Changes on the Way for Salespeople, Managing Brokers
By Zipporah Porton
In a recent Chicago Agent magazine survey, 68 percent of the agent respondents felt that obtaining a real estate license should be more difficult. A few years back, some would seek out a career in real estate because they thought it was an easy job that paid well without a lot of work. In the heyday this might have been true, but in our current market, this is far from the case.
In terms of licensing, that 68 percent might get their wish because the process is about to get a little tougher. After April 30, 2012, there will be no such thing as a Salesperson License. At this point in time, everyone wishing to sell real estate will be required to have a Broker License, and managing brokers will need to obtain a special Managing Broker License.
These changes shouldn’t come as a surprise, as over the last 10 years a need for more oversight in real estate offices has become increasingly apparent. “This wasn’t an overnight thing,” says Betsy Urbance, an attorney with the Sorling Law Offices in Springfield and the legal hotline attorney for the Illinois Association of Realtors (IAR). “It’s fairly common for the regulatory laws to have sunset provisions built into them. The laws were due to sunset Dec. 31, 1999, and then again 10 years later.”
Despite the sunset provision, Urbance believes these updates were necessary, regardless. As the industry changes, the rules and regulations need to change as well. “Over the course of time, it became apparent to those in the industry that there needed to be better oversight by managing brokers over their offices,” she says. “There are those that are selling and those that are managing. The managing broker holds a higher level of responsibility, as they have the oversight responsibility for those that are sponsored. These changes are designed to make a clearer distinction.“
With the new rules, a broker who wants to remain a broker must complete 12 hours of continuing education (CE) to renew their license before April 30, 2012.*
A salesperson has two options to successfully make the transition to broker*:
- Pass a proficiency exam prior to March 15, 2012. Then, complete 18 hours of CE on or before April 30, 2012.
- Complete a 30-hour course and pass an exam on or before April 30, 2012.
For a broker who wants to become a managing broker, there are also two options*:
- Pass a proficiency exam prior to March 15, 2012. Then, successfully complete 18 hours of CE and 12 hours of broker management CE on or before April 30, 2013.
- Complete a 45-hour transition course and exam prior to April 30, 2012, and 18 hours of regular CE before April 30, 21013.
According to Urbance, these changes are beneficial to both the public and the profession. “With these new guidelines, brokers and managing brokers will hold a license that indicates a higher level of education,” says Urbance. “In an industry like this where the transactions are quite complex, the public will have more confidence that their brokers are qualified to do the job.”
Overall, IAR strives to service the industry, as well as the public. With these new rules, agents will have to put in a little extra work to become licensed, but is this necessarily a bad thing? Urbance does not see the new rules discouraging anyone from renewing their license, but if they decide it isn’t worth their time, then perhaps this is a way to determine whether or not real estate is a good career choice for them. “People will have to decide for themselves if they’re willing to put 120 hours into their professional career,” notes Urbance. “Consumer protection and a higher level of accountability and education in the profession makes things better for everybody.”
As for the fees involved with the changes, the cost will not be much different for those interested in renewing. While the final decision has not been officially made, the plan is to keep the broker fee the same. A sales person moving up will pay what it would cost to be a broker, which is about $125. The Managing Broker License is a new one, so the fee of $150 isn’t necessarily an increase, though it is more than a simple Broker License. According to Urbance, the fees all go to the Real Estate Administration and Disciplinary Fund, administered by the Illinois Department of Financial and Professional Regulation (IDFPR), which is designed to regulate licensing for the industry.
If you’re reading the materials sent to you by your local association, then Urbance feels that you should already be aware of the upcoming changes. Nothing is set in stone just yet, but the associations have already been putting the word out (see sidebar). “This should not be the first time anyone is hearing about these changes,” says Urbance.
The Illinois Real Estate License Act officially went into effect on Dec. 31, 2009. The administrative rules that clarify the law are set to be filed any day now. Once they are filed, there is a comment period where Realtors are encouraged to make their voices heard. At this point, all comments should be directed to IDFPR. For more information, visit idfpr.com.
What Else is New?
