-compliance with CE (1450.960)

• The Division will conduct audits to verify compliance with CE requirements and issue citations noting the deficiency to licensees (copying the DMB and SB). Upon receipt of a citation, a licensee shall have 60 days to submit evidence of compliance and pay any fines. The Rules at this section outline the licensee’s opportunity for a hearing and potential discipline and fines.