- Official section
- Illinois II: Illinois Real Estate License Act
- Broker weight
- 40% of the state portion, approximately 16 of 40 scored questions
- Expected scored items
- The current PSI broker outline assigns 40% of the Illinois portion to the Real Estate License Act
Illinois practice guide
Turn the License Act into actor, trigger, duty, and consequence
A 16-question area deserves more than a list of prohibited acts. Build each problem as a small compliance decision. Who acted? Which relationship existed? What event triggered the rule? What had to be disclosed, written, deposited, delivered, supervised, or refused? What consequence follows if the licensee took the shortcut?
Last updated: August 1, 2026
What skill does this practice set measure?
Short answer: Prioritize agency and material facts; sponsoring-broker and sponsored-licensee relationships; accurate advertising and team identity; exclusive and nonexclusive brokerage agreements; minimum services; compensation and interference with existing relationships; licensed and unlicensed assistants; handling client or customer money and security deposits; delivery and retention of documents; disciplinary conduct; CMA and BPO boundaries; purchase and lease agreement handling; and the public-protection purpose of Illinois license law. Read the Act for the governing obligation and 68 Ill. Adm. Code Part 1450 for operational procedure. When a question overlaps the Disclosures area, classify it by what is asked, such as relationship duty versus required written notice.
This page follows the current broker column and preserves PSI's category boundaries. Dual-agency consent, no-agency notice, licensee-interest disclosure, compensation-source disclosure, and named property or environmental notices are practiced separately under Illinois Disclosures even when their legal source touches the License Act. Licensing Requirements is also a separate 10% area. The source review includes the current Part 1450 text and the Section 1450.770 brokerage-agreement amendment effective July 13, 2026. Actual brokerage conduct depends on current statute, Part 1450, written agreements, Department guidance, and facts. Sources were checked through August 1, 2026.
Ready to work the set?
These questions are original study items aligned to the published outline. They are not copied, recalled, or predicted PSI questions.
1. A social-media listing ad gives an individual broker's brand dominant placement and hides the sponsoring broker in much smaller text. Which rule cluster is most directly implicated?
- Illinois advertising and sponsoring-broker identification
- Property-tax assessment
- Mortgage amortization
- Deed delivery
Show answer and explanation
Answer: Illinois advertising and sponsoring-broker identification
Digital promotion is advertising, and current Part 1450 regulates sponsor inclusion and relative prominence.
2. Which task may an Illinois unlicensed assistant perform under appropriate supervision?
- Assemble signed transaction documents in a file
- Show a listed home to a buyer
- Explain an inspection contingency
- Negotiate a commission
Show answer and explanation
Answer: Assemble signed transaction documents in a file
Administrative assembly is permitted. Showing, interpreting, and negotiating require licensed activity.
3. A buyer and seller dispute earnest-money entitlement and provide no mutual written direction. What should the sponsoring broker do?
- Continue holding the funds until an authorized disbursement basis exists
- Pay the party who calls first
- Split the money based on personal fairness
- Move the funds into the operating account
Show answer and explanation
Answer: Continue holding the funds until an authorized disbursement basis exists
A unilateral demand does not resolve a written dispute. Disbursement must follow the agreement, law, court process, or another authorized route.
4. A client offers a sponsored broker a private cash bonus for licensed activity, outside the sponsoring brokerage. What is the best response?
- Decline direct payment and route compensation through the sponsoring broker
- Accept it because the client chose the amount
- Accept it if no receipt is issued
- Deposit it into the client escrow account
Show answer and explanation
Answer: Decline direct payment and route compensation through the sponsoring broker
Compensation for licensed activity by a sponsored licensee generally must pass through the sponsoring broker and required records.
5. Which action stays within the Illinois broker's limited contract-form boundary?
- Filling agreed factual terms into a customary preliminary purchase form at the parties' direction
- Drafting a deed from scratch
- Giving a legal opinion about a disputed title clause
- Preparing a mortgage instrument for the lender
Show answer and explanation
Answer: Filling agreed factual terms into a customary preliminary purchase form at the parties' direction
Illinois case law permits a narrow preliminary-form role. Drafting later legal instruments or giving legal advice falls outside it.
