Regulation and Licensing

Regulation of business practices

The real estate industry is regulated by every level of government. Federal and state statutes, as well as a large body of court decisions, generally referred to as common law, circumscribe how real estate can be developed, managed, and transferred.

Among the laws most relevant to agents and brokers are those relating to:

• agency
• contracts
• disclosure
• environmental impact
• fair housing

In addition to federal, state, and local laws and regulations, the real estate industry is, to a degree, self-regulated by the codes of ethical conduct propounded by the industry’s many trade organizations. For example, the National Association of Realtors® Code of Ethics not only reflects the law but sets an even higher standard of performance for members.   It is imperative for new brokers and agents to understand and abide by the many laws which regulate the industry.

Real estate license laws

State real estate license laws comprise the primary body of laws and regulations governing real estate brokerage practice. License laws in each state specify who must obtain a license to practice real estate and set the requirements for obtaining and maintaining the license. License laws also define critical aspects of real estate brokerage, including:

• procedures for handling escrow deposits and fees
• procedures for advertising
• guidelines for dealing with clients and customers

State license laws are administered in each state by a real estate board (in other states, often referred to as a real estate commission). For Illinois, the Illinois Real Estate Board, which is part of the Illinois Department of Financial and Professional Regulation (IDFPR) oversees licensing for these professionals, and it may take disciplinary action against a person’s real estate license for multiple different reasons.