- Official section
- State IV
- Broker weight
- 25%
- Expected scored items
- About 10 of 40 Illinois items
Illinois Section IV study guide
Illinois real estate disclosures
Disclosure questions are timing questions disguised as fact patterns. Identify the relationship or property fact, the person who knows it, the required recipient, the correct document, and the deadline before choosing an answer.
What does this exam area cover?
Short answer: Know designated agency, no-agency, dual-agency, and contemporaneous-offer notices; the rule against treating brokerage as neutral transaction facilitation; direct and indirect licensee interests; compensation sources; Illinois seller reports and material defects; radon, federal lead, mine-subsidence, underground-tank, and landlord flooding disclosures.
The current PSI broker outline assigns 10 questions to this section. It combines relationship disclosures under the License Act with property and environmental notices under separate state and federal laws. A document that is correct for one issue is not a substitute for another.
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What is on the official outline?
- Topic
- Designated agency for seller, landlord, buyer, or tenant
- What to know
- Presumed designated representation, written brokerage agreement, disclosure no later than beginning to work as a designated agent, identity of designated agents, consumer copy, broker retention, and compensation-policy discussion
- Best exam move
- Name the client and agent, then apply the beginning-of-representation deadline.
- Topic
- Notice of no agency relationship
- What to know
- Written notice to a customer, prevention of confidential disclosure, deadline no later than preparation of an offer to purchase or lease, and seller-agent work with an unrepresented buyer or tenant
- Best exam move
- Give the customer notice before confidential negotiating information is shared, not after the offer is written.
- Topic
- Dual agency
- What to know
- One licensee representing both sides, conflict disclosure, informed written consent of all clients, presentation with the brokerage agreement when offered, consent before acting, confirmation at offer or contract, limits on advice, withdrawal, and ownership-interest prohibition
- Best exam move
- Consent must come from every client before dual representation occurs; payment by both sides alone does not create dual agency.
- Topic
- No transactional broker or facilitator shortcut
- What to know
- Illinois presumption that a licensee represents the consumer as a designated agent unless a written agreement creates a different relationship, plus required no-agency notice when working with a customer
- Best exam move
- Do not invent a neutral transaction-broker status to avoid agency duties and written notices.
- Topic
- Contemporaneous offers
- What to know
- Two or more clients of the same designated agent, same parcel or unit, offers expected to be considered at the same time, written disclosure to every affected client, and referral to another designated agent on request
- Best exam move
- Separate a seller's multiple offers from one designated agent preparing competing offers for multiple buyer or tenant clients.
- Topic
- Direct or indirect licensee interest
- What to know
- Licensee as buyer, seller, landlord, or tenant; co-ownership; land-trust beneficial interest; partnership; closely held corporation; limited liability company; and any other direct or indirect interest
- Best exam move
- Disclose licensure status in writing to all parties before initiating the transaction.
- Topic
- Compensation sources and referral interests
- What to know
- All transaction-related third-party compensation, compensation policy and cooperating-broker amounts, compensation from both sides, referral compensation, greater-than-1% ownership or profit interest in a referred provider, and disclosure at referral
- Best exam move
- Ask who pays, who benefits, whether an ownership or profit interest exists, and which client must receive written disclosure.
- Topic
- Residential Real Property Disclosure Act
- What to know
- Covered one-to-four-unit property, condominiums, cooperatives, qualifying manufactured homes, covered transfers, nine seller exemptions, seller-completed statutory report, receipt before contract, actual knowledge, no investigation duty, supplement before closing, remedies, and delivery methods
- Best exam move
- Check property, transfer, exemption, seller knowledge, receipt, and supplement timing in that order.
- Topic
- Known latent material adverse facts
- What to know
- Seller-agent duty to prospective buyer customers, physical condition, actual licensee knowledge, facts not discoverable through reasonably diligent inspection, honest treatment, and no automatic duty to reveal nonphysical stigma
- Best exam move
- Do not let the seller's form replace the licensee's separate duty concerning actually known latent physical defects.
