Skip to main content

Illinois Property Disclosures Rules Sumarized: DIS-CLOSE! PERIOD!

Sometimes I long for the good old days of caveat emptor in Real Estate transactions. Ya pays your money, ya takes yer chances. That sort of thing. Still applies here in Illinois of course, but we have all sorts of disclosure laws now that have subsumed that ancient legal doctrine. We must disclose known problems with lead paint, mold, possibilities of radon, heating costs, and certain specified "major" material defects. It has reached the point that the number of pages of disclosure forms exceed the number of pages in the standard Chicago Association of Realtors form contracts!

Kinda takes all the fun out of real estate deals, but for the fact that sellers often play cute and fail to make necessary disclosures - and then get sued when their Buyers find out. Fun for my colleagues, the litigators I suppose. Troublesome for the rest of us.

So what happens, lets say, when a seller discloses a problem to his buyer, the buyer never experiences anything to suggest that the problem exists while he owns the property and then fails to disclose that problem to his buyer?

Well, thanks to colleague and Illinois Institute of Continuing Legal Education columnist Steve Bashaw, I have yet another reason to lie awake worrying about my clients and their real estate contracts. Steve reports the answer to that very question in the recently reported Illinois Appellate Court decision, Fox v. Heimann, 375 Ill.App.3d 35, 872 N.E.2d 126, 313 Ill.Dec. 366 (1st Dist. 2007).


The original Property Disclosure Report disclosed material defects in the basement or foundation, walls and floors, and settling of the building. The buyers did not investigate the statements in the disclosure report or have the property inspected prior to purchase. After the purchase, they renovated the kitchens, resurfaced the roof, and decorated, but did no structural work. When the property was sold a year and a half later they did not disclose any foundation problems or settling of the building and stated they were unaware of any such issues. Four and a half months after the closing, the building suffered damage from significant settling. After a trial on the merits, the court entered judgment in favor of the "buyers' buyer" and awarded $151,050 in damages, based on negligent misrepresentation.

"the Defendants were contractually obligated to disclose material defects in the property…[and]…breached their contractual obligation by failing to inform the plaintiff of known material defects that were disclosed to them when they purchased the building from [the original owner]."

Does this mean that we have to ask our seller-clients to pull out all the disclosure forms from their original purchases to make sure they "pick up" all previous disclosures?

Will we have to ask our Buyer-client's sellers if they received disclosures of defects that they did not disclose directly to us?

I'm uncertain, what do you think?

Labels:

Comments

Post a Comment

Popular posts from this blog

PLM Title Shuttered

Title insurance is a critically important part of any real estate transaction; or at least it should be. The title company guaranties the "quality" of an owners interest in the property - that there aren't any (unknown) liens or defects. No buyer that I work for will purchase a property without it. Title insurance is only as good as the insurer. We want to know that the insurance company, like the Rock of Gibraltar , will always be there. We want to sleep easy at night, knowing that the client is protected. That said, it was a bit distressing to see that PLM Title Company shut its doors, without any forewarning last week. Worse still, this morning's news is that there is a criminal investigation underway - and that we do not yet know why. Old timers like me shudder with memories of the great Intercounty Title debacle five years ago. Here's to hoping that this one is nothing like that one. Set aside the problems involved trying to make a claim against a defun
6 comments
Read more

FHA Loans and Condo Sales - Is Relief on the Way?

By all outward appearances, state government in Illinois has ground to a complete halt, with all eyes focused on the Governor's "problem" and all the related fal - der -rah. Its hardly business as usual in Springfield, but not everything has ground to a halt. Several new bills have been introduced this week. That is not to say that they will be of benefit to we the people. Nonetheless, the cogs and gears are turning, and we are hoping for the best. One such proposal comes from Rep. LaShawn Ford of Chicago's west side, who is himself a real estate broker and entrepreneur . He is the author of House Bill 155 , introduced & referred to the Rules Committee Wednesday. It seeks to address one of the most common problems I am seeing in condominium resale transactions these days; the tension between many Declarations of Condominium and FHA loan guidelines. Many Condo Declarations provide Associations with a "right of first refusal," which basically allows t
3 comments
Read more

MAYOR DALEY PROPOSES TIF FINANCING FOR SOME DISTRESSED PROPERTIES

Lets see how City Council reacts on this one, but the Mayor introduced a pretty interesting little ordinance that might be a real boon to first time area home buyers willing to buy and rehabilitate some bank-owned properties. Progress Illinois reports that the mayor's bill, introduced on March 9: "seeks to tackle the growing problem of vacant homes that are blighting neighborhoods across Chicago, and in particular in minority communities. Called the Vacant Building TIF Purchase and Rehabilitation Ordinance, the  bill  (PDF) proposes allowing residents with a household income no greater than 100 percent of the regional median income to apply for a tax increment financing (TIF) grant that would pay for up to 25 percent of the cost of purchasing and rehabilitating an empty residential property. Single-family empty homes or units in condo and cooperative buildings with four units or fewer are eligible. The empty homes must be located in a TIF district and must be in need of
Post a Comment
Read more