Illinois License Act

Illinois Real Estate License Act exam guide

The Illinois Real Estate License Act area is the largest part of the state exam: 16 of 40 scored state questions, or 40%. For broker candidates, PSI tests agency, advertising, sponsorship, agreements, compensation, assistants, teams, money, documents, discipline, CMA and BPO rules, contracts, leases, and the law's public-protection purpose. Learn each rule as a decision: identify the people, the triggering event, the required action, the timing, and the consequence. That approach is more useful than memorizing isolated section numbers.

What does the Illinois Real Estate License Act cover on the exam?

Short answer: Expect scenario questions about relationships and everyday brokerage conduct. Decide who is represented, who may act, what must be written or disclosed, who controls money and documents, and whether the conduct protects the public. PSI gives this area 16 questions, more than any other Illinois state area.

The title of the exam area is narrower than its practical reach. The Act supplies the legal framework, while 68 Ill. Adm. Code Part 1450 supplies operational detail. A good answer often requires both.

Cluster: Agency
PSI topics: Relationships, stigmatized property, material facts
Decision to make: Who is represented, what is confidential, and what must be disclosed

Cluster: Advertising
PSI topics: Print, internet, social media, team names, sponsoring broker identity
Decision to make: Whether the whole message is accurate and properly identified

Cluster: Broker relationships
PSI topics: Sponsored licensee, sponsoring broker, supervision
Decision to make: Who authorizes, supervises, holds records, and receives compensation

Cluster: Agreements and compensation
PSI topics: Exclusive and non-exclusive agreements, minimum services, compensation, interference
Decision to make: What is written, who agreed, what is owed, and whether another agreement exists

Cluster: Assistants and teams
PSI topics: Licensed and unlicensed tasks, team names, supervision
Decision to make: Whether the task needs licensed judgment and who is responsible

Cluster: Money and documents
PSI topics: Special accounts, security deposits, transaction records
Decision to make: Who holds the item, where it belongs, and what event controls delivery

Cluster: Conduct and valuation
PSI topics: Discipline, unprofessional conduct, CMA and BPO rules
Decision to make: Whether the act protects the public and stays within brokerage scope

Cluster: Contracts and purpose
PSI topics: Purchase contracts, leases, Quinlan and Tyson, purpose of license law
Decision to make: Whether the licensee is recording facts or crossing into legal advice

Illinois License Act exam map
Cluster	PSI topics	Decision to make
Agency	Relationships, stigmatized property, material facts	Who is represented, what is confidential, and what must be disclosed
Advertising	Print, internet, social media, team names, sponsoring broker identity	Whether the whole message is accurate and properly identified
Broker relationships	Sponsored licensee, sponsoring broker, supervision	Who authorizes, supervises, holds records, and receives compensation
Agreements and compensation	Exclusive and non-exclusive agreements, minimum services, compensation, interference	What is written, who agreed, what is owed, and whether another agreement exists
Assistants and teams	Licensed and unlicensed tasks, team names, supervision	Whether the task needs licensed judgment and who is responsible
Money and documents	Special accounts, security deposits, transaction records	Who holds the item, where it belongs, and what event controls delivery
Conduct and valuation	Discipline, unprofessional conduct, CMA and BPO rules	Whether the act protects the public and stays within brokerage scope
Contracts and purpose	Purchase contracts, leases, Quinlan and Tyson, purpose of license law	Whether the licensee is recording facts or crossing into legal advice

Exam-outline source: PSI Illinois Candidate Information Booklet dated June 24, 2026. The current broker outline assigns 16 questions and 40% of the state portion to this area.

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Find the rule you need

How should you read the Act and Part 1450?

Start with the PSI topic, then use the Act for the governing duty and Part 1450 for the procedure. Do not assume that every rule appears in one place or that an administrative detail is less testable.

