"Caveat Emptor" or
"let the buyer beware" used to be the watchword for buyers of real
estate. Over the years a number of
inroads have been made to protect the buyers of real estate, but a
Illinois law may make the "as is" sale of
homes a thing of the past. The
Residential Real Property Disclosure Act requires the seller of residential
property in Illinois to deliver a written disclosure document regarding the
physical conditions of the property to prospective buyers before a sale
contract is signed.
This Act is specifically
designed to benefit all the parties in a real estate transaction. A standardized form for the required
disclosures has been adopted by the Illinois legislature. The Act is designed to reduce the number of
oral representations which are made concerning property during the negotiation
process, and it is hoped that it will promote the faster settlement of disputes
between buyers and sellers.
Included under the Act
are transfers by sale, installment contract, assignment of beneficial interest,
or a lease with an option to purchase.
The Act does not apply to transfers of newly constructed residential
real property that has not previously been occupied.
In addition, the Act does not apply to a variety of other types
of real estate transactions including Deeds in lieu of foreclosure, transfers
by inheritance, transfers pursuant to certain court orders, and transfers
between spouses, descendants, and co-owners.
Under the Act a seller is required to disclose material defects of
which the seller has actual knowledge.
A "material defect" is one which has a substantial adverse
effect on the value of the property or which significantly impairs the health
and safety of the occupants. A seller
does not have the affirmative duty to investigate the status of the property to
uncover defects. The seller is also not
required to amend the disclosure document once it has been delivered to the
prospective buyer unless the disclosure document is inaccurate or contains
omissions that the seller knew about at the time the disclosure document was
Further, a seller is not liable
for failing to disclose a defect that the seller had knowledge of but
reasonably believed was corrected. Also, a seller is not
liable for errors or omissions in information provided by a contractor about
matters which are within the scope of the contractor's expertise.
Under the Act the seller has
the responsibility to complete and deliver the disclosure document to the buyer. It is likely that real estate brokers will
take an active role in making sure that the disclosure document is delivered to
a prospective buyer. In fact, some real
estate brokerage companies already require their sellers to complete such a
disclosure document even though the law has not yet taken effect. The required disclosure is not a warranty by
the seller of the condition of the property.
Therefore, a buyer of real estate should insist on all warranties that
they otherwise would have as if the law did not exist. The seller's disclosure
should also not be used by the buyer to take the place of the
buyer's own inspection of the property or the buyer's employment of a
professional inspection service to inspect the property.
Finally, the statute is not intended to
limit or modify any other duties and responsibilities of a seller to disclose
information about the property to avoid fraud or misrepresentation. A seller who violates the
Act is liable for actual damages incurred by the buyer as well as for court
costs. The court can also award
reasonable attorney's fees to the successful litigant. If a buyer wishes to bring an action against
a seller for violation of the Act, such a complaint must be brought within one
year from the earlier of the date of possession, the date of occupancy, or the
date on which the Deed to the property is recorded.
Be sure to contact our
office if you are buying or selling a home and have any questions about this
Act, particularly if a real estate broker is not involved in the