Which answer habits should you watch for?
- Trap
- A private contract can waive every License Act protection.
- Correction
- Mandatory public-protection, supervision, disclosure, money, and conduct rules cannot be erased by convenient wording.
- Trap
- A customer is owed no duties because the licensee represents the other party.
- Correction
- Illinois still imposes honesty and specified material-fact duties toward customers.
- Trap
- A client can make a known physical defect confidential.
- Correction
- Confidentiality does not authorize concealment of material information that Illinois law requires disclosed.
- Trap
- A small sponsor name anywhere cures every advertisement.
- Correction
- Current rules address both inclusion and relative prominence, and the full message must not mislead.
- Trap
- A team is an independent brokerage.
- Correction
- The team remains within its sponsoring broker and may not advertise in a way that creates a false independent-company impression.
- Trap
- An exclusive agreement lets the brokerage omit statutory minimum services.
- Correction
- Illinois minimum-service duties still apply to the covered exclusive relationship.
- Trap
- A client may pay a sponsored licensee directly in cash.
- Correction
- Compensation for licensed activity generally routes through the sponsoring broker and required records.
- Trap
- An unlicensed assistant may show property if a broker is reachable by phone.
- Correction
- Supervision does not turn prohibited licensed activity into an administrative task.
- Trap
- One party's escrow demand authorizes immediate disbursement.
- Correction
- A dispute requires an authorized agreement, court process, or other rule-based ground, not personal judgment.
- Trap
- Temporary operating-account deposit is harmless.
- Correction
- Improper mixing can be commingling even when the broker intends to move the funds later.
- Trap
- A paid broker opinion becomes an appraisal.
- Correction
- Compensation does not change professional scope. Use the proper CMA or BPO label, purpose, and disclosures.
- Trap
- Filling contract blanks permits drafting every legal document.
- Correction
- Illinois's limited preliminary-form role does not extend to drafting deeds, mortgages, or legal advice.
How should you reason through a difficult item?
A social post still needs its sponsoring broker
Scenario: A sponsored broker posts a listing video using only the broker's personal brand. The sponsoring broker is named in tiny text at the end while the personal name dominates every frame.
- The video promotes licensed brokerage activity and is advertising.
- Digital and temporary formats remain subject to Part 1450.
- Sponsor identity and the current prominence comparison must be satisfied across the advertisement as required.
Answer: Revise the advertisement to identify the sponsoring broker accurately and with the required prominence before use.
Administrative assembly is not contract advice
Scenario: An unlicensed assistant is told to arrange signed documents in the transaction file, deliver a copy, and explain why the buyer should waive an inspection contingency.
- File assembly and authorized document delivery can be administrative tasks.
- Explaining a contingency and persuading a buyer about waiver require licensed judgment and transaction advice.
- Combining the tasks does not make the prohibited portion permissible.
Answer: The assistant may perform the permitted administrative work but may not explain or recommend the waiver.
A unilateral demand does not resolve escrow
Scenario: A purchase contract terminates after an inspection dispute. The seller demands all earnest money, the buyer objects in writing, and the sponsoring broker holds the deposit.
- The money remains entrusted escrow money in the sponsoring broker's custody.
- The parties dispute entitlement and no mutual written direction is supplied.
- Personal belief about the stronger claim is not a rule-authorized disbursement basis.
Answer: Continue holding and documenting the funds until an authorized agreement, court process, or other rule-based disbursement event applies.
Compensation follows the sponsoring relationship
Scenario: A buyer offers to pay the sponsored broker a cash bonus personally at closing for successful negotiation, outside the sponsoring brokerage's records.
- The proposed payment arises from licensed activity.
- The individual is sponsored rather than operating an independent brokerage.
- Direct off-record payment bypasses the sponsor, agreement, disclosure, accounting, and compensation rules.
Answer: The sponsored broker should not accept the direct payment and must route compensation through the sponsoring broker under current rules.
A BPO cannot become the appraisal by relabeling
Scenario: A broker prepares a paid BPO and markets it as a certified appraisal that will be the primary market-value basis for a lender's mortgage-origination decision.
- The product was prepared under brokerage rather than appraisal authority.
- Calling it an appraisal misstates its nature and professional scope.