Source: 1-5 and 1-10
Main role: Purpose and definitions
High-value connections: Public protection, agency, client, customer, compensation, escrow, team

Source: 5-40
Main role: Sponsorship
High-value connections: Starting and ending sponsorship, notice, inactive status

Source: 10-10 through 10-27
Main role: Business practices
High-value connections: Compensation, interests, documents, and licensee-status disclosure

Source: 10-30 through 10-45
Main role: Advertising and valuation
High-value connections: Advertising, company policy, CMA, and BPO

Source: Article 15
Main role: Agency relationships
High-value connections: Clients, customers, material facts, notices, dual agency, agreements

Source: 15-75
Main role: Minimum services
High-value connections: Offers, negotiations, notices, contingencies, and client questions

Source: Article 20
Main role: Discipline
High-value connections: Violations, sanctions, money, documents, advertising, and conduct

Source: Part 1450
Main role: Administrative rules
High-value connections: How IDFPR implements advertising, assistants, escrow, records, agreements, and compensation

Illinois License Act and rule source map
Source	Main role	High-value connections
1-5 and 1-10	Purpose and definitions	Public protection, agency, client, customer, compensation, escrow, team
5-40	Sponsorship	Starting and ending sponsorship, notice, inactive status
10-10 through 10-27	Business practices	Compensation, interests, documents, and licensee-status disclosure
10-30 through 10-45	Advertising and valuation	Advertising, company policy, CMA, and BPO
Article 15	Agency relationships	Clients, customers, material facts, notices, dual agency, agreements
15-75	Minimum services	Offers, negotiations, notices, contingencies, and client questions
Article 20	Discipline	Violations, sanctions, money, documents, advertising, and conduct
Part 1450	Administrative rules	How IDFPR implements advertising, assistants, escrow, records, agreements, and compensation

The General Assembly states the Act's purpose directly: evaluate professional competence and regulate real estate activity for the protection of the public. When two answers look plausible, the one that preserves informed choice, accurate records, proper supervision, and safeguarded funds usually fits that purpose more closely.

Read the current Real Estate License Act of 2000 with 68 Ill. Adm. Code Part 1450.

How does Illinois agency work?

Illinois distinguishes a consumer, client, and customer. A consumer seeks or receives licensed activity. A client is represented. A customer is not represented. Section 15-10 treats the licensee as a designated agent for the consumer being served unless a written agreement creates a different relationship.

Client

The licensee performs the brokerage agreement, promotes the client's interests, presents offers timely, discloses known material facts, accounts for money and property, uses reasonable skill and care, and preserves confidentiality.

Customer

The licensee must deal honestly and may not negligently or knowingly provide false information. A seller's agent must timely disclose actually known latent material adverse physical facts that a reasonably diligent inspection would not reveal.

Confidential information

Negotiating-position information and information made confidential by written request can qualify. Material information about the property's physical condition is not made confidential by that label.

Material facts versus stigmatized property

Section 15-20 says no cause of action arises from failing to disclose that an occupant had HIV or another medical condition, an occurrence that did not affect the property's physical condition, or certain facts and conditions on property outside the transaction. Do not confuse a stigma with a physical defect or a material transaction fact.

Where dual agency belongs in your outline

Article 15 contains the dual-agency law, including informed written consent. PSI places dual agency under the separate Disclosures area. Study the rule here, but classify a question about the written notice or consent under Disclosures.

Review the Illinois Disclosures map

What makes an Illinois real estate ad compliant?

Read the advertisement as a whole. The Act prohibits fraudulent, deceptive, inherently misleading, or misleading-in-practice advertising. It also prohibits blind advertising. Current Part 1450 treats unsolicited marketing and prospecting for clients as advertising.

Four checks for an exam scenario

Truth: Is the overall message accurate, direct, and understandable to an ordinary consumer?
Sponsoring broker:Does the ad include the sponsoring broker's name?
Prominence:Is the sponsoring broker's name or qualifying identification at least as large as the individual or team identification under the rule's tests?
Team wording: Does a team name avoid misleading business-entity terms, or pair the listed term with the word “team” as the rule permits?

A logo counts as the sponsoring broker's identification only when it contains the sponsoring broker's name. A polished ad can still fail if the brokerage identity is missing or visually subordinate.

Primary source: 68 Ill. Adm. Code 1450.715.

What does sponsorship change?

Sponsorship is more than an employment label. It connects a broker to the sponsoring broker registered with IDFPR and determines whether the broker may perform licensed activity.

The sponsoring broker must notify the Department within 24 hours after establishing sponsorship.
The person or entity that initiates termination must notify the Department within 24 hours.
When sponsorship ends, the license becomes inactive immediately.
The licensee may not practice until a new valid sponsorship is registered.