Aside from the new licensing laws, another change involves agency disclosure in rental situations. In a place like Chicago with so many rental properties in existence, this rule is especially relevant. Under the old rules, there was no requirement of the agent to give the residential tenant agency disclosure unless there was an option to purchase. In the rewrite, if the agent is representing the tenant in a rental situation, he/she must give them agency disclosure. If the agent is working for a property manager only and won’t represent the tenant, they must tell the tenant upfront and give notice of no agency. When dealing with rentals there is a lot of personal information involved, and with the new agency disclosure rules, the agent must let the renter know the relationship between all of the parties involved.
Overall, the subject of agency is one that Urbance reports is the most confusing and troublesome for agents. In her 16 years on hotline duty, the hot topics vary throughout the years, and currently agency disclosure is a question that pops up often.
While it may seem difficult to keep up with all of these new rules and regulations, you are not in this alone. IAR and your local associations are doing all they can to help you stay informed. However, it is your responsibility to read the information sent to you, and ask questions when you’re confused. As all of you know, there is more to being an agent then just showing homes.
Betsy Urbance is an attorney with the Sorling Law Offices in Springfield, and has been the Legal Hotline Attorney for the Illinois Association of REALTORS® for nearly 16 years. As the IAR Legal Hotline Attorney, URBANCE answers over 300 calls and e-mails a month on real estate related legal topics. For more information, visit iar.org or call 217.529.2600.
*subject to change once rules are finalized.
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All Should be Fair for Agents and Housing
By Zipporah Porton
Adopted in 1968, the Fair Housing Act, also known as Title VIII of the Civil Rights Act of 1968, was designed to eliminate discrimination in the housing industry. According to the U.S. Department of Housing and Urban Development (HUD), the act prohibits discrimination in the sale, rental and financing of dwellings, and in other housing-related transactions, based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women and people securing custody of children under the age of 18) and handicap (disability). While sexual orientation is not yet an official part of the act, many state and local laws now prohibit discrimination in housing based on sexual orientation. Additionally, in July HUD announced a new policy that provides lesbian, gay, bisexual and transgender (LGBT) individuals and families with further assistance when facing housing discrimination.
Though the details and message behind Fair Housing should always be at the forefront of a Realtor’s mind, unfortunately a recent incident in Chicago has catapulted the consequences of violating the act into the spotlight. In early August, HUD charged a Bridgeport couple, Prudential Rubloff, Realtor Jeff Lowe and the Jeff Lowe Group with violating the Fair Housing Act. The complaint states that Lowe and his clients, Daniel and Adrienne Sabbia did not want to sell their $1.799 million home to a black couple because of their race.
The complaint alleges that comedian and radio personality George Willborn and his wife, businesswoman Peytyn Willborn, submitted the highest offer the sellers had received in the two years the property was on the market. However, when faced with the sales contract, the Sabbias refused to sign. Lowe told HUD investigators that Daniel Sabbia expressed a preference not to sell his home to an African-American. The complaint states that the home was taken off the market on January 12, and then was listed again on March 8 for the asking price of $1.799 million, the same amount that the Wilborns allegedly offered a few months prior.
After the complaint was filed, the HUD charge was to be heard by an Administrative Law Judge, but instead the Wilborns decided to file a $100 million lawsuit against the Sabbias, Prudential Rubloff and Lowe, taking the case to federal court instead. Additionally, the federal government filed a civil lawsuit just recently on September 20. The filing, made in U.S. District Court in Chicago, names as defendants Daniel and Adrienne Sabbia, Lowe and Midwest Realty Ventures, which does business as Prudential Rubloff Properties.
While every agent would like to think they would never be in this situation, the truth is it is hard to know how you will react without finding yourself in a similar predicament. The accusations do not neccesarily mean that Lowe is racist, and many that know him personally would refute this is far from the truth. Lowe is a well-known and successful agent in the Chicagoland area, which makes the lawsuit come as a surprise to many who know him. While some feel that what happened was avoidable and Lowe deserves to be punished, others feel that he got caught up in an unfortunate dilemma and should’ve acted differently. The complaint is online for all to read at hud.gov/offices/fheo/enforcement/10-Willborn-v.-Sabbia-et-al.pdf, but there are still pieces of the puzzle that the mass public doesn’t know or understand, and until the case is complete agents are forced to merely speculate.
