NAR Code of Ethics vs the Illinois License Act

The Illinois Real Estate License Act of 2000 is state law, and the Illinois Department of Financial and Professional Regulation (IDFPR) enforces it with fines of up to 25,000 dollars for each violation. The NAR Code of Ethics is a different kind of document. It belongs to a trade association, it has 17 Articles, and REALTORS voluntarily subscribe to it. A licensee can be bound by the Act alone, or by the Act and the Code together.

That difference decides who can complain, who hears the complaint, and what the outcome can be. If you are still weighing offices, read how to choose your first brokerage next to this guide and ask each office which memberships it expects and which rules it trains on.

This guide compares the 2026 NAR Code of Ethics and Standards of Practice with the Illinois Real Estate License Act and the Department's rule on unprofessional conduct. It sticks to what the two documents and the Division of Real Estate's own complaint form say. Where the sources are silent, the guide says so. It is not legal advice, and a licensee or consumer with a dispute should talk to an attorney.

Two Rulebooks, Two Enforcers

The Act and the Department

The General Assembly wrote the Act "to evaluate the competency of persons engaged in the real estate profession and to regulate their activities for the protection of the public." That is the stated intent in Section 1-5. Anyone who acts as a broker, meaning someone who sells, rents, leases or negotiates real estate for another and for compensation or with the expectation of compensation, falls inside the Act's reach.

Section 20-10 reaches people who are not licensed too. A person who practices, offers to practice or holds oneself out as a managing broker, broker or residential leasing agent without a license can be ordered to pay a civil penalty of up to 25,000 dollars for each offense, after a hearing. NAR describes it as a code that REALTORS voluntarily subscribe to.

For licensees, Section 20-20(a) lets the Department refuse to issue or renew a license, place it on probation, suspend it, revoke it, reprimand the licensee or take other action it considers proper, and add a fine of up to 25,000 dollars for each violation. The list of causes runs from number 1 to number 47. One cause is any act that violates Article 3 of the Illinois Human Rights Act. Another is dishonorable, unethical or unprofessional conduct likely to deceive, defraud or harm the public, including conduct set out in the Department's rules. Section 20-15 adds that a single prohibited act is a violation.

The Department does not decide discipline alone. Section 25-10 creates the Real Estate Administration and Disciplinary Board, which has 15 members appointed by the Governor. Twelve of them have worked as managing brokers or brokers for at least ten years before appointment, and three are public members who represent consumer interests. The Secretary considers the Board's recommendations on standards of professional conduct and discipline. Final decisions can go to court review under the Administrative Review Law, as Section 20-75 provides.

Our guide to Illinois Real Estate License Discipline and Complaints follows a complaint step by step through that process. This guide does not repeat it.

The Code and the local association

NAR describes itself as an American trade association involved in all aspects of residential and commercial real estate. Its Code of Ethics and Standards of Practice, effective January 1, 2026, opens with a Preamble and then runs through 17 Articles grouped under duties to clients and customers, duties to the public and duties to REALTORS. The Preamble says the Code establishes "the standards of honesty, fairness, and professionalism" for REALTORS.

NAR points out that REALTORS are different from non-member licensees because they voluntarily subscribe to the Code. That sentence matters for everything that follows. The Act applies because a person holds an Illinois license. The Code applies because a person chose to be a member.

Enforcement runs through the association, not the state. NAR says a person who believes a REALTOR violated one or more Articles can file an ethics complaint through the local association of REALTORS where the REALTOR holds membership, or where the REALTOR participates in an association-owned or association-operated MLS. NAR also tells readers to check with the local association for the proper forms. A charge has to be written as an alleged violation of one or more Articles. The Standards of Practice can be cited in support, since they clarify what each Article requires.

NAR says it does not recommend specific discipline for particular offenses. Its sanctioning guidelines only outline points to consider.

Which one wins in a conflict

NAR answers this itself in its Explanatory Notes. The Code "establishes obligations that may be higher than those mandated by law," but "in any instance where the Code of Ethics and the law conflict, the obligations of the law must take precedence." In plain terms, a member cannot cite the Code to excuse breaking the Act.

Where the Code and the Act Cover the Same Ground

Most of the big subjects appear in both documents. The wording differs, and so does the enforcer. The table below pairs each subject with what each source says. Nothing in it ranks the two, because the sources do not rank them either.

