Your FREE Illinois Real Estate Flashcards 2026 – 200+ Cards

Broker. Since 2011 Illinois has had NO 'salesperson' license — the entry-level license is the Broker, and Managing Broker is the upper, supervisory tier. (225 ILCS 454)

A broker who has supervisory responsibility for licensees in one or more offices; the upper tier above the entry-level Broker license. Requires added education and experience. (225 ILCS 454/1-10)

Illinois Department of Financial and Professional Regulation — administers and enforces the Real Estate License Act of 2000 through its Division of Real Estate. There is no separate 'Real Estate Commission.'

The unit within IDFPR that regulates real estate licensees in Illinois, headed by a Director appointed by the IDFPR Secretary.

225 ILCS 454 — the Illinois statute governing licensing and practice of brokers and managing brokers; abolished the salesperson license effective 2011.

75 hours of approved instruction: 60 hours of Real Estate Topics plus 15 hours of Applied Real Estate Principles (interactive/situational).

The interactive, case-study portion of the 75-hour Broker pre-license course; delivered in a classroom, live webinar, or online distance-education format.

At least 18 years old with a high school diploma or GED, plus the 75-hour pre-license course and a passing exam score. (225 ILCS 454)

Attorneys currently admitted to practice law by the Supreme Court of Illinois are exempt from the 75-hour pre-license education and the high-school-diploma requirement. (225 ILCS 454/5-25)

A licensed broker (or company) under whom a sponsored licensee must work; an Illinois licensee may not engage in licensed activity without sponsorship. (225 ILCS 454)

A scaled score of 75% (75) is required to pass; the exam has a national/general portion and an Illinois state-specific portion. Roughly three-quarters of first-time takers pass.

A newly licensed Illinois Broker must complete a 45-hour post-license program (three 15-hour courses) before the first license renewal.

12 hours per two-year renewal: a 6-hour Core course plus 6 hours of electives, with Sexual Harassment Prevention Training counting toward the requirement.

April 30 of every even-numbered year, on a two-year cycle. (Managing Brokers renew April 30 of odd-numbered years.)

The default agency relationship in Illinois: the sponsoring broker is presumed to appoint the sponsored licensee working with a client as that client's legal agent. (225 ILCS 454/15-50)

The individual sponsored licensee named by the sponsoring broker as the legal agent of a client — insulating other licensees in the firm from that agency. (225 ILCS 454/1-10)

Permitted only with the written, informed consent of all clients, given before the licensee acts as a dual agent. The Act provides statutory disclosure-and-consent forms. (Article 15)

In Illinois, the sponsoring broker may appoint different designated agents for the buyer and the seller in the same transaction without the firm itself becoming a dual agent.

In writing, no later than when the licensee begins working as a designated agent on the consumer's behalf. (Article 15)

Informational or clerical acts — like showing property or giving factual information — that do NOT, by themselves, create an agency relationship under Article 15.

A broker must hold escrow moneys belonging to others (e.g., earnest money) in a special account, separate and apart from personal and other business funds. (225 ILCS 454/20-20)

The escrow special account is non-interest-bearing by default, unless the principals to the transaction agree in writing to an interest-bearing account. (225 ILCS 454/20-20)

Mixing escrow funds belonging to others with the licensee's own money or property — prohibited and grounds for discipline under 225 ILCS 454/20-20.

The broker must keep disputed earnest money in escrow and may release it only by written agreement of the parties, a court order, or as the rules at 68 Ill. Adm. Code 1450.750 permit.

Escrow moneys must be turned over to the sponsoring broker promptly and deposited by the next business day following acceptance of the contract. (225 ILCS 454/20-20; 68 Ill. Adm. Code 1450.750)

Required by the Illinois Residential Real Property Disclosure Act (765 ILCS 77); the seller discloses known material defects to the buyer. It is a disclosure of actual knowledge, not a warranty.

On a residential sale, the seller must give the buyer (before contract) the Illinois Disclosure of Information on Radon Hazards and the IEMA radon pamphlet.

An aggrieved person may recover up to $25,000 from the Fund for damages in a single transaction. (225 ILCS 454/20-85)

Maximum total liability against the Fund arising out of the activities of any one licensee is $100,000. (225 ILCS 454/20-85)

When the Fund pays a claim, the licensee's license is automatically terminated/suspended until the licensee repays the Fund in full plus interest. (225 ILCS 454/20-85)

A 15-member board appointed by the Governor (12 active managing brokers/brokers + 3 public members) that advises IDFPR and recommends discipline. (225 ILCS 454/25-10)

Of the 15 board members, 3 must be public members representing consumer interests — not licensees, spouses, or immediate family of licensees. (225 ILCS 454/25-10)

775 ILCS 5, Article 3 — prohibits discrimination in Illinois real estate transactions and adds protected classes beyond the federal seven; enforced by the Illinois Department of Human Rights.