- Topic
- Radon
- What to know
- Covered one-to-four-unit residential sale, approved pamphlet, statutory warning and disclosure form, seller-held elevated-test information, delivery before buyer is bound, post-offer procedure, agent acknowledgment, sale exclusions, and separate tenant rules
- Best exam move
- Disclosure is required, but the sale provision does not itself compel testing or mitigation.
- Topic
- Lead-based paint
- What to know
- Federal rule for most pre-1978 housing sales and leases, known lead information, available reports, approved pamphlet, warning statement and acknowledgments, records, agent responsibility, and buyer's 10-day evaluation opportunity unless changed or waived in writing
- Best exam move
- Start with construction year and transaction type, then apply the federal pre-contract package.
- Topic
- Mine subsidence
- What to know
- Man-made underground mine, transferor and transferee, lender, insurance claims paid to the transferor, writing at the time of transfer agreement, incorporation into a written agreement, written waiver, and actual-damages remedy
- Best exam move
- Disclose paid mine-subsidence insurance claims, not merely a guess that mining occurred nearby.
- Topic
- Underground storage tanks
- What to know
- Illinois seller-report item for actual awareness of underground fuel storage tanks, possible environmental records or regulatory issues, and separate licensee duty concerning known latent material adverse physical facts
- Best exam move
- Treat the tank as a condition question under the seller report, then check whether other environmental duties are triggered.
- Topic
- Flooding disclosures for landlords
- What to know
- FEMA Special Flood Hazard Area, actual knowledge of flooding and frequency, parking areas, lower-level units, flooding in the last 10 years, written notice before lease, inclusion in lease or renewal, both signatures, tenant remedies, and statutory exemptions
- Best exam move
- For any rental apply the FEMA and actual-knowledge rule; for a lower-level unit add the 10-year history rule.
Which distinctions produce the most mistakes?
- Terms
- Designated agency notice vs. no-agency notice
- Difference
- The designated-agency writing tells a consumer the licensee represents the consumer. The no-agency writing tells a customer the licensee does not.
- Question cue
- Client receiving representation versus unrepresented customer.
- Terms
- Designated agency vs. dual agency
- Difference
- Designated agency assigns a legal agent to one client. Dual agency occurs when the same individual licensee represents clients on opposing sides and requires informed written consent from all.
- Question cue
- Different designated agents in one firm are not automatically dual agents.
- Terms
- Contemporaneous offers vs. multiple offers
- Difference
- Contemporaneous-offer disclosure protects multiple clients represented by the same designated agent who are competing for the same property. Ordinary multiple offers may come through different agents.
- Question cue
- One designated agent, two or more clients, same parcel or unit, same consideration window.
- Terms
- Compensation vs. agency
- Difference
- Who pays does not determine whom the licensee represents. Agency follows the relationship and agreement, while payment sources create separate disclosure duties.
- Question cue
- A seller-funded buyer-broker fee does not by itself make the buyer's agent the seller's agent.
- Terms
- Seller report vs. home inspection
- Difference
- The seller reports actual knowledge without a statutory investigation duty. An inspection is an independent evaluation and is not replaced by the report.
- Question cue
- Disclosure form says no; question asks whether the condition could still exist.
- Terms
- Seller's duty vs. licensee's duty
- Difference
- The covered seller completes and supplements the statutory report. A seller's agent separately must timely disclose actually known latent material adverse physical facts to prospective buyer customers.
- Question cue
- Ask whether the knowledge belongs to the seller, the licensee, or both.
- Terms
- Radon disclosure vs. radon testing
- Difference
- The sale law requires the prescribed information package but does not itself force the seller to test or mitigate.
- Question cue
- Information in the seller's possession versus creation of a new test result.
- Terms
- Lead sale rule vs. lead lease rule
- Difference
- Both covered pre-1978 transactions require known information and warnings before the contract or lease. The buyer's 10-day evaluation opportunity is a sale requirement.
- Question cue
- Buyer inspection opportunity, not a tenant inspection contingency.
- Terms
- Floodplain status vs. lower-level flood history
- Difference
- The statewide rental rule addresses FEMA Special Flood Hazard Area status and known flooding for tenants generally. Lower-level units also trigger disclosure of flooding affecting the unit or property in the last 10 years.
- Question cue
- Garden, basement, or first-floor unit adds a time-limited history inquiry.
