Sellers should know this when they put their home on the market, but it can give buyers peace of mind. During the due diligence period, buyers are given enough time to inspect the property to understand potential issues with the home they intend to purchase. Anyone who has gone through this will attest to how robust an inspection report can be. Though they will likely highlight every issue the inspector can find, there are still things the inspector cannot uncover. For instance, what is behind the walls? Did previous termite problems destroy the house’s internal structure, or did the house ever have severe water damage from a faulty roof?
Sellers don’t want to frighten potential buyers, and buyers don’t want to discover significant issues to which they must commit substantial amounts of money after they leave the closing table. Because the interests of a seller and a buyer may be at odds, the Illinois Residential Real Estate Property Disclosure Act exists to prevent many of the concerns we just raised.
What It Does
The Illinois Residential Real Estate Property Disclosure Act aims to identify what information a seller must disclose. Regardless of whether the sale involves a single-family home, condominium, co-op, or multiple-family home (up to 4 units), the Act applies. If you have ever sold a home before, your real estate agent likely had you fill this out before the house was listed.
Let’s discuss the things that need to be disclosed. When you read about this Act, you will see the phrase “material defect” get used. This equates to anything affecting the home’s value or creating an unsafe condition for future residents. Plumbing issues are examples of the former, whereas lead paint or radon gas in the basement speak to the latter. One of the most important things to remember is that the seller is not required to disclose an issue they reasonably believe to have been resolved. If the HVAC system completely fails, but the owner replaces it, they do not have to state the HVAC system is defective because it was replaced.
What It Does Not Do
The seller is not required to spend time investigating or searching for issues to disclose. Previously, we noted that plumbing could be a material defect. If the seller has never had any problem with the plumbing, had anyone repair it, or had to file an insurance claim, it will not be disclosed as an issue. That doesn’t mean there isn’t one. The buyer is responsible for hiring the right people to investigate the home thoroughly during the due diligence process.
After reading that, buyers may question whether this gives a seller an “out.” In other words, sellers may falsely claim they did not know of a defect and didn’t list it. First, buyers can walk away from a contract without penalty when sellers make a mistake on the disclosure statement, regardless of whether the oversight was intentional. Furthermore, there are scenarios where buyers discover a significant defect after closing that the sellers know about. (In most cases, evidence and documentation will show that the sellers were aware of something that never got added to the disclosures list.) When this happens, buyers can either contact the sellers and ask them to pay, or they can file a lawsuit.
Contact Auricchio Law Offices
Whether you are a seller or a buyer, you must overcome several hurdles before you reach the closing table. As your attorney, we will be there to represent you, your interest, and how to navigate each challenge as they surface. By the time you commit your signature to paper, you will have a full command of what you are committing to. If you are buying or selling real estate, contact the Auricchio Law Offices to set up your free consultation.
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