IL Real Estate cheat sheet

Fiduciary duties in Illinois brokerage are commonly summarized as obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care (OLD CAR).

A written agency agreement must be in place before a licensee provides residential brokerage services to a client in Illinois.

Dual agency requires the informed written consent of both buyer and seller and limits the licensee's ability to advocate for either party.

Designated agency assigns one licensee to represent the buyer and another to represent the seller within the same brokerage.

Compensation does not create an agency relationship; a cooperating broker may be paid by the listing broker without representing the seller.

Confidential information learned during an agency relationship generally remains protected after the relationship ends.

A licensee must disclose known material facts about the property to the client and must not conceal adverse facts.

Escrow funds must be held in a separate special account; commingling broker funds with client funds is prohibited.

Fixture test: an item becomes real property when it is annexed to the land, adapted to the property's use, and the parties intended it to be permanent.

Fee simple absolute is the most complete ownership estate; it has no termination date and is freely inheritable and alienable.

A life estate lasts for the lifetime of a named person; the life tenant must not commit waste and usually pays ordinary taxes and maintenance.

Tenancy in common has no right of survivorship and owners may hold unequal shares; joint tenancy requires equal shares and the four unities.

An easement appurtenant benefits a dominant parcel and burdens a servient parcel; an easement in gross benefits a person or entity, not a parcel.

A lien is an encumbrance that secures debt; a mortgage lien does not transfer title in a lien-theory state such as Illinois.

A condominium owner holds title to a unit plus an undivided interest in common elements; a cooperative owner holds shares in a corporation plus a proprietary lease.

Riparian rights relate to land bordering a watercourse; littoral rights relate to land bordering a lake or sea.

Statute of Frauds requires a real estate sale contract to be in writing, signed by the party to be charged, and to identify the parties, property, and price.

A counteroffer terminates the original offer; acceptance must be communicated and must mirror the offer's terms.

Earnest money is not required for contract validity; it is evidence of good faith and may be liquidated damages if the buyer defaults.

Contingencies make a contract conditional; common contingencies include financing, inspection, appraisal, and sale of the buyer's home.

Specific performance is a remedy that compels a breaching party to perform; damages and liquidated damages are alternative remedies.

An option gives the holder the right to buy or lease at set terms within a set period; a right of first refusal gives the holder the first chance to match a third-party offer.

Illinois Residential Real Property Disclosure Act requires sellers to disclose known material defects; the disclosure is not a warranty of condition.

Assignment transfers contract rights and duties; novation substitutes a new party and releases the original party.

A 'time is of the essence' clause makes deadlines enforceable; missing a deadline can be a material breach.

Loan-to-value ratio = loan amount ÷ property value; a higher LTV generally means higher lender risk.

PITI = principal, interest, taxes, and insurance; it approximates the monthly housing obligation used in qualifying.

One discount point equals 1% of the loan amount; paying points generally lowers the interest rate.

In an adjustable-rate mortgage, initial, periodic, and lifetime caps limit how much the rate can change.

RESPA requires a Loan Estimate within three business days of a mortgage application and a Closing Disclosure at least three business days before closing.

The Homeowners Protection Act generally requires automatic PMI termination at 78% LTV based on the original amortization schedule and borrower-requested cancellation at 80%.

Illinois is a lien-theory state; a mortgage creates a lien on the property while the borrower retains title.

Foreclosure in Illinois is generally judicial; the lender files suit and a court supervises the sale.

Monthly payment on an amortizing loan = P × [r(1+r)^n] ÷ [(1+r)^n − 1], where r is the monthly rate and n is the number of payments.

Sales comparison approach estimates value by adjusting comparable sales for differences; add value when the comparable is inferior, subtract when superior.

Gross rent multiplier = sale price ÷ gross monthly rent; it is a quick income indicator, not a full appraisal.

Income approach value = net operating income ÷ capitalization rate.

Cost approach value = replacement or reproduction cost − depreciation + land value.

Depreciation includes physical deterioration, functional obsolescence, and external (economic) obsolescence.

Highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive.

A CMA is prepared by a licensee to help a client set a price; an appraisal is a licensed valuation used for lending and legal purposes.

Reconciliation weights the approaches and comparables based on reliability and relevance to produce a final value opinion.

A valid deed requires a grantor, grantee, words of grant, legal description, grantor's signature, delivery, and acceptance.

General warranty deed contains six covenants: seisin, right to convey, against encumbrances, quiet enjoyment, warranty, and further assurance.

Quitclaim deed transfers whatever interest the grantor may have without warranty; special warranty deed limits warranty to defects during the grantor's ownership.

Recording protects a purchaser against later claims; Illinois is a race-notice state, so a later purchaser wins only if it records first and takes without notice.

Delivery with intent to convey and acceptance by the grantee are required for a deed to be effective; recording is not required between the parties.

Title insurance protects against covered defects; an owner's policy protects the owner and a lender's policy protects the lender.

An easement by prescription requires open, notorious, adverse, and continuous use for the statutory period.

Marketable title is title free from reasonable doubt and encumbrances that a buyer would not be required to accept.

The Illinois Real Estate License Act of 2000 is administered by the Illinois Department of Financial and Professional Regulation (IDFPR).

Illinois license categories include broker, managing broker, and leasing agent; only a licensed broker may be paid a commission for brokerage services.

A broker license requires 75 hours of pre-license education, passage of the state exam, and 45 hours of post-license education within the first two years.

Illinois broker licenses renew every two years and require 12 hours of continuing education per cycle, including 4 hours of core and 8 hours of elective courses.

A licensee may not pay compensation to an unlicensed person for activities that require a license.

Escrow funds must be maintained in a special account; commingling and conversion of escrow funds are grounds for discipline.

Advertising must identify the brokerage name and the licensee; false or misleading advertising is prohibited.

IDFPR may suspend or revoke a license and impose civil penalties for violations of the License Act and administrative rules.

Federal Fair Housing Act prohibits discrimination based on race, color, religion, sex, national origin, familial status, and disability.

Illinois Human Rights Act adds protected classes such as ancestry, age 40+, marital status, military status, sexual orientation, gender identity, pregnancy, and source of income.

Reasonable accommodation is a change in rules or practices for a person with a disability; reasonable modification is a physical change to the property.

Blockbusting, steering, redlining, and panic selling are prohibited fair housing practices.

Advertising must avoid discriminatory preferences; phrases like 'ideal for young families' or 'no children' violate fair housing laws.

The 'Equal Housing Opportunity' logo and statement are commonly used to show compliance in advertising.

The Illinois Residential Real Property Disclosure Act requires sellers to disclose known material defects; the form is not a warranty.

Federal lead-based paint disclosure is required for sales or rentals of housing built before 1978.