Can you earn referral fees with an inactive Illinois real estate license?
Not for new referrals. Under the Illinois Real Estate License Act, referring clients for compensation is licensed activity, and an inactive license can’t be used to practice. Referral fees must also be paid through your sponsoring brokerage. The exception: fees you earned while you were still sponsored can be paid after you go inactive. To earn new referral fees, keep your license active.
This is the question almost nobody asks before leaving their brokerage, and the one that costs people real money afterward. The short version: if your license is inactive when you make a referral, you can’t be paid for it.
Why an inactive license can’t earn referral fees
It comes down to two pieces of Illinois law that work together.
- Referring clients for pay is licensed activity. The Real Estate License Act defines a broker to include anyone who, for compensation, “assists or directs in procuring or referring of leads or prospects.”
- An inactive license can’t be used to practice. Illinois rules say “practicing or offering to practice on an expired or inactive license shall constitute unlicensed practice.”
Put together, earning a fee for a referral while your license is inactive would count as practicing on an inactive license. The Chicago Association of REALTORS’ own holding company says the same in its FAQ: “you still need to maintain an active license to refer transactions and receive compensation for it.”
No single IDFPR page states this in one sentence. It’s what the sections above add up to. If you have an unusual situation, ask a real estate attorney or IDFPR.
Referral fees have to go through your brokerage
Even with an active license, you can’t be paid directly by the other agent. The Act says: “No licensee sponsored by a broker shall accept compensation for the performance of activities under this Act” except from their sponsoring broker.
Here’s how the money moves when a referral closes:
- You refer your client to an agent, and you agree on the referral fee in writing.
- The client buys or sells with that agent, and the deal closes.
- The agent’s brokerage pays the referral fee to your sponsoring brokerage.
- Your brokerage pays you your share.
The exception: fees you earned while you were active
If you made the referral while your license was sponsored, you can still be paid after you go inactive. The Act lets a former sponsor pay someone who is no longer sponsored when “the payments are for licensed activity performed by that person while previously sponsored,” under “an employment agreement that was previously in place.”
So a deal that was already in motion when you left your brokerage can still pay you. A referral you make after you go inactive can’t.
Can you pay or receive a fee as an unlicensed person?
No. Illinois rules say: “No licensee may pay a referral fee to an unlicensed person who is not a principal to the transaction.” The person receiving a referral fee must be licensed as a broker, managing broker or residential leasing agent in Illinois, or hold an equivalent license in another state or country.
That’s another reason to keep your license active instead of letting it lapse. Once it expires, you’re an unlicensed person for referral purposes.
What a referral is actually worth
Referral fees aren’t set by law. You and the receiving agent agree on a percentage of that agent’s commission. Here’s what that looks like at a 2.5% commission and a 25% referral fee:
| Home sale price | Agent’s commission (2.5%) | Referral fee (25%) | You keep at 80% |
|---|---|---|---|
| $250,000 | $6,250 | $1,562.50 | $1,250 |
| $350,000 | $8,750 | $2,187.50 | $1,750 |
| $500,000 | $12,500 | $3,125 | $2,500 |
These are examples. Commissions and referral percentages vary by deal.
How to keep earning referral fees when you stop practicing
- Stay with your current brokerage if it charges you little or nothing to keep your license there.
- Move to a license holding company, a referral-only brokerage that sponsors your license so it stays active. You skip MLS and association dues and get paid through them when a referral closes. See how to keep your license active.
Either way, you still need to renew by April 30, 2028 and keep up with CE. See the renewal guide.
Key takeaways
- An inactive Illinois license can’t earn fees for new referrals.
- Referral fees must be paid through your sponsoring brokerage.
- Fees earned while you were still sponsored can be paid after you go inactive.
- You can’t pay or receive a referral fee as an unlicensed person.
We sponsor your license for $109 a year so it stays active, and you keep 80% of every referral fee.
Get the free guide: Will I Lose My License?
- What active, inactive and expired really mean
- Your 2028 renewal calendar and CE checklist
- How referral fees work, with real numbers
- Reminders before your April 30, 2028 deadline
Rather talk? Call 312.238.9796 for a free 2-minute license check-up.
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Get the free guideFrequently asked questions
Can an inactive Illinois real estate license receive a referral fee?
Not for a referral made while the license is inactive. Referring leads for compensation falls under the Act’s definition of broker activity, and practicing on an inactive license is unlicensed practice under Illinois rules.
Can my old brokerage pay me a referral fee after I leave?
Yes, if you earned it while you were still sponsored. The Act lets a former sponsor pay someone who is no longer sponsored when the payment is for licensed activity performed while they were sponsored, under an employment agreement that was already in place.
Can I pay a referral fee to a friend who isn’t licensed?
No. Illinois rules say no licensee may pay a referral fee to an unlicensed person who isn’t a principal to the transaction. The person receiving it must be licensed in Illinois, or hold an equivalent license in another state or country.
Who pays my referral fee?
Your sponsoring brokerage. The Act says a sponsored licensee may accept compensation for licensed activity only from their sponsoring broker. The other agent’s brokerage pays your brokerage, and your brokerage pays you your share.
How much is a typical referral fee?
There’s no set amount in Illinois law. You and the receiving agent agree on it, as a percentage of that agent’s commission. For example, on a $350,000 sale with a 2.5% commission and a 25% referral fee, the fee is $2,187.50.
Sources
- 225 ILCS 454/1-10 (definitions of “broker” and “inactive”)
- 225 ILCS 454/10-5 (who may pay and receive compensation)
- 225 ILCS 454/5-40 (license becomes inactive when sponsorship ends)
- 68 Ill. Adm. Code 1450.140 (practicing on an inactive license is unlicensed practice)
- 68 Ill. Adm. Code 1450.780 (referral fees to unlicensed persons)
- Chicago Association of REALTORS: NIREIN FAQs
This guide is general information, not legal advice. Rules change, so confirm the current requirements with the Illinois Department of Financial and Professional Regulation (IDFPR) before you act.