How should you solve an Illinois disclosure question?
- Classify the issue as relationship, interest, compensation, property condition, radon, lead, mine subsidence, underground tank, or rental flooding.
- Identify the person whose knowledge or status triggers the duty: licensee, sponsoring broker, seller, transferor, landlord, or agent.
- Identify the recipient: client, customer, all parties, buyer, tenant, transferee, or lender.
- Choose the controlling document, such as agency notice, no-agency notice, dual consent, seller report, pamphlet, environmental form, or lease language.
- Apply the exact timing phrase: beginning to work, before confidential information, before initiating, at referral, before contract, at transfer agreement, or before lease.
- Test coverage and exceptions, including unit count, year built, transfer exemption, direct or indirect ownership, lower-level unit, and federal exclusions.
- Keep disclosure, investigation, testing, repair, mitigation, and inspection separate unless the controlling rule connects them.
- Trigger
- Designated representation begins
- Recipient
- Consumer or client
- Deadline
- No later than beginning to work as designated agent
- Trigger
- Licensee works with unrepresented customer
- Recipient
- Customer
- Deadline
- Before confidential disclosure; never later than offer preparation
- Trigger
- Same licensee represents both sides
- Recipient
- All clients
- Deadline
- Written consent before acting; confirm at offer or contract
- Trigger
- Same agent prepares competing client offers
- Recipient
- Every affected client
- Deadline
- When contemporaneous offers are being prepared or made
- Trigger
- Licensee has interest in subject property
- Recipient
- All parties
- Deadline
- In writing before initiating transaction
- Trigger
- Referral includes greater-than-1% interest
- Recipient
- Client
- Deadline
- At time of referral
- Trigger
- Covered Illinois seller report
- Recipient
- Prospective buyer
- Deadline
- Received before contract signing
- Trigger
- Covered radon sale
- Recipient
- Buyer
- Deadline
- Before buyer is contractually obligated
- Trigger
- Paid mine-subsidence claim
- Recipient
- Transferee and lender
- Deadline
- At time transfer agreement is made
- Trigger
- Covered rental flood information
- Recipient
- Tenant
- Deadline
- Before lease; also in signed lease or renewal
How do the rules work in scenarios?
Protecting an unrepresented buyer's information
Scenario: A listing agent is showing the seller's home to an unrepresented buyer. Before any written no-agency notice, the buyer starts to explain the highest price the buyer can pay.
- The listing agent represents the seller, not the buyer.
- The buyer is a customer whose negotiating limit would be confidential if an agency relationship existed.
- Illinois requires the written no-agency notice at a time intended to prevent that disclosure and never later than offer preparation.
Answer: The agent should stop and provide the written no-agency notice before inviting or receiving the buyer's confidential negotiating information.
Handling two competing buyer clients
Scenario: One designated agent learns that offers from two of the agent's buyer clients for the same condominium will be considered by the seller that evening.
- The same designated agent represents two clients.
- The offers concern the same unit.
- The agent knows they will be considered at the same time, so they are contemporaneous offers under the rule.
Answer: The agent must give written disclosure to both clients and refer either client who asks to another designated agent.
Receiving a late seller report
Scenario: A covered seller delivers the statutory report after both parties sign the purchase contract. The report reveals a material roof defect, and the buyer receives it on Monday.
- The report was due before the contract was signed.
- It was delivered late and discloses a material defect.
- Section 40 gives the buyer five business days after receipt to terminate with return of earnest money or down payment, subject to the statute's terms.
Answer: The buyer may use the statutory five-business-day termination right because a material defect appeared in the late report.
Applying the lower-level flood rule
Scenario: A landlord plans to lease a garden apartment. The property flooded twice during heavy rainfall in the last 10 years, although it is not in a FEMA Special Flood Hazard Area.
- A garden apartment is a lower-level unit.
- The lower-level rule reaches flooding of the unit or any part of the real property during the last 10 years.
- The disclosure is required even when the property is outside the FEMA mapped area.
Answer: Before signing, the landlord must disclose the two flooding events in writing and include the disclosure in the signed lease.
What are the common exam traps?
- Trap
- An Illinois licensee can remain a neutral transaction facilitator without explaining agency.
