Practicing in the Post Transition “Era” Legal Webinar Presented by: IAR Chief Legal Counsel Steve Bochenek IAR Legal Hotline Attorney Betsy Urbance April 26, 2012

2 Overview Regulatory Issues Practice Oriented Fact Situations Your Questions

Regulatory Issues Important links to DFPR – – – NOTE: Source for this and subsequent slides is DFPR Website 3

Regulatory Issues Per DFPR, documents that must be sent by 04/30/12 to continue to practice on 05/01/12 –Properly completed transition application Fee included Proof of completed transition education/exam NO EXTENSIONS TO THIS DATE! –Exam results ed from test vendor acceptable. Send official transcripts when received –Transition applications postmarked after 04/30/12 will NOT be eligible to transition 4

Regulatory Issues What is needed for broker renewal –Properly completed renewal application Fee Proof of CE 5

Regulatory Issues What if I do not transition or renew by 04/30/12 and I want to practice on 05/01/12? DON’T do this UNTIL… –For salespersons Complete all pre-license requirements to become a broker and pass the State license exam (Section 5-27) –For self-sponsored brokers who did not transition to managing broker Complete CE for broker, file renewal application, pay fee and become sponsored by a new sponsoring broker –For broker staying broker File late renewal, submit proof of CE and pay the required fee 6

Regulatory Issues What will appear on the “License Look Up” webpage on 05/01/12 for licensees who have not received their license? –A licensee whose license shows as “active” on 04/30/12 will continue to show as “active” for some period of time –Brokers’ licenses that contain 2014 expiration date have been processed; Managing broker’s licenses that contain 2013 expiration date have been processed and the licenses have been or will soon be generated –If the license expiration date shows 2012, this means one of two things It is in the process of renewal because you sent in your transition/renewal application OR The licensee has not submitted any transition/renewal application 7

Regulatory Issues On or after 05/01/12, if I am a former sole proprietor who has a new sponsoring broker but I am working out of the office I used as a sole proprietor, when will I be required to have a branch license and signage showing my new office? –Immediately (per DFPR). Your signage and advertising/website must reflect your new sponsoring broker 8

Practice Oriented Fact Situations As a managing broker for my company what should I do to make sure our sponsored licensees have transitioned or renewed? –DFPR will consider you responsible so if your sponsored licensees are doing business you will want to make sure that they have transitioned and/or renewed by 04/30/12 –Your license could be subject to discipline for failure to do so 9

Practice Oriented Fact Situations Some actions you can take to check your sponsored licensees’ status –Check DFPR website for the new renewal dates –For salespersons transitioning to broker ask them to provide best evidence they have completed the transition/renewal process and just waiting to be updated to DFPR’s system Completion of transition education and filed transition and renewal applications with fees, OR Completion of proficiency exam and filed transition and renewal application with fees AND completed CE 10

Practice Oriented Fact Situations Some actions you can take to check your sponsored licensees’ status –Check DFPR website for the new renewal dates –For brokers staying broker Seek evidence of filing of renewal application with fee Seek evidence of completion of 12 hours of CE –For brokers who sought managing broker license Seek evidence of completion of transition education and filing of transition application with fee, OR Seek evidence of completion of proficiency exam and filing of transition application with fee 11

Practice Oriented Fact Situations Some examples of “best evidence” –Copies of canceled checks for payment of fees to DFPR –Copies of applications for transition and/or renewal (whichever applies) –Proof of mailing –Computer screen prints of on-line applications –Proof of passing transition or proficiency exams –Copies of CE transcripts if needed by the licensee 12

Practice Oriented Fact Situations Managing brokers might want to take a look at the independent contractor/employment contracts with sponsored licensees to be sure the references to their licensure status are accurate. 13

Practice Oriented Fact Situations What should a managing broker do when the managing broker learns that a sponsored licensee has not filed an application to transition and/or renew? –For a salesperson who has not transitioned to broker do not allow the licensee to provide any real estate brokerage services until the licensee can show proof he has done the necessary education and passed the test to obtain a new broker’s license –If no proof, and no intentions to go forward sign off on his license and return it to DFPR 14

Practice Oriented Fact Situations What if we had a managing broker for our company and she leaves the company after 05/01/12? –Hire a new managing broker licensee to manage your real estate brokerage company –Name a licensee within your company who has a broker’s license and at least two years of experience who is willing to seek a managing broker license Your company could name the broker licensee managing broker so long as that licensee obtains a managing broker license within 90 days of being named managing broker 15

Practice Oriented Fact Situations If I am a sole proprietor and did not transition to managing broker before 04/30/12, can I name myself managing broker and give myself 90 days in which to get my managing broker license? –No, because that provision discussed before does not become effective until 05/01/12 and you could not avail yourself of this provision by electing not to transition before the transition period ended and you had the opportunity to obtain the proper license in a timely manner 16

Practice Oriented Fact Situations If I am a sole proprietor and did not transition to managing broker before 04/30/12, what are my options? –You could renew your broker’s license and then find a new sponsoring broker to sponsor your license All advertising and business would be done under your new sponsoring broker’s business name –You could form a new corporation where you are the owner, but the corporation would hire a new managing broker licensee to manage your new company Advertising and name change issues 17

Practice Oriented Fact Situations What if we are the listing company and the coop company is a sole proprietor who did not transition. The contract was entered prior to 05/01/12 but the closing does not occur until after 05/01/12. May I pay this sole proprietor who did not transition? –On these facts, yes because he was licensed when the licensed activities were performed and while he was properly licensed –The closing provides the funds to pay commissions earned earlier (before 05/01/12) 18