For exam questions, separate “licensed” from “active and authorized.” A person can hold a current broker license and still be prohibited from brokerage activity because the license is inactive.

What must be in a brokerage agreement?

Brokerage agreements are written agreements between a sponsoring broker and a consumer for licensed activity. They may be exclusive or non-exclusive. The current rule requires a seller or owner agreement before marketing or listing, and a buyer or tenant agreement before, or as soon as reasonably practical after, licensed activity intended to assist with a purchase or lease.

Exclusive agreement

The sponsoring broker has the exclusive right to act as the client's agent or representative. The agreement must include the minimum services in Section 15-75.

Non-exclusive agreement

The sponsoring broker has a non-exclusive right to act. Do not import the exclusive-agreement minimum-services requirement into a question that clearly identifies a non-exclusive agreement.

What are the three minimum services?

Accept delivery of and present offers and counteroffers to the client.
Assist the client with developing, communicating, negotiating, and presenting offers, counteroffers, and related notices until an agreement is signed and contingencies are satisfied or waived.
Answer the client's questions about offers, counteroffers, notices, and contingencies.

A provision that waives these services does not preserve the agreement as exclusive under the current rule. Read the agreement type before choosing the duty.

Primary sources: Sections 15-50 and 15-75 and 68 Ill. Adm. Code 1450.770. The current agreement rule became effective July 13, 2026.

How do compensation and interference questions work?

First ask whether the payment is authorized and documented. Then ask whether it changes the agency relationship. Section 15-40 says compensation does not determine agency.

An unlicensed person may not be paid for performing licensed activity in violation of the Act.
When a sponsoring broker receives compensation from both sides in one transaction, that fact must be disclosed in writing to a client.
A referral involving more than a 1% interest and related compensation can trigger written disclosure.
Commission amount and payment timing belong in the applicable written brokerage agreement.

Interference questions add an existing exclusive agreement. Identify who initiated contact, whether the licensee is inducing a breach, and whether the limited future-agreement procedures in Part 1450 apply. A consumer's ability to make a future choice is not permission to undermine a current contract.

See 68 Ill. Adm. Code 1450.760 and 68 Ill. Adm. Code 1450.770.

What may licensed and unlicensed assistants do?

An unlicensed assistant may perform administrative, clerical, or personal tasks that do not require a real estate license. Compensation cannot be transaction based. The supervising licensee remains responsible for the assistant's acts and omissions.

Examples the rule permits

Forward inquiries to a licensee
Submit approved listing data to an MLS
Follow up after a contract is signed
Assemble closing documents
Obtain public information
Schedule appointments without soliciting business

Examples the rule prohibits

Host a public open house
Show property
Interpret transaction information
Explain a contract, listing, or lease
Negotiate compensation or a referral fee

How are teams different?

A team is two or more licensees who work together, use a team name different from the sponsoring broker's name, share the same sponsoring broker, and are supervised by the same managing broker. A team is not a separate legal entity. Team advertising still answers to the sponsoring broker and the advertising rules.

Primary source: 68 Ill. Adm. Code 1450.740.

How should you answer escrow and security-deposit questions?

Use a five-step path: classify the money, identify the holder, identify the correct account, find the deadline, and determine the event that authorizes disbursement.

Classify. Escrow money includes earnest money and generally includes security deposits held for the parties.
Separate. A sponsoring broker who accepts escrow money maintains it in a special account apart from personal and ordinary business accounts.
Deposit.The current rule generally requires deposit no later than the next business day after the transaction or receipt under the contract's terms.
Hold. Keep the money on deposit until the transaction is consummated or terminated unless an authorized basis permits earlier disbursement.
Resolve disputes lawfully. A sponsoring broker does not choose a winner merely because one party demands the money.

Ownership exception to notice

The Act's escrow definition excludes a security deposit when the holder is also the sole owner of the leased property. Read the identity of the holder before automatically applying the sponsoring-broker escrow rules.

Primary source: 68 Ill. Adm. Code 1450.750.

What are the document and record rules?

Treat a signed document as controlled evidence, not a working draft. Part 1450 prohibits accepting or executing a transaction document with blanks that are intended to be filled later. An addition, deletion, or alteration after signing requires written consent or direction, and the signatories must sign or initial the change.

