Your FREE Illinois Real Estate Flashcards 2026 – 200+ Cards

Illinois Real Estate Exam Flashcards

Illinois entry-level real estate license

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)

Managing Broker (Illinois)

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)

IDFPR

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.'

Division of Real Estate

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

Real Estate License Act of 2000

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

Illinois Broker pre-license education

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

Applied Real Estate Principles (15 hours)

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

Illinois Broker minimum eligibility

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)

Pre-license exemption (Illinois)

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)

Sponsoring broker

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)

Illinois Broker exam pass score

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.

45-hour post-license education

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

Illinois Broker continuing education (CE)

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.

Illinois Broker license renewal date

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

Designated agency (Illinois default)

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)

Designated agent

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)

Dual agency in Illinois

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)

Two designated agents, one firm

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.

When to disclose designated agency

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

Ministerial acts (Illinois)

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

Illinois escrow account rule

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)

Interest on Illinois escrow accounts

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)

Commingling (Illinois)

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.

Disputed earnest money (Illinois)

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 deposit deadline (Illinois)

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)

Residential Real Property Disclosure Report

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.

Illinois Radon Awareness Act

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.

Illinois Real Estate Recovery Fund — single claim cap

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

Illinois Recovery Fund — aggregate cap per licensee

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

Recovery Fund payment consequence

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)

Real Estate Administration and Disciplinary Board

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)

Public members of the Illinois Board

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)

Illinois Human Rights Act (fair housing)

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.

Extra Illinois protected classes

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.

Order-of-protection status

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.

Illinois Real Estate Transfer Tax (State rate)

$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)

Illinois county transfer tax

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)

Who pays the Illinois transfer tax

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)

Residential Leasing Agent (Illinois)

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

Confidentiality after termination (Illinois)

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

Grounds for discipline (Illinois)

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

Sponsor card / sponsorship

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)

Illinois agency disclosure timing

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.

No 'salesperson' in Illinois

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.

Sexual Harassment Prevention Training

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

Illinois Broker scope of practice

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.

Plat Act / surveys (Illinois)

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

Mortgage state (Illinois)

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)

Illinois Plat Act compliance

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

Real property

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

Bundle of rights

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

Fee simple absolute

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

Fixture

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.

MARIA test

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

Easement

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

Encroachment

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

Encumbrance

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

Police power

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.

Eminent domain

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

PETE

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

Escheat

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

Metes and bounds

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

Rectangular (government) survey

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

Section (survey)

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

Acre

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

Lot-and-block description

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

Riparian rights

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

Littoral rights

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

Severalty

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

Tenancy in common

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

Joint tenancy

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

Four unities (joint tenancy)

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

Tenancy by the entirety (Illinois)

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.

General warranty deed

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

Quitclaim deed

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

Delivery and acceptance

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

Recording / constructive notice

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

Title insurance

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

Illinois homestead exemption

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).

Market value

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

Market value vs. price vs. cost

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.

Appraisal

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

Comparative market analysis (CMA)

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

Highest and best use

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

Sales comparison approach

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

Cost approach

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

Income (capitalization) approach

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

Net operating income (NOI)

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

Capitalization rate

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.

Reconciliation (appraisal)

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

Depreciation (appraisal)

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

Contract (valid elements)

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

Statute of frauds

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

Earnest money

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

Contingency

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

Void vs. voidable

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).

Exclusive right-to-sell listing

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

Exclusive agency listing

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

Open listing

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

Agency

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

Fiduciary duties (OLD CAR)

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

Specific performance

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

Procuring cause

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

Liquidated damages

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

Bilateral vs. unilateral contract

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

Fair Housing Act (federal)

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

Steering

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

Blockbusting

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

Redlining

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

Reasonable accommodation

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.

Lease (lessor / lessee)

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

Property management agreement

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

Antitrust — price fixing

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

Trust (escrow) funds

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

Gross lease vs. net lease

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

Material fact

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

Latent defect

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

Illinois Residential Real Property Disclosure Act

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.

Illinois radon disclosure

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.

Lead-based paint disclosure

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.

Radon

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

Asbestos

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

Mold

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

Underground storage tank (UST)

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

Stigmatized property

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

Caveat emptor (limited)

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

Mortgage (Illinois)

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

Judicial foreclosure (Illinois)

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

Equity of redemption

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

Promissory note

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

Loan-to-value ratio (LTV)

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

Conventional loan

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

FHA vs. VA loans

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

RESPA

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

TILA

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

Loan Estimate / Closing Disclosure timing

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

Proration

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

PMI (private mortgage insurance)

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

Commission formula

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

Price for a target seller net

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

Square feet to acres

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

Feet per mile

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

Income approach value

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

Annual property tax

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

Discount points

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

Commission split

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

Loan-to-value from down payment

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

Mill rate

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

Area of a rectangle

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.

Combining parcels

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.

Buyer's agent

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

Seller's (listing) agent

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

Customer vs. client (Illinois)

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

Advertising rules (Illinois)

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

Branch office (Illinois)

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

Inactive / unsponsored license

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

Independent contractor vs. employee

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

Net listing (Illinois caution)

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.

Option contract

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

Assignment of contract

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

Counteroffer

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

Accretion / erosion

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

Appurtenance

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

Life estate

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

Deed restriction (covenant)

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

Variance

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

Nonconforming use

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

Adverse possession

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

Chain of title

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

Abstract of title

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

Marketable title

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

Gross rent multiplier (GRM)

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

Effective gross income

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

Functional obsolescence

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

External obsolescence

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

Principle of substitution

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

Buydown

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

Amortization

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

Balloon payment

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

Acceleration clause

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

Due-on-sale clause

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

Adjustable-rate mortgage (ARM)

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

Closing / settlement

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

Debit vs. credit (settlement)

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

Proration of taxes

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

Percentage / rate problems

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

Profit / loss on sale

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

Net to seller

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

Assessed value vs. market value

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

Square footage of a multi-story home

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.

Subagency

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

Puffing vs. misrepresentation

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

Time is of the essence

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

Novation

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

ADA (public accommodations)

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

Security deposit handling

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

Megan's Law / sex-offender info

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

Flood zone disclosure

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

Mortgage vs. deed of trust

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

Closing statement reconciliation

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.