Practice Oriented Fact Situations What if we are the listing company and the coop company is a sole proprietor who did not transition. The contract was entered after 05/01/12 and the closing does not occur until after 05/01/12. May I pay this sole proprietor who did not transition? –On these facts, this is a closer question and the answer is probably no because there are facts to indicate licensed activities were performed after 05/01/12 –Arbitration would not be mandatory but could be agreed to –Litigation might be option but if coop is not licensed, his lawsuit could be dismissed 19

Practice Oriented Fact Situations What if we are the listing company and the coop company is a brokerage company and not a sole proprietorship? Are the answers the same? –Not necessarily. The brokerage company license remains effective until 10/31/12 so the brokerage company still has a license This could be different if the brokerage company does not have a managing broker on file with DFPR Sometimes, the company could be granted permission to continue on an emergency basis 20

Practice Oriented Fact Situations What if we know that the coop company has some sponsored licensees who did not transition but the company is licensed? Do we still pay them? –Yes. You pay the licensed sponsoring brokerage company that is the coop office. Then, it will be an issue for the sponsoring brokerage company that is the coop office to determine whether or not it can pay its licensees who did not transition/renew 21

Practice Oriented Fact Situations How can I check the license status of a company or an individual after 04/30/12? –You can check DFPR’s website for information that was noted earlier, i.e. new expiration dates –A company license status will change on the website if the company does not have a managing broker designated for the company when DFPR has completed the transition/renewal process 22

Practice Oriented Fact Situations Will I be subject to discipline if I deal with someone who is not properly licensed after 04/31/12? –No universal answer here and will depend upon facts of situation –Don’t ignore information you might have –But, on the other hand you should not have to be a super sleuth 23

Practice Oriented Fact Situations Will a listing be removed from a local multiple listing service (MLS) if the listing agent did not transition/renew? –No, because the MLS participant is the brokerage company and the company can name a new designated agent to service the listing What if that listing belongs to a sole proprietor who did not transition/renew? –Yes, because the listing is with a person/entity that is not licensed and is thus, void. The sellers could enter a new listing with a licensed sponsoring brokerage company 24

Practice Oriented Fact Situations If the sole proprietor elected options discussed previously, like forming a new company, he could assign his listings to the new company and his new managing broker could name him the designated agent for those listings. 25

Practice Oriented Fact Situations Discuss the difference between practicing while licensed and being paid later for activities performed while properly licensed and sponsored, as opposed to… A person who did not transition/renew and continues to practices during the time period when she is not licensed. Could she be paid? –No. A person can’t be paid for licensed activities performed while she is/was not properly licensed 26

Practice Oriented Fact Situations What do I do when 05/01/12 comes and I don’t have my new license back from DFPR? –BUILD YOUR FILE 27

Practice Oriented Fact Situations What should be in my file? –Broker staying broker Copy of completed renewal application postmarked or ed on or before 4/30/12 Copy of cancelled check or other proof of payment of renewal fee paid to DFPR Copy of your CE transcripts Copy of your new 45 day permit if you have a new sponsoring broker 28

Practice Oriented Fact Situations What should be in my file? –Salesperson transitioning to broker Copy of completed transition/renewal application postmarked or ed on or before 4/30/12 Copy of cancelled check or other proof of payment of transition/renewal fee paid to DFPR Copy of your 30 hour transition course transcript and exam or copy of passing proficiency exam Copy of CE transcripts if you took and passed proficiency exam 29

Practice Oriented Fact Situations What should be in my file? –Broker transitioning to managing broker Copy or your completed transition application postmarked or ed on or before 04/30/12 Copy of cancelled check or other proof of payment for your transition fee paid to DFPR Copies of your transcript showing you took and passed the 45 hour transition course/exam or copy of evidence that you passed the proficiency exam 30

Your Questions Regarding CE, can you substitute core classes for electives? –Yes, but you can’t substitute electives for core. Also you need to be sure you are taking core courses with different course numbers –DFPR wants to see 1 Core A and 2 Cores B if you owe 18 hours for your renewal 31

Your Questions I did my transition early, but now I sent in a new 45 day permit since I changed brokers and DFPR says this could take 6 weeks to get my new license back? –Build your file to show best evidence of compliance 32

Your Questions What would a managing broker need to do to sponsor his/her license with the office in his/her home? –Meet the requirements of Section 5-45(d) in the Act –Make sure you comply with all local ordinances, zoning, neighborhood or association covenants and restrictions –Notify DFPR in writing 33

Your Questions What should a local association do with regard to membership if a member did not transition? –Once you have proof that they are no longer licensed, you would suspend/drop their membership If a local board runs an MLS and there is no managing broker on file, must we shut off MLS access? –Yes, if DFPR’s records show that there is no managing broker for the company. Everyone with that company will be inoperative until there is a new managing broker designated with DFPR. 34

Your Questions Will IAR notify locals as to who has and has not transitioned? –IAR has been doing this periodically and will do so once IAR receives “final” information from DFPR 35

Your Questions Are licensed IL attorneys still exempt from pre- license and continuing education? –Yes, they are still exempt for pre-license and continuing education –To sponsor themselves they do need to transition to the managing broker license by passing a transition exam –Attorneys must have been a real estate licensee for 2 of the last 3 years to obtain the managing broker license 36

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