Beyond the federal seven, the Illinois Human Rights Act adds source of income, marital status, sexual orientation, age, military status, order-of-protection status, and more.

An Illinois Human Rights Act protected class — it is illegal to discriminate in housing against a person who is, or has been, protected by an order of protection.

$0.50 per $500 of value (i.e., $1.00 per $1,000). Administered by the Illinois Department of Revenue; stamps collected by county recorders. (35 ILCS 200, Art. 31)

Counties may impose a transfer tax of $0.25 per $500 of value — half the State rate. Home rule municipalities may add their own. (35 ILCS 200, Art. 31)

The seller (grantor) is primarily responsible for the State and county transfer tax. Some home rule municipal taxes shift to the buyer. (35 ILCS 200, Art. 31)

A separate license limited to leasing residential real property; distinct from the Broker license and may not be used for sales. (225 ILCS 454)

A licensee's duty not to disclose confidential client information survives the end of the agency relationship. (Article 15, 225 ILCS 454)

Commingling/converting escrow funds, substantial misrepresentation, fraud, failing to account, and unlicensed practice are grounds for IDFPR discipline. (225 ILCS 454/20-20)

An Illinois licensee may not engage in licensed activity unless actively sponsored by a sponsoring broker, with the sponsorship documented and on file. (225 ILCS 454)

Designated agency must be disclosed in writing no later than when the licensee starts representing the consumer; dual-agency consent must be obtained before acting as a dual agent.

Since 2011, Illinois licenses Brokers (entry-level) and Managing Brokers (supervisory). The word 'salesperson' is a common exam distractor — it is not an Illinois license category.

A required component counting toward Illinois real estate CE; it is part of the 12-hour Broker renewal and the post-license curriculum.

An Illinois Broker may, for compensation and under a sponsoring broker, list, sell, buy, lease, exchange, and manage real estate and prepare CMAs — but must be supervised, not independent.

Illinois's Plat Act governs the subdivision and platting of land; legal descriptions in Illinois commonly use lot-and-block references to recorded plats.

Illinois is a lien-theory, mortgage state — the borrower keeps title and the lender holds a lien. Foreclosure is judicial through the courts. (735 ILCS 5, Art. XV)

Before a deed for a subdivided parcel is recorded, the division generally must comply with the Plat Act unless an exemption applies.

A licensee who represents the buyer's interests; in Illinois, typically a designated agent appointed by the sponsoring broker.

A licensee who represents the seller; in Illinois, a designated agent named by the sponsoring broker for the seller.

A client is represented (owed fiduciary duties); a customer is not represented but is still owed honesty and material-defect disclosure.

All licensee advertising must include the sponsoring broker's business name; blind ads (no broker identification) are prohibited under the Act and rules.

A separate place of business of a sponsoring broker; each branch must be registered/licensed and supervised by a managing broker.

A licensee without a sponsoring broker is inactive and may not perform licensed activity until sponsorship is restored. (225 ILCS 454)

Many Illinois licensees work as independent contractors of the sponsoring broker, but the broker still supervises licensed activity.

Land plus everything permanently attached to it (improvements and fixtures) and the bundle of legal rights of ownership.

Possession, use (enjoyment), exclusion, disposition (transfer), and control — the rights that come with ownership.

The most complete ownership — of unlimited duration, freely transferable by deed or will, and inheritable.

Personal property attached to real property so it becomes part of it and transfers with the land. The MARIA tests decide whether an item is a fixture.

Method of attachment, Adaptability, Relationship of the parties, Intention, and Agreement — the factors that determine whether an item is a fixture.

A nonpossessory right to use another's land for a specific purpose, such as a driveway or utility line.

An unauthorized intrusion of an improvement (fence, building) onto a neighbor's land — a title and survey issue.

Any claim, lien, charge, or right that limits an owner's title — liens, easements, encroachments, and deed restrictions.

Government's authority to regulate land for public health, safety, and welfare — the basis of zoning and building codes, with no payment to the owner.

Government's power to take private property for public use through condemnation, paying the owner just compensation.

The four government powers over land: Police power, Eminent domain, Taxation, and Escheat. Only eminent domain pays the owner.

