Keep Yourself Out of Trouble – Legal and Ethics Compliance is no joke
Lately I have heard of many fines leveled at agents usually starting at $250 and going up from there and just last week I saw that IDFPR had suspended a licensee and fined them $250,000 for advertising violations. To help keep you out of trouble here are the Most Frequent Violations of Licensee Law and Code of Ethics I have seen recently.
- Business Brokerage Services without being a registered business broker with the state of Illinois. Unless there is real estate included in the sale and the real estate is more than 50% of the total value of the business you must get certification from the state of Illinois and have business broker E&O insurance. Years ago, this was not the case but it has been for the last several years. Check the NSBAR Newsletter from September 14 2018 for a detailed article on this. Here is a short excerpt:
“Licensed real estate salespeople and brokers may be called upon to assist with the sale of a business that fits within the parameters of the IBBA, so it is important to analyze whether or not they must register with the Secretary of State’s office to ensure compliance. If the sale of the business is one in which an interest in real estate is a dominant element in the transaction, then the IBBA does not apply. As a result, the first question to address is whether an interest in real estate is a dominant element in the transaction. The rules under the IBBA define “dominant element” as one in which the interest in real estate is of a dollar value worth at least 50% of the net asset value or purchase price of the business, is an integral part of the transaction, or is the single largest part of the transaction. It is worth noting that, if an interest in real estate is a dominant element of the transaction, the person brokering the transaction would need a properly sponsored real estate license.”
- Showing your own listing without either the Notice of No Agency or Dual Agency consent signed prior to showing. Showing a property is an agent level activity so no paperwork and you are an undisclosed dual agent one of the worst offenses you can make. The same applies at an open house but only if an agency level discussion is about to happen then you would need to do no agency or dual paperwork.
- Not doing the required disclosure of buyer’s designated agent or buyer brokerage agreement at first substantial contact with the buyer client. This is supposed to be done before you start working with the client and the minimum requirement is the disclosure of buyers designated agent.
- Not having the full name of your brokerage on all advertising including social media pages and all social media posts having anything to do with real estate. You also need your name or properly registered team name and your role at the company. Brokers must state broker and Managing Brokers must state managing broker. Using Hashtags # to do this is acceptable. (note this is Illinois Law the REALTOR Code of Ethics is less strict and allows the information to be one click away but in Illinois we have to abide by the stricter Illinois Law).
- Signing cancellation forms or other paperwork for your clients. This is forgery and never ok even if they tell you just sign it for me. I also suggest you make a policy never to have power of attorney for your clients. Have the actual attorney handle it for them. All it takes is for a buyer to sue a seller or the reverse or IDFPR to audit the file and you could be out of the business and heavily fined.
- Representing two buyer clients making offers on the same property at the same time without the notice of contemporaneous offers form being signed by both buyers. This is required.
- Not placing the source of data and time frame of data on ads. Stating you sold 50 Million but not telling them it is 2000 to 2018 is not honest. Neither is claiming your are the #1 agent in a community without citing the data source your claim is based on.
- Sharing Listings that are not yours on social media. IDX agreements allow us to share other brokers listing on our websites. That is as far as that agreement goes. You cannot advertise other brokers listings without written permission of the managing broker of that office.
- Taking photos of properties you see on tour or when showing buyers. The seller only gave the listing brokerage permission to take photos not you. Many times these photos that should not have been taken end up on social media and that is even worse. You are now marketing a listing that is not your with no permission and photos you took also without permission.
- Forgetting to include the disclaimer – If your property is currently listed with another broker please disregard this mailing – or something very similar on all you mass mailings including email as well as snail mail. (including this disclaimer on mail intentionally targeting listed properties does not make that ok)
- Not checking the PLN as well as active MLS when contacting expired and cancelled listings. Checking yesterday and sending mail or calling today is also not ok. You must check and get it rite in the mail or make the call after checking.
- Not making clients fully aware of the wire fraud that is happening every day in our industry. Don’t let your clients be victims make sure you are warning them right upfront to be careful and remind them again during the process.
I hope this list helps you stay out of trouble and avoid fines from the REALTOR® Associations and IDFPR. If you have any questions on these or other issues let me know and I will be happy to help!