- The stated mortgage-origination use falls within the Act's BPO and CMA restriction.
Answer: The broker may not present or use the BPO in the stated manner.
The preliminary-form exception remains narrow
Scenario: At the parties' direction, a broker fills names, price, dates, and agreed factual terms into a customary preliminary purchase-contract form, then offers to draft the deed and interpret a disputed title clause.
- Limited factual completion of a customary preliminary form can fit the Illinois brokerage boundary.
- Drafting the conveyance instrument and giving legal interpretation are different activities.
- The permitted first task does not authorize the later legal work.
Answer: The broker may stay within the limited factual form role but should refer the deed and legal interpretation to an attorney.
How should you answer an Illinois License Act question?
- Identify the consumer, client, customer, licensee, sponsored licensee, sponsoring broker, assistant, team, and other brokerage.
- Classify the event as agency, advertising, agreement, compensation, assistance, money, document, valuation, discipline, or contract handling.
- Find the triggering fact, such as exclusivity, receipt of funds, sponsor identity, known material information, licensed judgment, or disputed disbursement.
- Apply the Act's governing duty and Part 1450's operational procedure together.
- Check writing, signature, copy delivery, timing, supervision, record retention, consent, and authorized recipient.
- Separate a relationship duty from a required disclosure form when PSI places them in different state areas.
- Reject shortcuts that hide the sponsor, bypass the special account, pay an unauthorized person, let an assistant negotiate, or ask a broker to practice law.
- Choose the response that preserves informed consumer choice, accurate records, proper supervision, safeguarded funds, and public protection.
- Question clue
- Known client motivation
- Primary rule cluster
- Agency confidentiality
- Best exam direction
- Protect unless authorized or legally required
- Question clue
- Known latent adverse physical fact
- Primary rule cluster
- Material-fact duty
- Best exam direction
- Do not conceal from the affected customer
- Question clue
- Sponsor name hidden in a social ad
- Primary rule cluster
- Advertising
- Best exam direction
- Correct identity and prominence before publishing
- Question clue
- Exclusive client receives upload-only service
- Primary rule cluster
- Minimum services
- Best exam direction
- Provide the statutory service obligations
- Question clue
- Client pays sponsored broker directly
- Primary rule cluster
- Compensation routing
- Best exam direction
- Route licensed-activity compensation through the sponsor
- Question clue
- Assistant asked to explain a clause
- Primary rule cluster
- Unlicensed assistant boundary
- Best exam direction
- Allow assembly or delivery, not interpretation
- Question clue
- Earnest money placed in operating account
- Primary rule cluster
- Escrow and commingling
- Best exam direction
- Use the required special-account process
- Question clue
- One party demands disputed deposit
- Primary rule cluster
- Authorized disbursement
- Best exam direction
- Hold until a rule-authorized basis exists
- Question clue
- Broker calls BPO an appraisal
- Primary rule cluster
- Valuation boundary
- Best exam direction
- Use accurate CMA or BPO label and disclosures
- Question clue
- Broker drafts deed language
- Primary rule cluster
- Practice boundary
- Best exam direction
- Refer legal drafting beyond the limited preliminary-form role
Which outline areas does this set sample?
- Topic
- Purpose, definitions, and public protection
- What to know
- Professional competence, public protection, licensee, consumer, client, customer, agent, designated agent, sponsoring broker, sponsored licensee, compensation, escrow money, brokerage agreement, team, advertising, and licensed activity
- Best exam move
- Use the statutory definitions before applying a familiar national label or private contract shortcut.
- Topic
- Agency relationships and material facts
- What to know
- Consumer, client, customer, designated agency, written alternative, client duties, customer duties, confidentiality, lawful obedience, material fact, latent adverse physical fact, stigmatized property, transaction fact, and termination
- Best exam move
- Identify who is represented, what information is protected, and what known property or transaction information cannot be concealed.
- Topic
- Sponsoring broker and sponsored licensee
- What to know
- Written employment or association, sponsorship registration, active status, termination, office, supervision, policy, transaction control, advertising, escrow, records, compensation, delegation, and designated managing broker
- Best exam move
- Trace the sponsored licensee's activity, funds, documents, advertising, and compensation through the responsible sponsoring brokerage.
