AMENDMENT TO RESPONSIBILITIES TO THE BUYER: WHAT BROKERS AND SELLERS MUST REVEAL

We offer the following amendment to the article that was originally published in the April 1998 issue of the ATG concept:

The Real Estate License Act of 1983, 225 ILCS 455/1 et seq., contains two separate enforcement mechanisms. Under Article 1, Real Estate Licensing, the Office of Banks and Real Estate has the power to enforce licensing provisions and may refuse to issue, renew, revoke, reprimand, or suspend a license or assess up to $10,000 in penalties. §18(h). That section allows these sanctions where a broker has been found guilty of the following, among other things:

 

 

  1. Making false promises of character likely to influence, persuade, or induce;
  2. Pursuing a continued and flagrant course of misrepresentation or false promises; or
  3. Dishonest dealing.

While the statute does not so specify, these responsibilities apply to brokers' relations with the buyer as much as any other party in the transaction.

However, Article 4, Brokerage Relations, imposes further responsibilities and a basis for private rights of action and defenses for sellers, buyers, landlords, tenants, real estate brokers, and real estate sales people. §38.5(c). Section 38.25 defines the broker's relationship with potential buyers and buyers (known as clients) where the broker represents the seller. The broker must disclose to clients all material adverse facts about the physical condition of the property of which the broker is actually aware and which the customer could not discover by a reasonably diligent inspection.

A broker will not be held liable, however, where the broker gives false information if the broker does not actually know the information is false, and the seller provided the false information. The section also generally requires that brokers treat all clients honestly and not knowingly or negligently give them false information. This requirement apparently expands a broker's liability to a negligence standard where the broker provides information not obtained from the seller. Thus, brokers must exercise great caution in making statements to clients.

© ATG atgc0798vol22

 

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