- Correction
- The Act presumes designated representation unless a written agreement creates a different relationship, and an unrepresented customer must receive the no-agency notice.
- Trap
- Designated agency disclosure can wait until the offer.
- Correction
- It is due no later than the beginning of work as a designated agent.
- Trap
- A dual-agency paragraph in a listing agreement is enough after dual representation begins.
- Correction
- All clients must give informed written consent before the licensee acts as a dual agent, with confirmation at the transaction offer or contract.
- Trap
- Every situation with two offers is a contemporaneous-offer disclosure.
- Correction
- The special rule requires the same designated agent to represent the competing clients for the same parcel or unit.
- Trap
- Disclosing that both sides pay the broker changes the agency relationship.
- Correction
- Compensation does not determine agency. Payment sources and representation require separate analysis.
- Trap
- A licensee can hide an interest held through a land trust or limited liability company.
- Correction
- The written status disclosure reaches direct and indirect interests, including listed entity and land-trust interests.
- Trap
- The Illinois seller report applies to every residential transfer.
- Correction
- The Act covers specified one-to-four-unit residential property and transfers but contains nine seller exemptions.
- Trap
- An as-is sale eliminates disclosure duties.
- Correction
- The statutory report expressly allows an as-is agreement while preserving the seller's disclosure duties and other law.
- Trap
- A seller must hire an inspector before marking the disclosure form.
- Correction
- The seller reports actual knowledge and has no investigation duty under the Act.
- Trap
- Radon disclosure means the seller must test and mitigate.
- Correction
- The sale rule requires information and prescribed documents but does not itself compel testing or mitigation.
- Trap
- The federal lead rule applies to every home regardless of age.
- Correction
- It generally applies to most housing built before 1978, subject to federal exclusions.
- Trap
- No FEMA floodplain designation means no Illinois rental flood disclosure.
- Correction
- Known flooding and the separate lower-level 10-year history can still require disclosure.
Can you answer these original practice questions?
These questions are original study items aligned to the published outline. They are not copied, recalled, or predicted PSI questions.
1. A listing agent is working with an unrepresented buyer. When is the no-agency notice due at the latest?
- At closing
- After inspection
- No later than preparation of an offer to purchase
- Only if the seller requests it
Show answer and explanation
Answer: C
The notice should come early enough to prevent confidential disclosure and never later than preparation of the offer.
2. One designated agent prepares offers for two buyer clients on the same house, knowing both offers will be considered together. What is required?
- Oral notice only to the seller
- Written disclosure to both clients and referral on request
- Automatic cancellation of both agency relationships
- Dual-agency consent from the seller only
Show answer and explanation
Answer: B
These are contemporaneous offers by clients of the same designated agent. Every affected client receives written disclosure and may request referral.
3. Which fact alone does not determine the existence of an agency relationship?
- The written brokerage agreement
- The identity of the designated agent
- The source of the licensee's compensation
- Informed written dual-agency consent
Show answer and explanation
Answer: C
Illinois expressly provides that payment or promised payment of compensation does not determine agency.
4. A covered seller knows of no defects and has not hired an inspector. How should the seller complete the Illinois report?
- Refuse to complete it until an inspection occurs
- Report actual knowledge without a specific investigation
- Ask the listing agent to sign in the seller's place
- Wait until after the purchase contract is signed
Show answer and explanation
Answer: B
The seller completes the statutory form from actual knowledge and has no investigation duty under the Act.
5. Which federal right generally belongs to a buyer of covered pre-1978 housing?
- A mandatory seller-funded lead abatement
- A 10-day opportunity for a lead inspection or risk assessment unless changed or waived in writing
- Automatic contract cancellation whenever lead paint is present
- A new lead test performed by the listing agent
Show answer and explanation
Answer: B
The federal disclosure rule provides a 10-day evaluation opportunity for buyers unless the parties change or waive it in writing.
How should you study this area?
- Session
- 1. Agency notices
- Focus
- Designated agency, no agency, dual agency, prohibited facilitator assumptions, and exact timing
- Proof you are ready
- Sort 12 scenarios by client or customer and state the required writing and deadline.