Property reverts to the state when an owner dies with no will and no legal heirs.

A legal description using distances (metes) and compass directions (bounds) traced back to a point of beginning.

Describes land by townships, ranges, and sections relative to principal meridians and base lines.

One square mile — 640 acres — and one thirty-sixth of a 6-mile-square township.

A unit of land area equal to 43,560 square feet.

Refers to a lot and block number on a recorded subdivision plat — the most common description for platted Illinois subdivisions.

The water rights of an owner whose land borders a flowing waterway such as a river or stream.

The water rights of an owner whose land borders a stationary body of water such as a lake or the sea.

Accretion is the gradual addition of land by water deposits; erosion is the gradual loss of land. Both affect property boundaries.

A right or improvement that runs with the land and passes with its transfer — such as an easement appurtenant.

An estate measured by someone's lifetime; on death it passes to a remainderman or reverts to the grantor.

A private limit on land use written into a deed or subdivision plat; enforceable by other owners, separate from zoning.

Permission to deviate from a zoning rule because of unique hardship, without rezoning the property.

A use that was legal before a zoning change and is allowed to continue ('grandfathered') after the new rule.

Sole ownership by one person or entity — no co-owners.

Co-ownership with undivided, willable shares and no right of survivorship; the default co-ownership form in Illinois.

Co-ownership with the right of survivorship; requires the four unities of time, title, interest, and possession.

Time, Title, Interest, and Possession — all four must exist to create a valid joint tenancy with survivorship.

A form of ownership available only to married couples for homestead/principal-residence property, with survivorship and creditor protection. Illinois recognizes it for a couple's homestead.

Gives the most protection — the grantor warrants clear title against all defects, even those arising before the grantor's ownership.

Conveys only whatever interest the grantor has, with no warranties; often used to clear a cloud on title.

Title transfers when the grantor delivers and the grantee accepts the deed — not on recording.

Recording a deed at the county recorder gives constructive notice to the world and establishes priority among interests.

A policy protecting the insured against loss from title defects (liens, recording errors) that existed before the policy date.

Protects a portion of a homeowner's equity in a principal residence from certain creditors; Illinois sets a statutory dollar exemption (735 ILCS 5/12-901).

Acquiring title by open, notorious, continuous, hostile, and exclusive possession for the statutory period; Illinois sets the timeframe by statute.

The recorded history of ownership transfers; a gap or defect creates a cloud on title.

A summary of the recorded documents affecting title, used (with an attorney's opinion or title insurance) to evaluate marketability.

Title free from reasonable doubt or serious defects, which a buyer can be compelled to accept.

The most probable price a property should bring in a competitive, open market under fair conditions — an opinion of value.

Value is an opinion of worth; price is what a buyer actually paid; cost is the money spent to build or improve. They are not the same.

An impartial, supported opinion of value prepared by a licensed appraiser as of a specific date, following USPAP.

A licensee's estimate of value from recent comparable sales used to help price a listing — not a formal appraisal.

The legally permissible, physically possible, financially feasible, and most profitable use of a site — the basis of value.

Compares the subject to recently sold similar properties, adjusting for differences. Best for single-family homes; based on substitution.

Land value + cost to rebuild the improvements new − depreciation. Best for new or special-use property.

Value $= \dfrac{\text{Net operating income}}{\text{Capitalization rate}}$. Best for income-producing property.

Effective gross income minus operating expenses, before any mortgage payment — the income figure used in the income approach.

The rate of return on an income property: $\text{cap rate} = \dfrac{\text{NOI}}{\text{value}}$. A higher cap rate implies more risk and lower value.

Weighing the three value indications into one final opinion — not simply averaging them.

Loss in value from physical deterioration, functional obsolescence, or external (economic) obsolescence.

Value $= \text{GRM} \times \text{gross rent}$; a quick income screen used mainly for residential rentals.

Potential gross income minus vacancy and collection loss, plus other income — the figure before operating expenses in the income approach.

Loss in value from outdated design or features (e.g., a one-car garage), independent of physical condition.

Loss in value from factors outside the property (e.g., a nearby nuisance) — usually incurable by the owner.

A buyer will pay no more for a property than the cost of an equally desirable substitute — the basis of the sales comparison approach.

A legally enforceable agreement needing mutual agreement, consideration, legal purpose, and competent parties — and, for real estate, a writing.

Requires real estate sale contracts (and most leases over one year) to be in writing to be enforceable.