- Topic
- Advertising
- What to know
- Truthful message, misleading practice, blind ad, sponsoring-broker name, individual name, team name, prominence, size, assumed name, franchise, digital platform, social media, website, unsolicited marketing, listing authority, price, availability, and records
- Best exam move
- Read the full message and presentation, then verify truth, authority, sponsorship identity, prominence, and fair housing compliance.
- Topic
- Brokerage agreements
- What to know
- Written agreement, exclusive, nonexclusive, buyer, seller, landlord, tenant, definite termination date, compensation, duties, consent, agency status, minimum services, copy delivery, renewal, protection period, and no automatic extension
- Best exam move
- Identify the client, exclusivity, term, services, compensation, signature, and delivery rather than assuming every agreement works alike.
- Topic
- Minimum services
- What to know
- Accept delivery and present offers, assist negotiation, answer client questions, provide information, receive notices, contingencies, waivers, satisfaction, and exclusive brokerage agreement
- Best exam move
- Reject an answer that reduces an exclusive arrangement to a listing upload while avoiding required client services.
- Topic
- Compensation and interference
- What to know
- Payment through sponsoring broker, client payment, cooperating brokerage, former sponsored licensee, referral, rebate, disclosure, inducement, unlicensed person, existing exclusive agreement, solicitation, negotiation, and interference
- Best exam move
- Ask who earned the compensation, who may receive it, what agreement exists, and whether another brokerage relationship is being disrupted.
- Topic
- Licensed and unlicensed assistants
- What to know
- Administrative task, clerical assembly, scheduling, document delivery, public information, sign placement, property access, showing, open house, solicitation, explanation, interpretation, negotiation, compensation, judgment, and supervision
- Best exam move
- Separate neutral administration from conduct requiring licensed judgment, persuasion, interpretation, or negotiation.
- Topic
- Real estate teams
- What to know
- Team name, sponsoring broker, group of licensees, advertising identity, registration, records, supervision, compensation, misleading impression, office, and no separate brokerage status
- Best exam move
- Keep the team inside the sponsoring brokerage and reject branding that suggests an independent real estate company.
- Topic
- Handling client and customer money
- What to know
- Escrow money, earnest money, security deposit, sponsoring broker, special account, deposit timing, ledger, reconciliation, receipt, personal funds, commingling, conversion, interest, dispute, authorized disbursement, court action, written direction, and records
- Best exam move
- Trace receipt, account, timing, ownership, documentation, dispute, and authorized release without inventing a fairness exception.
- Topic
- Handling documents and records
- What to know
- Offer, contract, lease, brokerage agreement, disclosure, consent, escrow record, copy delivery, signature, initial, electronic record, retention, transaction file, sponsoring broker custody, Department access, and alteration
- Best exam move
- Track who signed, who receives a copy, who retains the record, and whether the document remains complete and unaltered.
- Topic
- Disciplinary provisions
- What to know
- Misrepresentation, false promise, advertising violation, undisclosed interest, improper compensation, escrow violation, conversion, unprofessional conduct, incompetence, negligence, document failure, supervision failure, discrimination, discipline, civil penalty, suspension, revocation, and hearing
- Best exam move
- Match the act to public harm and the Department's authority without assuming every violation produces the same sanction.
- Topic
- CMA and BPO requirements
- What to know
- Comparative market analysis, broker price opinion, brokerage purpose, fee, client, property interest, disclosure, no appraisal label, appraiser boundary, mortgage-origination restriction, tax appeal, estate, litigation, and written report
- Best exam move
- Identify purpose, user, compensation, required disclosure, and whether the assignment crosses into appraisal or a prohibited primary valuation use.
- Topic
- Purchase and lease agreements
- What to know
- Customary preliminary form, factual blanks, party direction, negotiation, legal advice, deed, mortgage, later legal instrument, attorney review, delivery, signature, addendum, amendment, and Quinlan and Tyson boundary
- Best exam move
- Allow limited factual completion of customary preliminary forms while rejecting legal drafting and interpretation beyond brokerage scope.
What should you sort out before you begin?
