Illinois Agency Law: What Real Estate Exam Candidates Must Know

Illinois agency law is built on the same general principles as national agency law, but the unique broker/managing broker licensing structure creates Illinois-specific nuances that the exam tests regularly. Here's what you need to know.

The Illinois Licensing Structure and Agency

Illinois issues two main license types:

Broker: The entry-level license. A broker works under the supervision of a managing broker and cannot operate independently. In Illinois, what other states call a "salesperson" is a "broker."

Managing Broker: The supervising license. A managing broker runs a real estate brokerage, supervises brokers working under them, and is responsible for trust account management, advertising, and compliance.

Agency relationship: In Illinois, the managing broker's brokerage is the legal agent of the client (buyer or seller). Individual brokers working under the managing broker act under the managing broker's supervision. The managing broker bears ultimate responsibility for the conduct of the brokers they supervise.

Types of Agency Relationships in Illinois

Seller's Agency (Listing Agency) The brokerage (and its managing broker) represents the seller. All brokers affiliated with that brokerage who assist with the listing or showing are agents of the seller.

Fiduciary duties owed to the seller (OLD CAR): - Loyalty — seller's interests first - Obedience — follow lawful seller instructions - Disclosure — reveal material facts to the seller - Confidentiality — protect the seller's confidential information - Accounting — account for all funds - Reasonable care — professional skill and diligence

Buyer's Agency The brokerage represents the buyer. Fiduciary duties run to the buyer. Established through a written buyer representation agreement.

A buyer's agent cannot disclose to the seller: the buyer's maximum price, motivation to buy, or willingness to pay more than the listed price.

Dual Agency Occurs when the same brokerage represents both buyer and seller in a transaction. **Illinois law requires informed written consent from both parties** for dual agency.

A dual agent cannot: - Reveal seller's minimum price to the buyer - Reveal buyer's maximum price to the seller - Advocate for either party's negotiating position

Designated Agency The managing broker designates different brokers within the same firm to represent buyer and seller separately. Each designated agent owes full fiduciary duties to their client — avoiding the limitations of dual agency. This is the most common solution when a brokerage works with both sides of a transaction.

Illinois Agency Disclosure Requirements

Under 225 ILCS 454, brokers must: - Disclose their agency status in writing at the time of first contact with a consumer - The written disclosure must identify who the licensee represents - The consumer must acknowledge receipt of the disclosure

Key rule: A broker showing a listed property on behalf of the listing brokerage must disclose that they represent the seller — not the buyer — before providing any information about the property or buyer.

Managing Broker Supervisory Responsibility

The managing broker is responsible for: - Supervising all brokers under their license - Maintaining the brokerage's trust account - Ensuring advertising complies with Illinois law (no blind ads) - Reviewing and approving transactions and contracts - Training affiliated brokers on disclosure and agency requirements

If a broker violates Illinois law, the managing broker may also face disciplinary action from IDFPR if the violation resulted from inadequate supervision.

Advertising Rules in Illinois

Illinois prohibits blind advertising — ads that do not disclose the brokerage name. All advertising must clearly identify the licensed brokerage (not just the individual broker's name).

Fiduciary Duties Summarized — OLD CAR

• Obedience
• Loyalty
• Disclosure
• Confidentiality
• Accounting
• Reasonable care

For Illinois agency scenario practice questions, visit [CARealestate.com/states/illinois](https://carealestate.com/states/illinois).