If you have or plan to operate a virtual office, you should carefully review the proposed rules changes to the Real Estate License Act (“RELA”) regarding the issue of whether a licensee’s place of business can be in a physical office location or a virtual office.

When you consult with legal counsel regarding the proposed new RELA language, available in the Illinois Register, you should consider the following:

  • Virtual offices must be associated with an entity licensed to practice real estate with the Department;
  • All virtual and physical offices must be registered with the Department;
  • A virtual office, like a physical office, must have a designated managing broker (“DMB”) who has been named as such with the Department;
  • The Department must be provided an accurate physical address for the DMB (e.g. for service of process), correct phone number and correct email address for the DMB;
  • A virtual office must maintain secure electronic files maintained in the format where they were originally generated, sent or received;
  • All electronic files must be set up so they can be made accessible to the Department in the event of an audit or an investigation;
  • All electronic files must be backed up monthly;
  • Electronic records related to escrow accounts must be securely stored for a minimum of five years;
  • All agency and designated agency duties under RELA apply to agents operating out of virtual offices including the responsibility to protect the confidential information of clients; and
  • Physical sign requirements that apply to physical offices do not apply to virtual offices.

The following are required of the virtual office:

  • The website homepage must clearly identify the sponsoring brokerage company;
  • Any relevant contact information should be present;
  • Designated Managing Broker(“DMB”) must be presented on the website, and identified as such, and their contact information must be included;
  • Licensees registered with the sponsoring broker must be displayed; and
  • The city or geographic location and state where services are offered must be identified.

For more clarification on the virtual office, go to the proposed rules language at Section 1450.610.

It is important to remember all provisions of RELA apply to licensees operating from a virtual office just as they would to those operating out of a physical office, such as keeping files of required agency disclosures and records of transactions as set forth in Rules Section 1450.755.

Illinois REALTORS® legal team will provide members with more information about the potential impact on their businesses in the coming days.

The proposed changes will not go into effect until after a public comment period, which will take a minimum of 90 days (probably longer), review by the Joint Committee on Administrative Rules and then formal adoption.