Client/earnest-money funds must be held in a special account (escrow/trust account), separate from the broker's own funds — no commingling.
Before you read
Test yourself first: 5 questions
Question 1 of 5
An Illinois sponsoring broker must keep a complete record of each transaction. Which of the following is NOT typically a required transaction record?
Answer: D. Required transaction records include sales contracts, agency and dual-agency disclosures, the Residential Real Property Disclosure Report, and escrow/financial records. The private tax returns of the buyer and seller are not records the brokerage is required to keep.
Question 2 of 5
In Illinois, escrow or earnest money funds held by a brokerage must be kept in what type of account?
Answer: B. Illinois requires that escrow funds be held in a separate special account and never commingled with the broker's own funds.
Question 3 of 5
An Illinois licensee deposits a client's earnest money into the licensee's personal checking account to cover a temporary cash shortfall, intending to repay it. This act is most accurately characterized as:
Answer: B. Escrow and earnest-money funds must be kept in a designated escrow/trust account, never mixed with personal or operating funds. Using client funds for personal purposes is conversion and commingling—prohibited conduct that can result in suspension or revocation regardless of intent to repay.
Question 4 of 5
Under the Illinois Real Estate License Act of 2000, where must a sponsoring broker deposit earnest money received in connection with a real estate transaction?
Answer: B. Illinois requires that escrow/trust funds such as earnest money be held in a special account, separate from the broker's personal funds and business operating funds, in a recognized federally insured depository institution. Keeping such funds in personal or operating accounts is commingling, a violation of the License Act.
Question 5 of 5
In Illinois, mixing a brokerage's own funds with client escrow money in the same special account is best described as which prohibited act?
Answer: B. Commingling is the act of mixing a licensee's or brokerage's own funds with money belonging to clients or customers that is being held in escrow. It is prohibited under the Real Estate License Act of 2000 and is grounds for discipline by the IDFPR Division of Real Estate.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- Seller disclosure form: Residential Real Property Disclosure Report.
- The report covers known material defects in residential property of 1-4 dwelling units.
- Illinois is NOT a community property state.
- Client/earnest-money funds must be held in a special account (escrow/trust account), separate from the broker's own funds — no commingling.
- Sponsoring broker is responsible for proper handling and accounting of escrow funds.
- Pre-license education for the entry Broker license: 75 hours.
- Federal lead-based paint disclosure applies to housing built before 1978.
- Licensees may not convert client escrow funds to personal use (no conversion).
Illinois Disclosures, Escrow & Key Numbers Cheat Sheet: FAQs
Is Illinois Disclosures, Escrow & Key Numbers Cheat Sheet on the real estate exam?
Yes. State License Law is a scored domain on the Illinois real estate licensing exam, and this topic appears in the state license-law portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
Does Illinois test this differently?
Illinois applies its own license law on top of the national portion. This page covers the Illinois rules specifically, which is what the state section of your exam tests.