A buyer's good-faith deposit; held in the broker's escrow account and usually applied to the price at closing.

A condition that must be met for a contract to become binding — such as financing, inspection, or appraisal contingencies.

Void = missing an essential element, no legal effect; voidable = valid until a party with the right chooses to rescind (e.g., a minor's contract).

The listing broker earns the commission no matter who finds the buyer — the most protective listing for the broker.

The broker earns the commission unless the owner personally sells the property.

Only the broker who actually finds the buyer earns the commission; the seller may list with several brokers.

A fiduciary relationship in which an agent represents a principal in dealings with third parties.

Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care — the duties an agent owes the principal.

A court order making a defaulting seller complete the sale; available because land is considered unique.

The broker whose efforts directly led to the sale — relevant to who earns the commission, especially on open listings.

An agreed-in-advance amount (often the earnest money) a seller keeps if the buyer defaults, in place of suing for actual damages.

Bilateral = a promise for a promise (sale contract); unilateral = a promise for an act (an option, or an open listing).

A listing where the broker keeps any amount above the seller's set price — disfavored as a conflict of interest and restricted in many states.

A unilateral contract giving a buyer the right, but not the obligation, to buy within a set period for a stated price, for consideration.

Transferring contract rights to another party; allowed unless the contract or law forbids it.

A response that changes the terms of an offer; it rejects the original offer and creates a new one the other party may accept.

An agency relationship created when a cooperating broker works on behalf of the listing broker's principal — less common under designated agency.

Puffing is opinion/sales talk ('best view in town'); a false statement of material fact is misrepresentation and is actionable.

A contract clause making the stated deadlines strict; missing a date can be a material breach.

Substituting a new contract or party for an old one, releasing the original obligor with all parties' consent.

The 1968 law banning housing discrimination based on race, color, religion, national origin, sex, familial status, and disability — seven protected classes.

Illegally guiding buyers toward or away from neighborhoods based on a protected class — a fair-housing violation.

Inducing owners to sell by claiming members of a protected class are moving into the area — a fair-housing violation.

A lender refusing to lend or insure in an area based on its demographic makeup — a fair-housing/lending violation.

A change in rules or services a housing provider must allow so a person with a disability can use a dwelling — such as a service animal.

A contract conveying the right to use property for a term in exchange for rent; landlord = lessor, tenant = lessee.

Employs a managing broker/agent to operate property for an owner — collecting rent, maintaining the property, and accounting for funds.

Agreeing with competitors to set commission rates is an illegal antitrust violation; commissions are always negotiable.

Client money — like earnest money or security deposits — that a broker must keep separate from personal funds; commingling is a violation.

Gross lease: landlord pays operating expenses. Net lease: tenant pays some or all of taxes, insurance, and maintenance.

The Americans with Disabilities Act requires commercial/public-accommodation properties to be accessible — separate from fair-housing rules for dwellings.

A managing broker must hold tenant security deposits per the lease and applicable law and account for them — they are trust funds.

A fact that would affect a reasonable buyer's decision or price; in Illinois the seller discloses known material defects on the statutory report.

A hidden physical defect not discoverable by ordinary inspection; a known latent defect must be disclosed.

765 ILCS 77 — requires the seller to give the buyer a Residential Real Property Disclosure Report of known material defects; a disclosure of knowledge, not a warranty.

Under the Radon Awareness Act, a residential seller must give the buyer the Illinois Disclosure of Information on Radon Hazards and the IEMA radon pamphlet before contract.

Federal Title X requires sellers/lessors of pre-1978 housing to disclose known lead paint, give the EPA/HUD pamphlet 'Protect Your Family From Lead in Your Home,' and (for sales) a 10-day test window.

An odorless, radioactive gas from soil that can accumulate indoors; Illinois requires radon-hazard disclosure on residential sales.

A hazardous material in old insulation and flooring; remove or encapsulate to control fibers.

Grows in damp areas; may require disclosure and remediation as a material condition.

Can leak and contaminate soil and groundwater, creating potential cleanup liability for an owner.

A property psychologically impacted by an event (e.g., a death); Illinois law limits when such facts must be disclosed.

'Let the buyer beware' — now limited by Illinois and federal disclosure laws requiring sellers to reveal known material defects.

Buyers can access public sex-offender registries; licensees generally direct buyers to the registry rather than independently disclosing.

A property in a FEMA-designated flood zone may require flood insurance; flood risk is a material condition buyers consider.

Illinois's security instrument: the borrower (mortgagor) keeps title and gives the lender (mortgagee) a lien. Illinois is a lien-theory state.