- Terms
- Client vs. customer
- Difference
- A client is represented under a brokerage relationship. A customer is not represented by that licensee but still receives duties imposed by Illinois law.
- Question cue
- Advocacy and client confidentiality versus honest dealing and required material-fact disclosure.
- Terms
- Material fact vs. stigma
- Difference
- A material fact concerns the property or transaction in a legally significant way. A statutory stigma concerns specified events or personal conditions that Illinois treats differently from physical condition.
- Question cue
- Known latent flooding versus an event that did not affect physical condition.
- Terms
- Sponsoring broker vs. sponsored licensee
- Difference
- The sponsoring broker holds the registered relationship and responsibility for office systems, supervision, records, funds, advertising, and compensation. The sponsored licensee performs licensed activity through that relationship.
- Question cue
- Who receives money, stores the file, approves the ad, or supervises the act.
- Terms
- Individual ad vs. team ad
- Difference
- Both remain advertising of the sponsoring brokerage and must identify the sponsor as required. A team is not a separate brokerage merely because it has branding.
- Question cue
- Personal or team name dominates while the sponsoring broker is hidden or too small.
- Terms
- Exclusive vs. nonexclusive agreement
- Difference
- An exclusive agreement grants the defined exclusive relationship and invokes applicable minimum-service duties. A nonexclusive agreement preserves the client's ability to engage others as written.
- Question cue
- Who may represent the client and which required services follow.
- Terms
- Licensed vs. unlicensed assistant
- Difference
- A licensed assistant can perform licensed activity within sponsorship and competence. An unlicensed assistant is limited to permitted administrative tasks under supervision.
- Question cue
- Scheduling or assembling versus showing, soliciting, explaining, or negotiating.
- Terms
- Commingling vs. conversion
- Difference
- Commingling improperly mixes entrusted funds with brokerage or personal funds. Conversion is unauthorized use or control of another person's money.
- Question cue
- Wrong account versus money spent, diverted, or withheld without authority.
- Terms
- CMA or BPO vs. appraisal
- Difference
- A CMA or BPO is a broker valuation product for permitted purposes with required disclosures. An appraisal is a distinct professional valuation service governed by appraisal law and standards.
- Question cue
- Broker market analysis versus an appraisal represented as an independent opinion under appraisal authority.
- Terms
- Factual form completion vs. legal drafting
- Difference
- A broker may fill factual blanks in a customary preliminary form at the parties' direction within the Illinois case-law boundary. Drafting deeds, mortgages, or legal provisions and interpreting rights crosses that boundary.
- Question cue
- Recording agreed facts versus inventing legal language or advising on legal effect.
- Terms
- License Act duty vs. Disclosure notice
- Difference
- The License Act can define the relationship and conduct duty. The Disclosures exam area separately asks whether a specified written notice, consent, or property disclosure was delivered on time.
- Question cue
- What the agent owes versus which form or informed written consent is required.
How should you review your results?
- Session
- 1. Map people and categories
- Focus
- Consumer, client, customer, designated agent, sponsored licensee, sponsoring broker, assistant, team, and other brokerage
- Proof you are ready
- Label each actor and the governing License Act cluster in ten scenarios.
- Session
- 2. Practice agency and advertising
- Focus
- Client duties, customer duties, confidentiality, material facts, stigma, sponsor name, prominence, team identity, truth, and digital ads
- Proof you are ready
- Separate protected information from required disclosure and audit five ads.
- Session
- 3. Read agreements and compensation
- Focus
- Exclusive, nonexclusive, term, copy, minimum services, payment route, referral, former licensee, rebate, and interference
- Proof you are ready
- Name the agreement, required service, authorized payee, and competing relationship in each question.
- Session
- 4. Draw licensed-task boundaries
- Focus
- Assistants, teams, showing, solicitation, interpretation, negotiation, CMA, BPO, appraisal, preliminary forms, legal drafting, and attorney referral
- Proof you are ready
- Classify fifteen tasks as administrative, licensed, valuation-limited, or legal.
- Session
- 5. Trace funds and documents
- Focus
- Receipt, special account, ledger, reconciliation, dispute, disbursement, security deposit, copy delivery, file custody, retention, and Department access
- Proof you are ready
- Follow one deposit and one complete transaction file from receipt through final authorized disposition.
