Free Illinois Real Estate Exam Flashcards

The most complete form of ownership: the entire bundle of rights, of indefinite duration, freely transferable and inheritable. All other estates are measured against it. A defeasible fee, by contrast, can be lost if a stated condition is violated.

A life estate gives ownership only for the duration of someone's life; the holder cannot pass title at death. The remainderman is the party who receives fee title automatically when the measuring life ends. A reversion instead returns title to the original grantor.

Joint tenancy carries the right of survivorship (a deceased owner's share passes to surviving joint tenants, bypassing probate) and requires the four unities: time, title, interest, possession. Tenancy in common has no survivorship, allows unequal shares, and each share passes by will or inheritance.

Real property is land plus permanent improvements and the bundle of legal rights attached. Personal property (chattel) is movable. A fixture is personal property that has become real property by attachment; an item annexed for a business tenant's trade is a trade fixture and is usually removable.

An appurtenant easement benefits an adjacent parcel (the dominant tenement) and burdens another (the servient tenement); it runs with the land. An easement in gross benefits a person or entity, not a parcel, such as a utility's right to run lines, and does not transfer with the land automatically.

An unauthorized physical intrusion of an improvement (fence, wall, roofline) onto a neighboring property. It is typically revealed by a survey, can cloud title, and may give the neighbor grounds to demand removal or claim a prescriptive easement over time.

An Illinois-specific arrangement where a trustee holds legal and equitable title while the beneficiary retains full control and the right to direct the trustee. It keeps the owner's identity private, simplifies transfers, and treats the beneficiary's interest as personal property rather than real property.

A special agent is hired for a single, limited task, such as a broker listing one property, with no authority to bind the principal broadly. A general agent has authority to handle a range of matters within a continuing relationship, such as a property manager. Most brokerage relationships are special agency.

Common-law duties an agent owes the principal: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care/diligence. Loyalty requires putting the client's interest above the agent's own; accounting requires safeguarding and reporting all funds and documents.

Illinois' default model: the sponsoring broker designates individual licensees to represent specific clients. Two designated agents from the same firm may represent a buyer and a seller in the same transaction without creating company-wide dual agency, so each can fully advocate for their own client.

When one licensee represents both buyer and seller in the same transaction. Illinois permits it only with written informed consent obtained both before (disclosure of the possibility) and at the time it occurs (confirmation). The dual agent cannot disclose confidential information such as either party's price flexibility.

A client is the party an agent represents and owes fiduciary duties. A customer is a party the agent deals with but does not represent. In Illinois, a licensee owes a customer honesty, fair dealing, and disclosure of known material defects, but not loyalty or confidentiality.

Under the License Act of 2000, a licensee must disclose in writing whom they represent no later than the point at which the consumer first discloses confidential information, and before drafting an offer. Brokerage agreements and the designation of the agent must also be in writing.

A bilateral contract is a promise for a promise; both parties are obligated, like a signed purchase agreement. A unilateral contract is a promise for an act; only one party is bound unless the other performs, like an option or an open listing where commission is earned only if the broker produces a buyer.

Void means no contract ever existed (illegal purpose). Voidable means valid but one party may cancel (a minor's contract, or one signed under duress). Unenforceable means valid but a court will not enforce it, often because the Statute of Frauds requires it to be in writing and it is not.

Requires contracts for the sale or transfer of an interest in real estate (and most leases over one year) to be in writing and signed to be enforceable. An oral listing or oral land-sale contract is generally unenforceable even if both parties admit it was made.

A custom in Illinois residential contracts: a typically 5-business-day period after signing during which either party's attorney may propose changes, disapprove, or cancel the contract. It is built into standard multi-board forms rather than mandated by statute, reflecting Illinois' attorney-assisted closing practice.

Earnest money is a good-faith deposit showing the buyer is serious; it is credited at closing. A liquidated damages clause lets the seller keep the earnest money as the agreed remedy if the buyer defaults, in place of suing for actual damages. The broker must hold the deposit in escrow.

A condition that must be satisfied for a contract to proceed, such as financing, appraisal, inspection, or sale-of-buyer's-home contingencies. If the condition is not met within its deadline, the protected party may cancel without penalty and typically recover earnest money.

Current Illinois law does not separately name net listings as categorically prohibited. The broker keeps everything above the seller's fixed net, so clear written compensation terms and all disclosure, honesty, and client duties remain essential.

The promissory note is the borrower's personal promise to repay the debt (the IOU). The mortgage (or deed of trust) is the security instrument that pledges the property as collateral and gives the lender the right to foreclose if the note is not paid. The note is the debt; the mortgage secures it.

Illinois is a judicial-foreclosure state: the lender must file suit and obtain a court judgment to force a sale. Illinois also grants a statutory reinstatement period and a redemption period during which the borrower can cure the default or pay the debt to keep the property.

Conventional loans are not government-insured and often require private mortgage insurance (PMI) when the down payment is under 20%. FHA loans are insured by the FHA, allow low down payments, and require mortgage insurance premiums. VA loans are guaranteed for eligible veterans and can require no down payment.

The loan amount divided by the property's value or price, whichever is lower. A $180,000 loan on a $200,000 home is a 90% LTV. Higher LTV means more lender risk, which typically triggers mortgage insurance and can affect interest rate and approval.

Prepaid interest paid to the lender at closing to buy down the loan's interest rate. One point equals 1% of the loan amount. On a $250,000 loan, two points cost $5,000. Points are a financing cost separate from origination fees.

The Real Estate Settlement Procedures Act, a federal law governing residential mortgage closings. It bans kickbacks and unearned referral fees, requires the Loan Estimate and Closing Disclosure, and aims to make settlement costs transparent to borrowers.

