Proper Service of a Five-Day Notice

If you are an Illinois landlord, you may have had the misfortune to come across a tenant who refuses to pay rent. What should you do? Serve a five-day notice. How should you serve the notice? Properly. What does service of a proper notice involve?

1) The notice should be worded properly. For more information on the proper wording of a five-day notice, click here.

2) The notice should be served properly. According to the Illinois Forcible Entry and Detainer Statute, a five-day notice must be served by a) personal delivery, b) leaving the notice with a person who is at least 13 years old and resides at the property, or c) sending the notice to the tenant via certified or registered mail. In the event that the tenant has vacated the premises and no one is living there, you can also post notice on the tenant's door.

Before sending a five-day notice, you should check with your attorney and make sure it is correct in every way. Improperly phrased or served five-day notices can hurt your chances in court. Even if you make it through trial, an improperly served five-day notice can cause landlords a lot of headache at appeal. In fact, in a recent court decision, American Management Consultant, LLC v. Carter (2009 Ill.App.LEXIS 530, 3rd Dist., 2009), the landlord lost the appeal, even after winning at trial, because, among other reasons, the service of his five-day notice was deemed improper.

No Jury Trials Allowed in Certain Real Estate Cases

In a recent case, Anderson v. Klasek (2009 Ill.App.LEXIS 708, 5th Dist., 2009), the Buyers sued the Seller, the Seller's real estate agent, and their own home inspector after closing on a home that was infested with termites and had purportedly been treated for the same. The home inspector settled the case outside of court, but the Seller and the Seller's real estate agent decided to proceed to trial. The real estate agent demanded a trial by jury, which the judge granted.

Subsequently, the Buyers lost the case. They filed an appeal on the grounds that the Residential Real Property Disclosure Act, which was the basis of part of their claim, did not allow for trial by jury. The appellate court agreed, stating that the Illinois legislature had not allowed for trials by jury when drafting the Residential Real Property Disclosure Act. Cases that fall within the purview of this Act should therefore be tried in front of a judge, not a jury. The court also added that the Real Estate License Act and the Consumer Fraud and Deceptive Business Practices Act should also be tried in front of a judge, not a jury.

When bringing cases before the court, attorneys and real estate practitioners should keep in mind that a jury trial might not always be an option!

RESPA and TILA Updates

Buyers and lenders take note! In an effort to prevent deceptive and/or fraudulent loan practices, new federal regulations modifying the Truth and Lending Act took effect at the end of July 2009. Under these new requirements, lenders may not collect upfront application fees from the borrower until the borrower has received the Truth in Lending Disclosure and the Good Faith Estimate. Furthermore, closing cannot take place until at least seven business days after these two disclosures have been issued.

Moroever, after the two disclosures are issued, if there are any further changes to the closing figures that would result in an APR change of greater than .125% (for a fixed-rate loan) or .250% (for an adjustable rate mortgage), the lender MUST redisclose the Truth in Lending Disclosure and Good Faith Estimate, reflecting the changes in the fees and closing figures, to the borrower. Three additional days are required between redisclosure and closing.

Will these changes help prevent deceptive mortgage practices? Well, that remains to be seen. In the meantime, buyers and lenders should work diligently to complete the mortgage process to ensure a timely closing!

Disclosure Act Applies to Homes Being Torn Down Too!

In Skarin Custom Homes, Inc. v. Ross, No. 2 08 0061 (Ill. App. Ct., 2nd Dist., February 26, 2009), the court stated that just because a buyer intended to tear down a home did not mean that the seller was exempt from the provisions of the Illinois Residential Real Property Disclosure Act. In that case, the seller-defendant did not clarify the extent of flooding damage to the home being purchased; in court, the seller-defendant argued that the severity of the flooding was in fact irrelevant, because the buyer intended to destroy the residence on the property and build a new home.

The court did not agree, even though in a prior case, Grady v. Sikorski, 349 Ill. App. 3d 774 (2004), the court had held that if a buyer intends to destroy the home he is purchasing, the Illinois Residential Real Property Disclosure Act serves no purpose. The court distinguished Grady from Skarin Custom Homes, however, because the house in the Grady case was uninhabitable, but the house in the Skarin Custom Homes case was habitable should the buyer change his mind about building a new home.

Bottom line -- sellers beware. If you are selling a home in habitable condition, you should be extremely diligent in completing your Illinois Residential Real Property Disclosure Report, even if the Buyer intends to tear the house down!