- Session
- 6. Finish with discipline scenarios
- Focus
- Misrepresentation, advertising, interest, compensation, funds, documents, discrimination, negligence, supervision, sanctions, and public protection
- Proof you are ready
- Score at least 85% on two fresh mixed sets and identify the public-protection failure behind every miss.
Do not count recognition as mastery. Close the notes and explain the rule, apply it to a new fact pattern, and identify why each distractor fails.
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Questions students ask about Illinois Real Estate License Act Practice Questions: 2026
How many Illinois broker exam questions cover the Real Estate License Act?
The PSI booklet effective June 24, 2026 assigns 40% of the 40 scored Illinois questions to the Real Estate License Act, or approximately 16 questions. It is the largest state content area by a wide margin.
What should I study for License Act practice questions?
Study agency, material facts, stigmatized property, advertising, sponsored-licensee and sponsoring-broker relationships, brokerage agreements, minimum services, compensation, interference, assistants, teams, money, security deposits, documents, discipline, CMA and BPO rules, purchase and lease agreements, and the law's public-protection purpose.
Do I need to memorize every Illinois section number?
No. First learn the actor, trigger, duty, timing, document, and consequence. Section numbers are useful source anchors, but exam scenarios are usually solved by classifying what happened and applying the operational rule from the Act and Part 1450.
Is dual agency in the License Act exam area?
Article 15 contains the Illinois dual-agency law, but PSI classifies dual agency under the separate Disclosures area in the current broker outline. Learn the agency relationship here and the informed written consent and confirmation requirements with Disclosures.
What must Illinois real estate advertising include?
Advertising must be truthful, not misleading, and include the sponsoring broker's name. Current Part 1450 also contains prominence rules for comparing the sponsoring-broker identification with an individual licensee or team name. Digital format does not create an exemption.
Can an unlicensed assistant show property in Illinois?
No. An unlicensed assistant may perform permitted administrative tasks under supervision, but may not show property, host a public open house, interpret transaction information, explain contract terms, negotiate, solicit listings or buyers, or perform other licensed activity.
Who pays compensation to a sponsored Illinois broker?
A sponsored licensee generally receives compensation for licensed activity through the sponsoring broker, not directly from a client or another brokerage. The agreement and current rules control routing, recordkeeping, former-licensee payments, and cooperating-brokerage arrangements.
How should I answer disputed earnest-money questions?
Identify who holds the money, the written contract, written directions, whether a dispute exists, and every rule-authorized basis for disbursement. A demand from one party does not itself settle a dispute, and the broker should not decide ownership based on personal fairness.
Can an Illinois broker prepare a CMA or BPO?
A broker may prepare a CMA or BPO within the statute and rules, but must not present it as an appraisal. The Act restricts using a CMA or BPO as the primary basis for specified mortgage-origination valuation decisions and imposes purpose, disclosure, and scope boundaries.
Are these official PSI License Act questions?
No. They are original scenarios mapped to the current Illinois outline and primary law. They are not copied or recalled live questions. The PSI booklet, Illinois Real Estate License Act, and Part 1450 rules were checked through August 1, 2026.
Primary sources
- PSI Illinois Candidate Information Booklet dated June 24, 2026
- Illinois General Assembly, Real Estate License Act of 2000
- Illinois Administrative Code, current 68 Ill. Adm. Code Part 1450, including the July 13, 2026 amendment
- 68 Ill. Adm. Code 1450.715, advertising
- 68 Ill. Adm. Code 1450.740, unlicensed assistants
- 68 Ill. Adm. Code 1450.750, special accounts
- 68 Ill. Adm. Code 1450.755, transaction records
- 68 Ill. Adm. Code 1450.760, compensation
- 68 Ill. Adm. Code 1450.770, brokerage agreements
- Illinois Courts guidance citing Chicago Bar Association v. Quinlan and Tyson
The current official outline controls the tested scope. Statutes, regulations, and official agency materials control when a general study rule and a jurisdiction-specific rule differ.
Editorial status
Checked against primary sources
The Pass Illinois editorial team last checked this guide on August 1, 2026. Every practice question is an original study item, and the source links above let you verify the rules that support the lesson.