Appraisers use the sales comparison approach (comparing recent similar sales, best for homes), the cost approach (land value plus replacement cost minus depreciation, best for new or unique property), and the income approach (capitalizing net operating income, best for investment property).

A CMA (comparative market analysis) is a broker's pricing opinion using comparable sales, not a formal valuation. An appraisal is an independent licensed appraiser's certified value estimate. A BPO is a broker price opinion. Only a licensed appraiser may perform an appraisal for a federally related loan.

Cap rate equals net operating income divided by value (or price). It converts income into value: Value = NOI / Cap Rate. A higher cap rate signals higher risk or lower price relative to income, and is the core of the income approach to value.

Loss in value from physical deterioration (wear and tear), functional obsolescence (outdated design or features), or external/economic obsolescence (negative outside forces like a nearby nuisance). External obsolescence is the only type generally considered incurable because it is off-site.

Police power is government's authority to regulate land for public welfare, such as zoning and building codes, without paying owners. Eminent domain is the power to take private property for public use through condemnation, which requires just compensation under the Constitution.

A variance allows a specific deviation from a zoning rule (such as a setback) due to a hardship unique to the parcel, without changing the zoning. A special (conditional) use permit allows a use that the zoning otherwise permits only with approval, like a church in a residential zone.

A use that was lawful before a zoning change but no longer conforms to current rules. It is usually allowed to continue ('grandfathered'), but typically cannot be expanded, rebuilt if destroyed, or resumed after long abandonment.

Private limitations placed on land by a developer or prior owner, such as covenants, conditions, and restrictions in a subdivision. They are enforced by other owners or an HOA, not the government, and when more restrictive than zoning, the stricter rule controls.

A general warranty deed offers the most grantee protection, with full covenants guaranteeing clear title against all defects, even from before the grantor owned it. A quitclaim deed conveys only whatever interest the grantor has, with no warranties, and is common for clearing clouds on title or transfers between family.

Actual notice is knowledge a person genuinely has. Constructive notice is knowledge the law presumes everyone has because information is publicly recorded or the property is visibly possessed. Recording a deed gives constructive notice and protects the grantee's priority.

An abstract of title is a historical summary of recorded documents affecting a property. Title insurance is a policy that protects the insured against losses from undiscovered title defects. The owner's policy protects the buyer; the lender's policy protects the mortgagee.

A specific lien attaches to one identified property, such as a mortgage, mechanic's lien, or property-tax lien. A general lien attaches to all of a debtor's property, such as a judgment lien or IRS lien. Real estate tax liens generally take priority over other liens.

Illinois imposes a state real estate transfer tax of $0.50 per $500 of consideration, plus a county tax of $0.25 per $500. Many municipalities add their own; Chicago's transfer tax is substantially higher and split between buyer and seller, making local rates a key closing-cost item.

The federal Fair Housing Act prohibits discrimination based on race, color, religion, national origin, sex, familial status, and disability. It bars steering, blockbusting, and redlining, and requires reasonable accommodations and modifications for people with disabilities.

Illinois extends fair-housing protection well beyond federal law, adding classes such as ancestry, age, marital status, sexual orientation, gender identity, military status, order of protection status, pregnancy, and (since 2023) source of income. Source-of-income protection bars refusing tenants who pay with housing vouchers.

Steering is directing buyers toward or away from areas based on a protected class. Blockbusting is inducing panic selling by suggesting a protected group is moving in. Redlining is denying loans or insurance in certain neighborhoods. All three are illegal under fair-housing law.

Commission equals sale price times the commission rate. On a $300,000 sale at 6%, total commission is $18,000. If split 50/50 between listing and selling firms, each side receives $9,000 before any further split with the sponsoring broker.

Dividing ongoing costs (property taxes, HOA dues, prepaid rent) fairly between buyer and seller as of the closing date. Items the seller used but the buyer will pay are credited to the buyer; prepaid items are credited to the seller. Illinois often prorates taxes because they are paid in arrears.

One acre equals 43,560 square feet. To find lot area, multiply length by width. Property tax can be expressed in mills, where one mill equals $1 per $1,000 of assessed value, so a 20-mill rate on a $150,000 assessment yields $3,000 in tax.

Codified at 225 ILCS 454, it is the governing statute for Illinois real estate licensees. It defines license categories (Broker, Managing Broker, Leasing Agent), sets agency disclosure and escrow rules, and authorizes IDFPR to license, investigate, and discipline. The companion administrative rules add detail.

A Broker is the entry-level license (what most states call a salesperson) and must be sponsored by a Managing Broker to practice. A Managing Broker supervises brokers, runs the office, and is responsible for escrow and advertising compliance, requiring a separate exam, added experience, and 45 hours of education.

Illinois offers a separate Leasing Agent license for those who only show and lease residential rentals; it requires far less education than a broker license. Every Broker and Leasing Agent must hold a sponsorship card from a sponsoring broker; an unsponsored license is inactive and the person may not practice.

The Illinois Department of Financial and Professional Regulation (IDFPR) licenses and disciplines real estate professionals. Brokers renew every two years and must complete 12 hours of continuing education per cycle, including required core and a Sexual Harassment Prevention component; first-renewal brokers complete a 45-hour post-license course instead.

Earnest money and other client funds must be deposited in a special escrow or trust account maintained by the sponsoring (managing) broker, kept separate from operating funds. Commingling personal or business funds with client money is prohibited, and the License Act sets deadlines for deposit and recordkeeping that IDFPR enforces.