The two are not always identical in reach. Article 7 asks for informed consent to dual compensation even when the law allows it. Section 20-20(a)(14) asks for written notice when a licensee acts for more than one party. Those are related ideas, but they are not the same rule, and a person reading only one of them would miss the other.

Duties the Act spells out for clients

Article 1 of the Code states the client duty in a single sentence. The Act spends more space on it. Section 15-10 says a licensee is considered to represent a consumer as a designated agent unless a written agreement between the sponsoring broker and the consumer provides a different relationship. Section 15-15(a) then lists what a licensee representing a client must do. The licensee must perform the brokerage agreement, present offers on time unless the client waived that duty, disclose material facts the licensee actually knows, account on time for money and property, use reasonable skill and care, keep confidential information confidential, and follow the Act and other laws, including fair housing and civil rights statutes.

The Department's rule on unprofessional conduct fills in more detail. Rule 1450.900 says unprofessional conduct "includes, but is not limited to" failing to act in a client's best interests, deliberately misleading a client about market value, deliberately misrepresenting property condition or access, and failing to reasonably safeguard confidential information. It also lists obstructing an inspection, audit, investigation, examination or disciplinary proceeding. Article 14 of the Code makes a parallel demand of REALTORS in association proceedings. Members must put the pertinent facts before the proper tribunal and must not disrupt or obstruct the process.

The Act also treats a false claim of membership as a problem. Section 20-20(a)(13) makes it a ground for discipline to use any trade name or insignia of membership in a real estate organization of which the licensee is not a member.

Topics where only one source speaks

Some Articles of the Code have no match among the Act's discipline provisions that this guide read. Article 3 tells REALTORS to cooperate with other brokers unless cooperation is not in the client's best interest, and it adds that the duty to cooperate does not include a duty to share commissions or fees. Article 15 bars knowingly or recklessly false or misleading statements about other real estate professionals. Article 16 bars practices that conflict with exclusive representation agreements other REALTORS have with their clients. Article 13 bars the unauthorized practice of law and tells REALTORS to recommend legal counsel when a party's interest requires it. Article 17 is the arbitration duty, covered below.

On the other side, the Act contains the licensing machinery the Code does not, such as the civil penalty for unlicensed practice, the temporary suspension power in Section 20-65, and the requirement in Section 20-20(a)(18) to make escrow records available to the Department within 24 hours of a request. The Code is not a licensing law and does not claim to be.

What Each One Can Do About a Dispute

The Division's limits

The Division of Real Estate (DRE) at IDFPR publishes a complaint form, and the front of that form is blunt about its limits. It says DRE will investigate complaints to determine whether there has been unlawful or unprofessional conduct by a real estate broker, real estate company or leasing agent. It also says the process can be lengthy for reasons inside and outside the Division's control.

Then it lists what the Division cannot do. It cannot provide legal advice or act as your attorney. It cannot order the refund of fees, award damages, or enforce or cancel contracts. And it cannot mediate commission disputes. A person who thinks a broker broke the Act can ask the Division to investigate, but the Division is a regulator, not a claims office.

The Act does leave one door to private claims. Section 15-5(c) says Article 15 may serve as a basis for private rights of action and defenses by sellers, buyers, landlords, tenants, managing brokers and brokers. The Act then says those private rights of action do not extend to any other Article of the Act. Whether a particular claim fits is a question for an attorney.

The association's arbitration duty

Commission disputes between brokers are exactly where Article 17 of the Code applies. For contractual disputes, and for the specific non-contractual disputes the Standards of Practice define, between REALTORS who are principals in different firms, the Article says the members must mediate if their Board requires it. If mediation does not resolve the matter, or the Board does not require it, they must submit the dispute to arbitration under the Board's policies "rather than litigate the matter." NAR adds that REALTORS agree to this as a condition of membership.

The Standards of Practice carve out several limits. Standard of Practice 17-1 says that filing a lawsuit and refusing to withdraw it in an arbitrable matter counts as a refusal to arbitrate. Standard of Practice 17-2 says Article 17 does not require arbitration when all parties advise the Board in writing that they choose not to arbitrate before it. Standard of Practice 17-3 says a REALTOR acting solely as a principal in a transaction is not obligated to arbitrate with other REALTORS unless they agreed in writing.

Article 17 also reaches clients, but only on their terms. If clients wish to mediate or arbitrate contractual disputes arising out of real estate transactions, REALTORS must do so under the Board's policies, provided the clients agree to be bound by the resulting agreement or award.

