Senate Bill 571/House Bill 5358, a joint effort by the Illinois Association of REALTORS and the Illinois Department of Financial and Professional Regulation, amends the Real Estate License Act of 2000 to substantially update and revise the Act in several key areas, including essential upgrades to the educational components of the Act. SB 571/HB 5358 is strongly supported by IAR, and we urge a YES vote.

Educational Components/Licensure Requirements

Perhaps the most important changes to the Act are in the educational and other requirements for persons to obtain or maintain a license.

• The changes are much-needed . . . Among the states, Illinois educational and other licensure requirements are substantially lower than most other states. In short, IAR, in conjunction with the DFPR, have identified additional education as an essential component needed to ensure that licensees are adequately qualified to represent consumers in real estate transactions.

• The changes are well-thought-out . . . it is essential to strike a balance between setting educational standards high enough to make sure that consumers are represented by knowledgeable licensees, while not erecting a barrier to entry into the profession. This bill, the product of ongoing discussions within the industry and with the IDFPR for the past several years, strikes a proper balance.

The changes

• Increases the coursework requirement for an initial salesperson's license from 45 hours to 90 hours, 15 of which must be in practicum/situational coursework. The thought here is to significantly increase a salesperson's practical knowledge about essential elements of the real estate transaction before they are out in the field representing clients.

• Establishes a requirement for 30 hours of continuing education for newly licensed salespersons, to provide essential additional training to the new licensee when they are first out in the field practicing. Many industry leaders indicate this is key to the success of new licensees in giving clients adequate representation. This 30-hour continuing education requirement is also required of EXISTING salesperson licensees in the first renewal term after enactment of the bill to enhance the quality of client representation of existing licensees as well.

• Provides that an applicant for a broker's license must have practiced as a salesperson for two out of the last three years. Broker licensees are authorized to run a real estate business, enter contracts with consumers, and supervise licensees. Under current law, someone can be a salesperson first, then a broker, or they can go directly to broker licensure without any practical experience.

• Provides that the coursework requirement for a broker applicant will be 45 hours, all focused on supervisory and administrative issues. This will be in addition to the 120 hours of pre/post continuing education for a salesperson, as the salesperson's license will be a pre-requisite, as referenced above. In short, then, the total pre-license coursework requirement for brokers will go from the current 120 hours, to 165 hours.

• Clarifies that there is a 6-hour, DFPR-designated CE course curriculum for brokers, dealing with key broker-management and administrative issues.

In short, the changes in this bill achieve two primary objectives:

1)     Ensures that salesperson licensees have the basic knowledge of critical components of the real estate transaction to adequately represent licensees; and

2)     Ensures that there is a greater emphasis on the broker as the person responsible for and knowledgeable of management and administrative requirements in operating a real estate brokerage business.

• The bill also tightens up the quality and integrity of educational offerings:

  • Requires continuing education (CE) exams to be closed-book.

  • Provides for qualified "proctors" to administer CE exams.

  • Provides for greater uniformity in CE courses by requiring CE instructors to attend a one-day development workshop.

Enforcement Issues

• Establishes a "private right of action" against persons engaged in the unlicensed practice of real estate brokerage, and provides for a TRO/permanent injunction as a remedy. This is similar to the remedies in other Acts administered by the IDFPR.

• Adds disabling mental illness and substance abuse as a cause for discipline, and gives the IDFPR further leeway in pursuing these disciplinary issues.

• Defines "good moral character" and establishes such as a licensure requirement.

Clean-Up and Clarifying Changes

• Includes clarifications of definitions and terms to ensure licensed activities conducted via technology are covered.

• Makes several changes regarding required applicant information and flow of information to tighten up and ease administration of the Act.

Finally, following this exhaustive and comprehensive update of the Act, and taking into account that the implementation of these changes extends out several years, the bill proposes to change the sunset date of the Act from January 1, 2010 to January 1, 2019.

Technical changes

• Throughout the Act any reference to the OBRE (Office of Banks and Real Estate) is changed to Department of Professional Regulation
• Any reference to Commissioner is changed to Secretary of Financial and Professional Regulation.
• Any reference to the Director of Real Estate is changed to Coordinator.
• There is some reformatting of sections to bring the Act into compliance with the Illinois Department of Financial and Professional Regulation's "model act" language and format.

Substantive changes

• Adds the requirement for an applicant's social security number or tax number on a license application.
• Adds "Address of Record" to the definitions section. This will be the designated address as indicated in the file maintained by the Department.
• Amends the definition of "broker". This change recognizes the growth of technology in business by clarifying that a broker can perform brokerage activities in person, or through any media or technology and updates terminology in (8) to include the procuring and referring of leads.
• Amends the exemptions for Multiple Listing Service or other similar information exchange as well as other mediums of advertising to clarify that no other brokerage activities may be performed.
• Clarifies that continuing education (CE) exams are closed book.
• Add a definition of "proctor" and requires that CE schools provide and be responsible for actions of proctors, and for the duties and responsibilities to be established by rule.
• Provides that CE instructors must attend one-day development workshop.
• Specifies that pre-license courses cannot be used to satisfy the CE requirement.
• Provides that a salesperson licensed more than 90 days from the renewal date must take continuing education; provides that a broker licensed during the one year preceding the renewal shall be required to complete the six hours per year of continuing education but not the broker management continuing education course.
• Adds and defines good moral character as a condition of licensure.
• Changes term "civil fine" to "civil penalty" in a number of provisions.
• Establishes a private right of action for unlicensed practice.
• Adds mental illness or disability resulting in inability to practice with reasonable skill, judgment or safety as reason for discipline.
• Adds habitual or excessive use or addition to alcohol, narcotics, stimulants or other chemical agents or drugs resulting in inability to practice as grounds for discipline.
• Provides Department with right to compel physical or mental examination and treatment program, if appropriate. Also provides that the failure of an individual to submit to a mental or physical examination when directed shall be grounds for suspension of his/her license.
• Clarifies that a Real Estate Administration and Disciplinary (READ) Board member or Advisory Council member cannot begin a term that would take them beyond 12 years in a lifetime.
• Defines READ and Advisory Council quorum.
• Establishes initial Salesperson pre-license and CE requirements:
  • 90 hours of pre-license education, 15 must be in classroom practicum/situational course work;
  • Requires 30 hours of continuing education for the first renewal and 12 hours of CE for subsequent renewals;
• Establishes initial Broker pre-license and CE requirements:
  • 45 hours of pre-license education, all course work in management, supervision and administration;
  • Requires 18 hours of continuing education with at least 6 hours in broker management.
• Establishes that broker applicant must have been licensed as a salesperson for 2 out of the last 3 years.
• Establishes transitional education requirements for salesperson and brokers:
  • Each salesperson licensed on the effective date of the amendment must complete the same 30 hours of CE as those licensed under the new pre-license requirements and must be completed within the pre-renewal period of 2009-2011.
  • Each broker licensed on the effective date of the amendment must complete the current 12 hours CE requirement and the 6 hour broker management CE course.
• Establishes that the sponsoring broker shall provide to the Department the name of the broker managing the office or branch.

This bill is SUPPORTED by the Illinois Department of Financial and Professional Regulation and the Illinois Association of REALTORS.