A true copy of the original or corrected document must be delivered within 24 hours to the person who signed or initialed it. Sponsoring brokers retain transaction records, including agreements, offers, notices, disclosures, closing records, and relevant electronic documents. Current Part 1450 generally sets a five-year retention period for transaction and escrow records.

Primary sources: 68 Ill. Adm. Code 1450.775 and 68 Ill. Adm. Code 1450.755.

What conduct can lead to discipline?

Article 20 is broad because discipline can follow one prohibited act, a rule violation, or violation of a disciplinary order. IDFPR may refuse, reprimand, fine, place on probation, suspend, revoke, or take other authorized action. The Act permits a fine of up to $25,000 for each violation.

High-value conduct patterns

Fraud, misrepresentation, false promises, or dishonest dealing
Misleading or unauthorized advertising
Acting for a broker other than the sponsoring broker
Failing to account for or remit money or documents
Commingling or improperly disbursing escrow money
Failing to furnish a signed document to a party
Performing licensed activity without active authority
Failing to use a required written brokerage agreement
Failing to provide minimum services in an exclusive agreement

Do not memorize Article 20 as a penalty list. Connect each ground to the underlying duty. That makes it easier to recognize the same violation when PSI changes the names or chronology in a scenario.

What is the difference between a CMA, BPO, and appraisal?

A comparative market analysis addresses pricing, marketing, or financial aspects of a specified real estate interest. A broker price opinion estimates or analyzes probable selling price. Under the Act, neither is an appraisal.

A paid CMA or BPO must be in writing and include the disclosures required by Section 10-45, including its intended purpose and a statement that it is not an appraisal. It cannot be used as the primary basis for determining market value for mortgage-loan origination by a financial institution secured by the property.

The exam distinction is scope and purpose. A broker may supply a permitted brokerage analysis, but should not label it as an appraisal or use it for a prohibited appraisal purpose.

What does Quinlan and Tyson mean for contracts?

PSI names Chicago Bar Association v. Quinlan and Tyson, Inc.under purchase contracts and lease agreements. The Illinois Supreme Court allowed a real estate broker to fill simple factual blanks in a customary preliminary contract or offer form as part of the brokerage function. It drew the line at deeds, mortgages, and later legal instruments that require a lawyer's skill.

Inside the limited brokerage role

Supply simple factual data in a customary preliminary form at the parties' direction, without giving legal advice or selecting legal consequences for them.

Outside the brokerage role

Draft deeds, mortgages, or other title instruments, choose a legal form for the parties, or explain legal rights in a way that requires a lawyer's training.

The test is not simply whether a form is standard or the task looks easy. Ask whether the act requires legal judgment beyond recording the parties' factual directions.

Case source: Chicago Bar Association v. Quinlan and Tyson, Inc., 34 Ill. 2d 116 (1966).

How do License Act and Disclosure questions overlap?

The Act contains many disclosure duties, but PSI gives Disclosures a separate 10-question area. Classify the question by the issue it asks you to decide.

Question focus: Agency relationship
Main PSI area: License Act
What to decide: Who represents whom and what duties follow

Question focus: Designated agency or no-agency notice
Main PSI area: Disclosures
What to decide: What written notice is required and when

Question focus: Material fact known to a licensee
Main PSI area: License Act
What to decide: Duty to client or customer concerning a transaction or physical condition

Question focus: Seller's statutory property report
Main PSI area: Disclosures
What to decide: Separate seller disclosure form and delivery timing

Question focus: Dual-agency consent
Main PSI area: Disclosures
What to decide: Informed written consent and confirmation for the same transaction

License Act and Disclosure topic boundaries
Question focus	Main PSI area	What to decide
Agency relationship	License Act	Who represents whom and what duties follow
Designated agency or no-agency notice	Disclosures	What written notice is required and when
Material fact known to a licensee	License Act	Duty to client or customer concerning a transaction or physical condition
Seller's statutory property report	Disclosures	Separate seller disclosure form and delivery timing
Dual-agency consent	Disclosures	Informed written consent and confirmation for the same transaction

Use the Illinois state portion study guide when you need the complete four-area boundary map.

How should you study the License Act area?