Sections 20-20, 20-60, 15-15, 15-25 and 10-30 of the Act do not mention mediation or arbitration at all. So the two systems split the work. The Division regulates the license and says plainly that it will not mediate a commission dispute. The association handles members' disputes with each other through the process Article 17 requires.

A worked example, with both sources in play

Suppose a licensee who is also a REALTOR deposits a buyer's earnest money in the firm's operating account. The Act has a direct answer. Section 20-20(a)(17) makes failure to deposit escrow money in a special account, separate from personal and other business accounts, a ground for discipline, and (a)(22) covers commingling. Each violation can carry a fine of up to 25,000 dollars. The Department's rule lists a special accounts violation as unprofessional conduct as well.

The Code speaks to the same facts in Article 8. REALTORS must keep money held in trust for others in a special account, separate from their own funds. The Preamble adds a duty for other members. A REALTOR with direct personal knowledge of conduct that may violate the Code and involves misappropriation of client or customer funds is to bring the matter to the attention of the appropriate Board or Association of REALTORS.

Neither source says one route cancels the other. The Division's own form even asks a complainant to identify any other agency that received the same complaint. What differs is the result. The Department can act on the license. The association can act on membership. Neither source says the Division will return the buyer's money, because its form says it cannot order a refund.

Now change the facts. Two brokers from different firms disagree over which one is owed a commission after a sale. The Act's discipline sections do not address who gets paid between brokers, and the Division says it does not mediate commission disputes. If both brokers are REALTORS and principals, Article 17 points them to their Board's mediation or arbitration process. If neither is a member, the Code is not part of the picture, and the sources read for this guide do not describe another forum. An attorney can say what remains.

What This Means If You Are Entering the Business

The Act applies to a person because the person holds a license. The Code applies because a person joined, and it comes with its own upkeep. NAR requires ethics training of not less than two hours and thirty minutes. The current training cycle runs from January 1, 2025 to December 31, 2027. New members, and people returning after a break in membership of more than a year, take the new member course.

NAR also requires Fair Housing training of not less than two hours, on the same three-year timeline. The consequences are specific. A member who misses the requirement in a cycle is suspended for January and February after the cycle ends, and the membership is terminated on March 1 if the member is still suspended.

NAR says that suspension of membership will, in most instances, have no effect on MLS access. It explains that only a REALTOR principal who belongs to an MLS requiring association membership can have MLS access cut off for failing the training requirement, and that a non-principal cannot. That answer turns on whether the MLS requires association membership and on whether the member is a principal, so a new agent should ask the local association.

For agents in Rockford, Winnebago County, Boone County or Ogle County, no source read for this guide describes a separate local rule on top of these two rulebooks. State law, meaning the Illinois Real Estate License Act and IDFPR, controls the license, and the NAR Code controls membership through the local association.

Two habits follow from all of this. First, when a question is about the license, the Act and IDFPR are the authority. Their rules apply to a person who holds an Illinois license. Second, when a question is about membership, the Code and the local association are the authority, and NAR itself says the law wins any conflict.

One last point on wording. Section 20-10 reaches a person who holds oneself out as a broker without a license. Section 20-20(a)(13) reaches a licensee who uses the insignia of an organization the licensee has not joined. Both sections turn on what a person claims to be.

Bottom Line

The Illinois Real Estate License Act of 2000 is the law, and IDFPR enforces it against every licensee with discipline that can reach the license itself and fines of up to 25,000 dollars for each violation. The NAR Code of Ethics is a promise made by members of a trade association, enforced through local associations, with arbitration as its dispute tool. They overlap on money held for others, advertising, discrimination, written agreements and honesty to the other side. They diverge on remedies, because the Division cannot refund money or mediate commissions, while Article 17 requires members to take certain disputes to a Board.

Read the Act first, because it binds everyone with a license and wins any conflict. Read the Code second, because it sets higher expectations for members and tells you where a member's dispute goes. If you are choosing an office, how to choose your first brokerage covers the questions worth asking, and For the related rules on money and marketing, see our guides to Illinois Escrow and Trust Account Rules for Brokers, Illinois Real Estate Advertising Rules for Brokers and Fair Housing Duties for Illinois Brokers. The full list is in the Illinois Real Estate Guide: Every Gambino Realtors Article.

Questions about these two rulebooks come up often, so here are the ones that matter most.

Frequently Asked Questions