Hot on the Hotline: Illinois Residential Real Property Act gets an update

Writen by Anneliese Fierstos |

Published: April 29, 2022 |

Reading Time: 4 min

Illinois Residential Real Property Act gets an update

During the most recent legislative session, House Bill 4322 was introduced with proposed mostly technical changes to the Illinois Residential Real Property Act (“The Act”) including language clarifying some of the terms used in the Act and bringing it up to date. The Illinois Real Estate Lawyers Association proposed this legislation and worked with Illinois REALTORS® to gain support for the bill, as amended. The bill originated in the House and passed in the Senate on March 31, 2022 and will be sent to the Governor. Illinois REALTORS® anticipates the Governor will sign the bill.

Some of the changes to the Illinois Residential Real Property Act include the following non-exhaustive list:

  • Seller shall deliver to a prospective buyer the written disclosure report before the signing of a contract. This language was updated from “before the signing of a written agreement by the seller and prospective buyer that would require the prospective buyer to accept a transfer of the residential real property.”
  • Provides that, if prior to closing, and seller becomes aware (rather than has actual knowledge) of an error, inaccuracy, or omission in any prior disclosure report or supplement after delivery of that disclosure report or supplement to a prospective buyer, that seller shall supplement the prior disclosure report. This language clarifies the existing responsibility for a seller to make sure information about the condition of the property is up to date.
  • Provides that if a seller discloses a material defect in the disclosure report, a prospective buyer, within five (rather than three) days after receiving the report may terminate the contract.
  • Clarifies that if the seller discloses a material defect in a supplemental report, buyer can only terminate under three specific factual scenarios:
    1. The material defect results from an error, inaccuracy, or omission of which the seller had actual knowledge at the time of the prior disclosure; (Existing language)
    2. The material defect is not repairable prior to closing; (New language)
    3. The material defect is repairable prior to closing, but within five business after delivery of the supplemental disclosure the seller either declines, or otherwise fails to agree in writing, to repair the material defect. (New language)
  • Allows for a disclosure report to be made by email or other electronic delivery.
  • Provides that newly constructed property that has never been occupied does not include the rehabilitation of residential real property. This should be a helpful clarification.
  • Clarifies that if a seller answers “no” to occupying the property within the last 12 months, they shall identify in what capacity they are signing or their relationship to the property. (Note: there is and always has been a requirement for the non-occupying seller to complete the entire list of questions to the best of their knowledge even if the answer to question one is “no.” Identifying capacity or relationship might inform the buyer about what the seller may or may not be aware of regarding the property’s condition.)

REALTORS® have a duty to respond to requests from cooperating brokers seeking affirmation their buyers’ offers have been submitted to a seller.

The ongoing competitive atmosphere created by the limited inventory and stressful multiple offer situations has the legal hotline flooded with calls from Buyers’ agents concerned that their offers have not been presented to Sellers and requesting assistance in determining whether offers have been presented.

The Real Estate License Act, Section 15-15 (2)(B) requires that licensees “[t]imely present all offers to and from the client, unless the client has waived this duty.” Similarly, NAR Code of Ethics, Article 1, Standard of Practice 1-6, requires that REALTORS® submit offers and counteroffers objectively and as quickly as possible.

Often, REALTORS® call the hotline concerned that other licensees are not complying with the above provisions and frustrated that they cannot get any reply or information from the listing agent confirming that their Buyer’s offer was presented to Seller. Of some consolation is the requirement under NAR Code of Ethics Article 1, Standard of Practice 1-7, that if a cooperating broker submits a written request to the listing broker, the listing broker must provide written affirmation that the offer was either presented or that the seller waived the obligation to have the offer presented. Failure to cooperate with the written request of the cooperating broker for the written affirmation is a specific ethics violation and may support an ethics panel imposing a fine of up to $250 or other disciplinary measures.

About the writer: Anneliese Fierstos is the Illinois REALTORS® Legal Hotline Attorney.

Your Illinois REALTORS® Legal Team