The law states that if the seller of residential property in Illinois fails or refuses to provide the Illinois Residential Real Property Disclosure prior to the sale of the property, the buyer has the right to terminate the contract (765 ILCS 77/55). This is bad news for sellers -- what if they simply forgot to provide the disclosure? The law doesn't care. It doesn't matter why the seller didn't provide the Residential Real Property Disclosure or whether he was acting in good or bad faith. As long as the seller did not give the disclosure to the buyer, the buyer can opt out of the transaction.
While this issue is not litigated often, it did come up just recently. In Muir v. Merano, 378 Ill.App.3d 1103 (5th Dist. 2008), the buyer repeatedly asked the seller for the disclosure statement, but the seller never delivered it. The buyer then terminated the contract pursuant to state law based on seller's failure to provide the Illinois Residential Real Property Disclosure. Seller refused to return all of the buyer's earnest money, stating that he would only only return half of it. As a result, Buyer sued.
In court, the seller argued that since the statute does not state a timeframe for providing the disclosure, seller should be allowed to provide the disclosure just prior to or at closing. The court disagreed, stating that the purpose of the Illinois Residential Real Property Disclosure Act is to give prospective buyers the same knowledge of defects in the home that seller has, allowing the buyers to make an informed decision about whether or not to purchase. If the buyer does not receive the disclosure until just before or at closing, it is too late -- the buyer is already committed to purchase.
So if you are selling your home or rental property, where do you get the Illinois Residential Real Property Report? If you have a real estate agent, he should give one to you. If not, your attorney can provide it. It is imperative that as a seller, you complete and sign this document and give it to your potential buyer.
Lastly, the Illinois Residential Real Property Act clearly states that anyone who knowingly makes false statements on the disclosure shall be liable in the amount of actual damages, court costs, and attorneys' fees. The disclosure should be completed honestly and in good faith. It is better to address problems up front than end up in court later!
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8 comments:
In a short sale transaction, does the buyer have to sign the residenial property disclosure, mold, radon and lead base paint disclosures? If the property is being conveyed "As Is" and the buyer understands this transaction is a short sale with bank approval needed, I was told no disclosures need to be signed by the buyer.
A short sale transaction is similar to a regular sale in that the property is not owned by a bank. It is customary for both parties to sign all relevant disclosures.
In a private sale (no real estate agents), the Seller marks "no" to all boxes indicating no problems. At the time the disclosure form is presented, the contract for sale is also executed. This contract states that the house is sold "as is". Buyers agree to the as is arrangement because of the disclosure report which shows no problems at all. Upon execution of the contract, the Seller then visibly relaxes and starts to mention problems around the property...problems which were not marked on the disclosure form. Is there recourse?
If you're not satisfied with the condition of the house during the inspection period, you can cancel the contract!
It's been nine months since closing and we discovered in the past two months that there are flooding issues and the neighbor also said there was flooding issues before. My realtor went through all the papers and said a disclosure form was never given. Am I basically stuck now?
It will depend on your contract and other associated paperwork.
I inherited my parents' house and want to sell quickly, no money to invest in improvements. Not pretty but all seems fine. The basement is a bit damp, but never a flood or, leak. Parents had been told moisture in soil makes concrete walls exude salts/minerals. Never saw any mold, smells fine, all looks fine. Should I disclose "moisture" and just suggest dehumidifer since IL state form doesn't list this item?
This is not the right forum for specific legal advice. You should contact the attorney handling the sales transaction for you and pose this question to him or her!
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