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The legal issue: You, your listings and the law

by Jason Porterfield

Dealing with Data

Appropriate contact is just the tip of the iceberg when it comes to consumer data.

They say that in real estate, it’s all about who you know; in a legal sense, it’s all about how you protect your contacts’ data. There are strict regulations around how agents may obtain consumer data, how they may use it, and steps they must take to protect it.

Companies doing business in Illinois are obligated to protect personal data under the Illinois Personal Information Protection Act. Previously, protected information consisted of a person’s name in combination with a driver’s license or state ID number, an address, a Social Security Number, or a credit card or account number. The law was amended earlier this year to include user names, medical information, insurance information, email addresses and biometric data, such as fingerprints.

Under the law, such data should be encrypted. If another party gains access to it, the affected individuals are to receive notification of the breach. Sales information, including the final price and the names of the buyers and sellers involved, are a matter of public record. But until the transaction is complete and the deed recorded, it is the agent’s responsibility to protect that information.

Entities that store personal information are required to contact consumers in the event of a security breach, even if the information is encrypted or redacted. If the compromised data includes a username and/or an email address, the affected consumers must be told to change their passwords and update their security questions. Information-gathering businesses and other entities are also required to take reasonable security measures to protect data.

Any business that complies with the federal Financial Services Modernization Act is in compliance with state data protection regulations. Real estate professionals must take steps to ensure that the technology and services they use to deal in consumer data are secure, and a team or brokerage can designate an employee to coordinate information security efforts like training, regular system updates and supervising the storing and transfer of data. Firewalls, encryption and anti-virus software should be used and updated regularly.

“Brokers have to really be aware and cognizant of the fact that transmission of protected data can get them in trouble,” Fortunato says. “Encrypted email is used quite commonly. There is a big issue with the transmittal of wire transfer instructions as well. Brokers should be very sensitive about transmitting such information. It’s just a matter of time before some licensee gets exposed.”

Contracts

Attorneys step in when it becomes time to draw up the contract and close the transaction. They have the option of using the 6.1 Multi-Board Residential Real Estate Contract or the Chicago Association of Realtors’ Residential Real Estate Purchase and Sale Contract. The recently introduced 6.1 contract includes language referencing requirements under the TRID rules that went into effect last year.

“The 6.1 is much more all-encompassing than the city contract,” Goodman says. “You typically don’t have to include as detailed of a rider because so much of the information that would be in a review is already there.”

Fortunato helped to create the 6.1 contract. “If you’re not careful, you can pick the wrong rider,” he says of the CAR contract. “So we tried to have a unified document where there isn’t as much discretion on the part of the licensee. Discretion turns into risk if the licensee is ill-informed.”

New construction contracts are a well-documented source of confusion for real estate agents. Such contracts, Goodman says, are often wildly different from each other.

“Agents often are not as fully conversant in the terms as they would be with a boilerplate contract,” she says, noting that timing is often an issue, and not every buyer can wait for the allotted time it takes for a home to be built.

Disclosures and inspections are another area where having a skilled attorney to protect the client’s interest comes in handy. Failing to disclose a problem with a property before the sale can lead to a lawsuit.

“I handle many condos, and the inspections take up the most time,” Cartright says. “Everybody seems to have water problems now. Agents do not renegotiate the contracts once they are written, so it falls to [Goodman] to renegotiate – without upsetting the other side and while showing your client that you’re protecting them.”

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Comments

  • Lynn Madison says:

    You make mention that it is the Mainstreet 6.1 contract and it is, in fact, the Multiboard 6.1 Contract. It was a collaborative effort of all of the associations in the Chicagoland area who are members of MRED – including Chicago Association and it is approved for use by all the associations.

  • Thanks for that insight, Lynn!

  • Adagio Micaletti says:

    Two beautiful women we can all be so proud of, Best cover girls I’ve seen! Congratulations!

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