This is preparation advice, not an IDFPR or PSI requirement.

Map the 14 PSI headings. Make sure every heading from agency through purpose appears in your notes.
Build relationship rules first. Learn client, customer, designated agent, sponsoring broker, and team roles.
Add business practices. Study ads, agreements, compensation, interference, and assistants as connected decisions.
Practice custody rules. Work money and document scenarios with timelines.
Finish scope and conduct. Connect CMA, BPO, contracts, legal boundaries, and discipline to public protection.
Mix the clusters. Remove labels and name the tested duty before choosing an answer.

Check your License Act starting point

The free Illinois diagnostic includes original License Act questions with explanations and official source links. Your result separates this area from the other three state areas.

Try the free Illinois diagnostic

Can you apply the Illinois License Act?

These are original study questions, not copied or reconstructed live exam items. Answer each one before opening the explanation.

A broker's social media ad displays the broker's personal name more prominently than the sponsoring broker's name. Which topic controls?

Advertising.

Part 1450 requires the sponsoring broker's name in all advertising and provides size tests for comparison with an individual or team name.

A licensee's sponsorship ends on Tuesday. May the licensee show property on Wednesday while a new sponsorship is pending?

No.

Termination makes the license inactive immediately. Licensed activity cannot resume until a new valid sponsorship is registered.

An unlicensed assistant is asked to assemble closing documents and then explain a contract clause to a buyer. Which task may the assistant perform?

The assistant may assemble the documents, but may not explain the clause.

The rule permits administrative assembly and prohibits contract interpretation by an unlicensed assistant.

A sponsoring broker receives disputed earnest money and one party demands immediate payment. What is the safest exam answer?

Continue holding the funds until an authorized basis for disbursement exists.

A unilateral demand does not settle a written dispute. The rule identifies written agreement, court action, and other authorized paths.

A broker fills simple factual blanks in a customary preliminary contract form at the parties' direction. Is that automatically unauthorized practice of law?

No.

Quinlan and Tyson permits this limited brokerage function. Drafting deeds, mortgages, or other later legal instruments is outside that boundary.

A paid BPO will be the primary basis for a financial institution's mortgage-origination value decision. Is that an allowed BPO purpose?

No.

Section 10-45 does not allow a BPO or CMA to serve as the primary market-value basis for that mortgage-origination purpose.

Illinois License Act FAQ

How much of the Illinois broker state exam is the License Act?

PSI assigns 16 of the 40 scored state questions to the Illinois Real Estate License Act area. That is 40% of the state portion and makes it the largest Illinois area.

What should I study for the Illinois License Act questions?

Study agency, advertising, sponsorship, brokerage agreements, minimum services, compensation, interference, assistants, teams, money, documents, discipline, CMA and BPO rules, purchase and lease agreements, and the purpose of license law.

Do I need to memorize every section number?

No. Learn the people, trigger, duty, timing, and consequence first. Section numbers help you verify a rule, but a fact pattern usually turns on who acted and what happened.

Is dual agency in the License Act exam area?

The rule is in the License Act, but PSI places dual agency under the separate Disclosures area in the current broker outline. Study the relationship and the written-consent requirements together, then classify the question by what it asks.

What happens when an Illinois broker loses sponsorship?

The broker's license becomes inactive immediately after sponsorship ends. The broker cannot perform licensed activities until a new valid sponsorship is registered with the Department.

What must an Illinois real estate ad include?

All advertising must include the sponsoring broker's name. Current Part 1450 also provides size tests so the sponsoring broker's name or qualifying identification is at least as large as the individual or team identification.

Can an unlicensed assistant show property in Illinois?

No. An unlicensed assistant may perform listed administrative tasks under supervision, but may not show property, host a public open house, interpret transaction information, explain a contract, or negotiate compensation.

How should I study Illinois escrow questions?

Track who received the money, whether it is escrow money, which account must hold it, the deposit deadline, the event authorizing disbursement, and whether a dispute exists. Do not decide based only on which party demands the funds.

Primary sources

PSI controls the tested outline. The Illinois General Assembly and IDFPR rules control the governing law and procedures.

Pass Illinois is independent exam prep. It is not affiliated with PSI or IDFPR, does not replace required education, and does not provide legal advice or reproduce live exam questions.