New language for brokerage agreements includes surveillance (audio and video), consent (including phone) and protected class gender identity, plus two NEW forms offered are the Affirmation to Cooperating/Buyer’s Broker and the Office/Company Start-up Checklist.

By Mindie Nesch, Ethics & Legal Services Manager, and
Betsy Urbance, General Counsel & VP of Legal Services

In a continuing effort to provide up-to-date tools to our members, the Legal Services team has rolled out revised versions of its legal forms as part of its regular forms review process. The most significant revisions come in the form of new language added to the brokerage agreements regarding the following issues: (1) buyers photographing or videoing properties; (2) sellers’ use of surveillance equipment (both audio and video) in their properties; (3) clients consenting to being contacted by their agent/brokerage via phone, email, and/or fax; and (4) updating the list of protected classes where discrimination is prohibited on the basis of gender identity.

Looking ahead to one change that will come with the new Real Estate License Act (the “Act”), we have removed reference to “ministerial acts” from our documents – most notably, the Agency Compliance Manual – as this term has been deleted from the language in the bill containing definitions in the revised Act. More information on the recent license law rewrite will be forthcoming following the Governor’s signature later this summer. While the defined term “ministerial acts” is likely going away, an agent can still assist her client by treating the opposing, unrepresented party as a customer.

In addition to the aforementioned improvements, we have also added two new forms to our toolkit – the Affirmation to Cooperating/Buyer’s Broker (the “Affirmation”) and the Office/Company Start-up Checklist (the “Checklist”). The Affirmation provides an avenue by which a listing broker can comply with the recently amended Standard of Practice 1-7 under Article 1 of the Code of Ethics regarding presentation of offers, while the Checklist gives a starting point for members seeking direction on opening their own offices.

Now let’s take a “tour” through Illinois REALTORS® list of Forms available for free download on our website.

Property Disclosure Forms

• In this section you will find what the Illinois REALTORS® Legal Team calls “The Big 3” property disclosure forms. Namely:
  • Residential Real Property Disclosure Form (no real changes since last update)
  • Disclosure of Radon Hazards and Illinois Emergency Management Agency (IEMA) Flyer
    • For sales transactions, this is due for almost all with a few exceptions
    • The IEMA fact sheet is required and is linked in this section
  • Lead Based Paint Disclosure – for sales transactions of residential properties built prior to 1978
    • Also required for rentals to new tenants
    • There are not many exceptions if the property is pre-1978
    • Requires a HUD pamphlet to accompany the disclosure form which is also available through our site (most current version dated June 2017)

• Flood Insurance Disclosure – Illinois REALTORS® does not get many requests for this form but it is available and we bring it to members’ attention given the recent flooding and the fact that the National Flood Insurance Program (NFIP) is in the news. The recent trend with regard to NFIP is that the U.S. Congress will extend this program for a few weeks at a time. NAR continues to monitor this situation.

Agency Disclosure Forms

• The form entitled Consumers’ Guide to Real Estate Agency in Illinois is a helpful tool for licensees when they are trying to educate consumers about the designated agency relationship that will exist when a brokerage relationship is established. There is also a section that can be used to give a client the required written Designated Agency Disclosure.

• The other agency disclosure forms in this section can be used when the agency disclosures are not incorporated into other documents, such as a listing agreement or a buyer brokerage agreement, as examples.

• Notice of No Agency – must be given to a consumer whom you don’t represent but the consumer does not want their own agent and you are trying to assist your existing client on the other side of the transaction. This applies in residential and commercial sales as well as rental situations.

Independent Contractor Agreement Form

• Illinois REALTORS® offers a very general form from which to start that can be used by your sponsoring brokerage company when sponsoring a new licensee. This agreement is drafted anticipating an independent contractor relationship. If your newly sponsored licensee will be an employee this document will need substantial revisions. As always, consultation with your company attorney is highly recommended.

Checklists

• See this section for suggested forms to help your licensees through the property intake procedures on both sides of a sales transaction.

• Also note this is where to find our newly created “Office Start-up Checklist”
  • This checklist includes important questions to ask and get answered for yourself if you are contemplating a new sponsoring brokerage company.
  • Again, it is important when starting a new company to consult with legal and financial advisors.

Brokerage Agreements

• Buyer Brokerage Agreements
  • Here you will find sample buyer brokerage agreements which are both exclusive (highest level of protection) and non-exclusive (low level of protection)
    • The Exclusive Right to Acquire check box on the Exclusive Buyer brokerage agreement operates like an exclusive buyer “agency” agreement in that no commission will be due the buyer’s brokerage if buyer finds the property with no agent involvement on either side of the transaction.
    • The Exclusive Right to Purchase check box operates like the exclusive right to sell on the listing side, where a commission will be due if the buyer purchases at any time during the term of the agreement.
  • Also noteworthy is the addition of provisions suggesting legal advice and/or permission from property owners prior to video recording the inside of a listed property.
  • In addition, there is a provision that warns buyers about sellers use of surveillance or eavesdropping equipment in the listed property.

• “Listing Agreements”
  • The Exclusive Right to Sell agreement is the most comprehensive and highest level of protection for the seller’s brokerage company.
  • The Exclusive Seller Representation agreement operates as an exclusive “agency” where the contract does not provide for commission to be paid if the seller sells his property without the involvement of a broker on either side of the transaction.
  • The listing forms contain language related to the seller’s potential use of surveillance or eavesdropping equipment
    • The language holds the brokerage company harmless for potential violations of state or federal eavesdropping laws (especially in the case of audio recordings).
    • It suggests to sellers that they should remove or hide any items from their listed properties to prevent unwanted recording by buyers.

• The brokerage agreement forms contain language where those who sign, consent to being contacted by any means available, including text messages.

• If you are using forms that don’t have permission to be contacted using alternate methods, there is a general rider that is available to members for this purpose.

Manuals, Guides and Sample Policies

• Check out this section for sample language for many different situations

• Note that brokerage companies must have a written policy and procedures manual when operating a real estate brokerage company in Illinois. IR has a template manual that will get you started in the process of customizing your company manual.

• In addition, there is a sample Do Not Call Policy which is required of any office, even if the office has a general policy against cold calling. The policy can protect against charges of unwanted solicitation calls.

Additional Resources

• Check out other helpful resources in this section. Some noteworthy tools include links to the
  • Illinois Real Estate License Act
  • Administrative Rules
  • NAR Code of Ethics

• Another new form related to the Code of Ethics is an affirmation that the agent has presented an offer or counter-offer; or that the client has waived the right to see the offer or counter-offer.