- Session
- 2. Conflicts and compensation
- Focus
- Contemporaneous offers, direct and indirect interests, all compensation sources, both-side payment, and referrals
- Proof you are ready
- Identify the recipient and timing for eight interest or payment scenarios.
- Session
- 3. Seller report coverage
- Focus
- Property definition, covered transfers, nine exemptions, seller identity, delivery, receipt, and actual knowledge
- Proof you are ready
- Decide whether the Act applies in 10 transfers and explain every exemption.
- Session
- 4. Defects and remedies
- Focus
- Report items, supplement, late report, five-business-day rules, inspection, as-is, licensee material-fact duty, and stigma
- Proof you are ready
- Build a timeline from report preparation through closing for four fact patterns.
- Session
- 5. Environmental disclosures
- Focus
- Radon, pre-1978 lead, mine-subsidence claims, and underground fuel storage tanks
- Proof you are ready
- Match each trigger to the correct document, recipient, deadline, and testing rule.
- Session
- 6. Flooding and mixed review
- Focus
- FEMA status, known flooding, parking, lower-level 10-year history, lease placement, remedies, and all-section timing
- Proof you are ready
- Score at least 90% on a mixed disclosure set and explain why each wrong deadline is wrong.
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.
Illinois Real Estate Disclosures Exam Guide FAQ
How much of the Illinois broker exam is the Disclosures section?
Disclosures is 25% of the 40-question Illinois broker portion, so the current outline assigns about 10 scored state questions to this area. It is tied with Additional Illinois Laws and Regulations as the second-largest state section.
When must an Illinois designated agency disclosure be given?
A licensee acting as a designated agent must advise the consumer in writing no later than beginning to work as a designated agent. The writing identifies the relationship and the designated agent or agents, and it may appear in the brokerage agreement or in a separate document.
When is an Illinois no-agency notice required?
A licensee must tell a customer in writing that the licensee is not the customer's agent at a time intended to prevent the customer from revealing confidential information, and never later than preparation of an offer to purchase or lease.
What consent is required for dual agency in Illinois?
The licensee needs the informed written consent of every client. The statutory disclosure is presented when the brokerage agreement is entered into if dual representation is offered, or before the licensee acts as a dual agent, and the clients should confirm consent when executing the offer or contract in the dual-agency transaction.
When must a real estate licensee disclose an ownership interest in Illinois?
A licensee who is selling, leasing, or buying the property directly or indirectly must disclose the licensee's status in writing to all parties before initiating the transaction. The rule reaches interests held through a land trust, partnership, closely held corporation, limited liability company, and other direct or indirect arrangements.
When is the Illinois Residential Real Property Disclosure Report due?
For a covered transfer of residential real property, the seller must complete the statutory report and deliver it to the prospective buyer before the signing of the contract. Receipt, not merely sending, makes delivery effective.
Does an Illinois seller have to investigate before completing the property disclosure report?
No. The seller reports material defects of which the seller has actual knowledge and has no duty under the Act to make a specific investigation or inquiry. The report does not replace an inspection, warranty, fraud rules, or other disclosure duties.
What environmental disclosures appear on the Illinois broker outline?
The current state outline names radon, lead-based paint, mine subsidence, underground storage tanks, and landlord flooding disclosures. Each has its own trigger, document, recipient, and timing.
Does Illinois law require a seller to test a home for radon before sale?
No. The Illinois Radon Awareness Act requires the prescribed disclosure, approved pamphlet, and information about elevated radon test results in the seller's possession for a covered sale. It does not itself require the seller to test or mitigate.
Are these questions copied from the PSI exam?
No. Every practice question is original and based on the public PSI outline and controlling sources. The guide does not reproduce confidential exam questions.
Primary sources
- PSI Illinois Candidate Information Booklet dated June 24, 2026
- 225 ILCS 454, Illinois Real Estate License Act of 2000
- 68 Ill. Adm. Code 1450, Illinois real estate rules
- 765 ILCS 77, Residential Real Property Disclosure Act
- 420 ILCS 46, Illinois Radon Awareness Act
- 765 ILCS 95, Mine Subsidence Disclosure Act
- 765 ILCS 705/25, rental flooding disclosures
- U.S. EPA Lead-Based Paint Disclosure Rule
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.