Key Takeaways
- All Brokers must be sponsored by a Managing Broker to practice
- Managing Brokers are responsible for supervising all sponsored licensees
- Compensation can only be paid through the sponsoring Managing Broker
- When changing sponsors, licensees must notify IDFPR within 24 hours
- Independent contractor status is common but does not reduce supervision requirements
Last updated: January 2026
Sponsorship & Employment
Understanding the Managing Broker-Broker relationship is essential for Illinois practice.
Sponsorship Requirement
Who Must Be Sponsored
| License Type | Sponsorship |
|---|---|
| Broker | MUST have Managing Broker sponsor |
| Leasing Agent | MUST have Managing Broker sponsor |
| Managing Broker | No sponsor required |
Sponsorship Responsibilities
| Managing Broker Duty | Description |
|---|---|
| Supervision | Oversee all sponsored licensees |
| Training | Ensure competency |
| Review | Check transactions |
| Compliance | Ensure law compliance |
| Advertising | Approve all ads |
| Trust accounts | Maintain escrow |
Changing Sponsors
Notification Requirements
| Action | Deadline |
|---|---|
| Notify IDFPR | Within 24 hours |
| Notify old sponsor | Immediately |
| License status | Inactive until new sponsor |
Process
| Step | Action |
|---|---|
| 1 | Resign from current sponsor |
| 2 | Notify IDFPR within 24 hours |
| 3 | Find new Managing Broker |
| 4 | New sponsor activates license |
Compensation
Payment Rules
| Rule | Description |
|---|---|
| Through sponsor | All compensation through MB |
| No direct payment | Cannot accept from clients directly |
| Referral fees | Only to/from licensees |
| Fee splitting | Only with sponsor approval |
Commission Disputes
| If Dispute | Action |
|---|---|
| Between licensees | Managing Broker decides |
| Procuring cause | Determining factor |
| Civil action | Court resolution |
Independent Contractor vs. Employee
Common in Illinois
| Status | Tax Treatment |
|---|---|
| Independent contractor | 1099, self-employed |
| Employee | W-2, employer withholding |
Regardless of Status
| Requirement | Still Applies |
|---|---|
| Supervision | Must be supervised |
| Compliance | Must follow rules |
| Liability | Managing Broker responsible |
Branch Offices
| Requirement | Details |
|---|---|
| Branch license | Required for each location |
| Manager | Managing Broker on-site |
| Supervision | Same requirements apply |
| Sign | Proper identification |
Termination
When Sponsorship Ends
| Situation | License Status |
|---|---|
| Voluntary termination | Inactive |
| Sponsor revoked | Must find new sponsor |
| Death of sponsor | Must find new sponsor |
| Sponsor closes | Must find new sponsor |
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Test Your Knowledge
When a Broker changes Managing Broker sponsors, how soon must they notify IDFPR?
A
B
C
D
Test Your Knowledge
Can an Illinois Broker receive commission payments directly from a client?
A
B
C
D