Chicago Agent asked our readers in an anonymous survey what they think about the charges against Lowe, and the responses can be found on page 15. Overall, 24 percent of those surveyed report that they have witnessed discrimination in the real estate industry, indicating this is a serious problem that agents must deal with. To make sure other agents don’t find themselves in an unfortunate predicament, CA spoke with a number of experts in the field to find out how to react appropriately in any situation.
Genie Birch – immediate past president of the Chicago Association of Realtors (CAR), former member of the CAR Professional Standards board and an agent with Koenig & Strey – advises agents to just walk away in any situation where discrimination comes up. “As Realtors, we are bound to uphold the Code of Ethics,” says Birch, who also serves on the national board of the National Association of Hispanic Real Estate Professionals. “It is against the law to discriminate. We must stop the potential client and explain this to them. If they insist, then you have to walk away from the listing.”
Bryan Greene, General Deputy Assistant Secretary for Fair Housing at HUD in Washington, D.C., agrees that the agent should attempt to explain to the potential client that discrimination is not tolerable. “Agents should inform parties that it’s against the law to refuse to sell to a person based on race, religion, etc.,” says Greene. “They should inform them they will not refuse a sale to any person because of race, religion, etc. Most agents recognize that they have a professional responsibility not to discriminate, and more significantly a federal responsibility not to discriminate.” Greene acknowledges that it is entirely possible that the potential client does not understand that discrimination in housing is not allowed, at which point the agent should inform any potential seller that it violates federal, state and local laws.
In some cases, the agent may take on a new client and have no idea that he/she is capable of discrimination in the future. At this point, the agent has worked with the client for a period of time and created a trusting relationship. Unfortunately, if the agent discovers his/her client will not sell the home due to discriminatory reasons, then the agent must take action. If they move forward with the client with this knowledge, then they are in violation of the Fair Housing Act, and can be punished. “The agent has an obligation to take some action,” says Greene. “Either to insist upon the seller selling the home or terminating the relationship. The agent cannot engage in the discriminatory behavior, and cannot abet the behavior. If an agent believes someone is going to engage in this behavior and wants to let HUD know, then we can investigate what that agent might do. Our role is to enforce the laws against actual cases of discrimination.” Turning a blind eye to the situation is not enough, the agent must take action or they are in violation.
If an agent terminates the relationship, then they are not guilty of violating the Fair Housing Act. The agent may also choose to report the incident to HUD, as this is a part of their professional responsibility according to the National Association of Realtors. Additionally, Greene points out that the agent’s rights have been violated, as the client’s decision to discriminate is costing the agent a client and commission.
In the end, if an agent has any questions at all about the Fair Housing Act or violations of any other codes, they are welcome to either contact the HUD housing discrimination hotline at 800.669.9777 or visit hud.gov to find a local office. Additionally, an agent may view the Code of Ethics on NAR’s website, or visit CAR’s site at chicagorealtor.com and explore the professional standards information. Alternatively, agents may contact the director of professional standards at their local association with questions.
There are many times where you will find yourself in an uncomfortable situation with a client, and while walking away is the best choice, sometimes it isn’t that easy. However, if you think about the consequences, the correct response should be easier to accept.
If an agent is accused of being in violation of the Fair Housing Act, Greene reports that HUD would investigate, and if a violation of the law is found, the agent is liable for having engaged in discrimination. HUD would then bring a charge against the agent and the seller, though the individual discriminated against might decide to go to federal court on their own.
“However you look at it, the agent and the seller face serious consequences [if they are found in violation],” says Greene. “HUD will seek damages on behalf of the injured parties, and as a result of judge’s order, serious sanctions could be imposed and the agent could possibly lose their license or have other professional sanctions.” Regardless of whether the case goes before HUD and an administrative law judge or to federal court, as in the case of Lowe, the consequences for an agent are the same.
The Professional Standards Committee is in place to assist agents, so if you ever have a question or concerns, go to them for answers. Feeling slightly uncomfortable for a few minutes is a lot better than losing your license, or being sued for $100 million. C.A.
Immediate Past President, CAR
Agent, Koenig & Strey
General Deputy Assistant Secretary for Fair Housing