Because Illinois is a mortgage, lien-theory state, foreclosure runs through the courts under the Illinois Mortgage Foreclosure Law (735 ILCS 5, Art. XV).

A defaulting borrower's right to reinstate or pay off the debt and reclaim the property; Illinois sets statutory redemption periods.

The borrower's written promise to repay the debt; the mortgage secures the note with the property.

$\text{LTV} = \dfrac{\text{loan amount}}{\text{value or price}}$. A higher LTV means a smaller down payment and more lender risk.

A loan not insured or guaranteed by the government; LTV above 80% usually requires private mortgage insurance (PMI).

FHA loans are government-insured (low down payment); VA loans are government-guaranteed for eligible veterans (often 0% down).

The Real Estate Settlement Procedures Act — requires loan-cost disclosures (Loan Estimate, Closing Disclosure) and prohibits kickbacks at closing.

The Truth in Lending Act — requires lenders to disclose the cost of credit, including the annual percentage rate (APR).

Loan Estimate within 3 business days of application; Closing Disclosure at least 3 business days before closing.

Dividing prepaid or accrued expenses — taxes, rent, interest — fairly between buyer and seller as of the closing date.

Insurance a lender requires on a conventional loan when the LTV is above 80%, protecting the lender against borrower default.

Paying points up front to lower the interest rate for some or all of the loan term.

Paying off a loan with regular payments of principal and interest so the balance reaches zero by the end of the term.

A large final payment due at the end of a loan that was not fully amortized over its term.

Lets a lender demand the full balance at once when the borrower defaults — the basis for foreclosure.

Requires the loan to be paid in full when the property is sold, preventing an unapproved assumption.

A loan whose interest rate changes periodically based on an index plus a margin, subject to rate caps.

The final step where funds are disbursed, the deed is delivered and recorded, and the buyer takes title.

Illinois uses a mortgage (two parties, judicial foreclosure); deed-of-trust states use a trustee and non-judicial sale. Know which your state uses.

Commission $= \text{sale price} \times \text{rate}$. A $300,000 sale at 6% is a $18,000 commission.

Price $= \dfrac{\text{net}}{1 - \text{rate}}$. To net $300,000 after 6%, divide by 0.94 → $319,149.

Divide square feet by 43,560. One acre = 43,560 sq ft; one section = 640 acres.

1 mile = 5,280 feet. Memorize this and 43,560 sq ft/acre — they are not provided at the test center.

Value $= \dfrac{\text{NOI}}{\text{cap rate}}$. A $135,000 NOI at a 9% cap rate gives $1,500,000.

Tax $= \text{assessed value} \times \text{tax rate}$ (or mills $\times 0.001$). 18 mills on $320,000 = $5,760.

Each point is 1% of the loan amount. 1.5 points on a $425,000 loan = $0.015 \times 425{,}000$ = $6,375.

Apply each percentage in turn: total commission → brokerage share → agent split. A 70/30 agent split keeps 70% of the brokerage's portion.

LTV $= \dfrac{\text{loan}}{\text{price}} = 1 - \dfrac{\text{down payment}}{\text{price}}$. A $45,000 down on $375,000 = 88% LTV.

1 mill = $1 per $1,000 of assessed value, or 0.001. Tax levy ÷ assessed base = the mill rate needed.

Area $= \text{length} \times \text{width}$. A 0.5-acre rectangular lot (21,780 sq ft) that is 145 ft deep is 150 ft wide.

Add the acreages, then multiply by 43,560 to convert to square feet. 0.75 + 1.25 + 2.5 = 4.5 acres = 196,020 sq ft.

On a settlement statement, a debit is a charge to a party; a credit is an amount owed to that party.

Split unpaid or prepaid taxes between buyer and seller by days of ownership; the seller is usually charged through the closing date.

Part $= \text{whole} \times \text{rate}$; rearrange to find any missing piece (e.g., rate = part ÷ whole).

Percent change $= \dfrac{\text{new} - \text{old}}{\text{old}}$. A gain divides by the original cost, not the sale price.

Sale price minus commission and the seller's other closing costs and loan payoff equals the seller's net proceeds.

Assessed value is the figure used for taxes (often a fraction of market value via an assessment ratio), not the market price.

Add the finished area of each floor. A 1,800 sq ft main floor plus a 1,100 sq ft second story totals 2,900 sq ft.

The total debits and credits must balance for each party and overall; the buyer's cash to close and the seller's net both come from this balancing.