(logo) Attorneys' Title Guaranty Fund Inc.

Casenotes

Illinois

Brokers

Gruwell v Illinois Department of Financial and Professional Regulation, 406 Ill App 3d 283, 943 NE2d 658, 348 Ill Dec 50 (4th D 2010).

Facts:Carol Gruwell was an independent contractor for Cifsbo Illinois For Sale By Owner (Cifsbo) from October 2002 to October 2003. Cifsbo provided a forum for homeowners not represented by a real estate broker to list their homes for a flat fee. Cifsbo also provided basic guidelines for pricing and negotiating the sales of their homes and referred them to professionals for such services. Gruwell received a commission for each home advertised on the site.

In October 2003, Cifsbo agreed to the entry of a consent order with the Department of Financial and Professional Regulations (the Department) for the unlicensed practice of real estate in violation of the Real Estate License Act of 2000, 225 ILCS 454/20-10. In December 2003, the Department served Gruwell with a complaint for violating the act through various activities, including representing herself as a real estate broker and providing advice and services to homeowners related to marketing and selling their homes.

After a hearing, the Department adopted a finding that Gruwell practiced real estate without a license and imposed a $25,000 fine. This finding was upheld by the circuit court and Gruwell subsequently appealed.

Holding:Affirmed as modified. Gruwell challenged the decision primarily on two grounds: (1) that she did not act as a "broker" under the terms of the act; and (2) that the fine imposed on her was excessive. To succeed, Gruwell had to demonstrate clear error in the Department's findings.

First, the court considered whether Gruwell was a broker. The basic definition of a broker under the act is one who performs licensed activities, for another, for compensation. Licensed activities are defined in Section 1-10 of the act and generally include activities incident to selling, exchanging, leasing and marketing real estate. Gruwell argued that none of the three parts of the broker definition fit her circumstances. However, the court held that the Department did not clearly err in determining that each part of the broker definition fit Gruwell's circumstance.

Gruwell performed "licensed activities" by representing herself as an intermediary between sellers and buyers in numerous ways, including radio appearances in which her statements sufficiently characterized Cifsbo as a real estate company. Although Gruwell repeatedly disclaimed that neither she nor Cifsbo was not a real estate broker, the substance of her actions — such as giving advice to homeowners and referring to "putting houses on the market" constituted licensed activities.

Gruwell's activities were also "for another" and "for compensation." The court held that "for another" was a narrow and unambiguous term included merely to exempt actions to sell one's own home. Therefore, the Department did not have to find evidence of any special agency relationship between Gruwell and others, but merely that Gruwell acted in the sale of homes that were not her own. Also, Gruwell acted "for compensation" because she received a commission for each home advertised on the site, even though she did not receive full brokerage commissions. In fact, the court held that Gruwell essentially earned less than full brokerage commissions for less than full brokerage activities, but the statute provided no exception for "minor violations."

Second, the court considered the sum of Gruwell's fine. The court considered the act's maximum fine of $25,000 per violation and compared that to the Department's imposition of a $7,500 fine on Cifsbo for admitted multiple instances of violating the act. In this case, the court found no principled reason to impose a 233% greater fine on Gruwell than on Cifsbo for similar violations and therefore reduced her fine to $7,500.

© ATG|Casenotes/Bulletin 1104_v4n4

[Last update: 5-24-11]