Contracts
What is a 'kickback' in a real estate transaction and why is it illegal in Illinois?
AA legal commission split between cooperating brokers
BAn undisclosed payment to a party for referring business, prohibited by RESPA and Illinois law✓ Correct
CA penalty charged when a buyer backs out of a transaction
DA legitimate marketing fee paid to closing service providers
Explanation
A kickback is an undisclosed payment made to someone (often a real estate agent or settlement service provider) in exchange for referring business. RESPA (Real Estate Settlement Procedures Act) prohibits kickbacks in connection with federally related mortgage loans.
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Key Terms to Know
Net Operating Income (NOI)
The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Math Concepts
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