Modern Real Estate Practice in Illinois Chapter 5: Real Estate Brokerage

© 2008 Dearborn Real Estate Education Broker-Salesperson Relationship Real Estate Salesperson –any person licensed to perform real estate activities on behalf of a licensed real estate broker Broker –fully responsible for the actions performed in the course of the real estate business by all persons licensed under the broker –all of a salesperson’s activities must be performed in the name of the supervising broker

© 2008 Dearborn Real Estate Education Broker-Salesperson Relationship Independent Contractor versus Employee –whether a salesperson is treated as an employee or an independent contractor affects the structure of the salesperson’s responsibilities and the broker’s liability to pay and withhold taxes from the salesperson’s earnings

© 2008 Dearborn Real Estate Education Broker-Salesperson Relationship Independent Contractor versus Employee –Three requirements must be met to establish an independent contractor status: Current real estate license Written contract specifying that the salesperson will not be treated as an employee for federal tax purposes 90% of income based on production, not number of hours worked

© 2008 Dearborn Real Estate Education Broker’s Compensation Specified in the contract with the principal Amount of a broker’s commission is negotiable in every case –attempting to impose uniform commission rates is a violation of antitrust laws –a broker may set the minimum rate acceptable for that broker’s firm

© 2008 Dearborn Real Estate Education Broker’s Compensation Broker must cause the action that results in a real estate transaction, to be considered the procuring cause of sale Even if the transaction is not consummated, the broker may still be entitled to a commission

© 2008 Dearborn Real Estate Education Salesperson’s Compensation Amount of compensation a salesperson receives is set by mutual agreement between the broker and the salesperson

© 2008 Dearborn Real Estate Education Transactional Brokerage Transactional broker’s job is simply to help both the buyer and the seller with the necessary paperwork and formalities involved in transferring ownership of real property Transactional brokerage is NOT legal in Illinois

© 2008 Dearborn Real Estate Education Real Estate Brokerage Personal Assistants –combination office manager, marketer, organizer and facilitator with a fundamental understanding of the real estate industry –may or may not have a real estate license

© 2008 Dearborn Real Estate Education Real Estate Brokerage Unlicensed Personal Assistants –May perform administrative and clerical functions –May Not host public open houses interpret information related to a real estate transaction explain or interpret real estate documents with anyone outside the employing licensee’s firm negotiate commission or fees on behalf of a licensee perform any other activity for which a license is required

© 2008 Dearborn Real Estate Education Technology and Brokerage Blogs Vlogs Security Electronic Contracting Fee-for-Services

© 2008 Dearborn Real Estate Education Technology and Brokerage Electronic Contracting –growing field in real estate practice –quickly and efficiently integrates information in a real estate transaction between clients, lenders, title and closing agents –2 Federal acts govern electronic contracting Uniform Electronic Transactions Act (UETA) Electronics Signatures in Global and National Commerce Act (E-Sign)

© 2008 Dearborn Real Estate Education Technology and Brokerage UETA four key provisions: –Contract cannot be denied its legal effect just because electronic record used –Record or signature cannot be denied its legal effect because it is in electronic format –If state law requires signature on contract, electronic signature is sufficient –If state law requires written record, electronic record is sufficient

© 2008 Dearborn Real Estate Education Antitrust Laws Price Fixing Group boycotting Allocation of Customers or Markets Tie-In Agreements

© 2008 Dearborn Real Estate Education Penalties Federal Sherman Antitrust Act –price fixing or allocation of markets: maximum $100,000 fine and three years in prison; for corporations, the penalty may as high as $1 million Triple damages are available in civil locations

© 2008 Dearborn Real Estate Education National Do Not Call Registry To avoid penalties, a licensee/broker must demonstrate that: –it has written procedures to comply with the do- not-call requirement –it trains its personnel in those procedures –it monitors and enforces compliance with these procedures –it maintains a company-specific list of phone numbers that it may not call

© 2008 Dearborn Real Estate Education National Do Not Call Registry (cont’d) To avoid penalties, a licensee/broker must demonstrate that: –it accesses the national registry every 30 days before calling any consumer and maintains records documenting this process –it must show that any call made in violation of the do-not-call rules was the result of an error

© 2008 Dearborn Real Estate Education The CAN-SPAM Act of 2003 Controlling the Assault of Non-Solicited Pornography And Marketing –Establishes requirements for sending commercial –Spells out penalties for those that don’t comply –Gives consumers the right to have ers stop ing them

© 2008 Dearborn Real Estate Education The Junk Fax Prevention Act of 2005 Does not legalize unsolicited fax advertisements or solicitations, but does allow for an established business relationship exception