In 2018 the Illinois Real Estate Lawyers Association (IRELA) released the newest version of the Multi-Board Residential Real Estate Contract, version 7.0. The contract is a template that many Illinois real estate brokers use to enter into a contract for the sale and purchase of a residential property in Illinois. Using a template such as the 7.0, brokers typically fill out the form, and negotiate the terms with the other party, prior to any attorney review.
After the contract is accepted there is usually an Attorney review period, which is when the Attorneys for either side may propose modifications, accept/reject modifications, and review the contract, to ensure conformity with the client’s wishes.
One of the updates to the 7.0 from the prior version is the section that applies the Attorney Review, paragraph 10. The Attorney Review paragraph provides that within five (5) business days after date of acceptance, the attorneys for the respective parties, by notice, may:
- Approve the contract; or
- Disapprove the contract, which disapproval shall not be based solely upon the Purchase Price; or
- Propose modifications to this Contract, except for the Purchase Price, which proposal shall be conclusively deemed a counteroffer notwithstanding any language contained in any such proposal purporting to state the proposal is not a counteroffer. If after expiration of ten (10) Business Days after Date of Acceptance written agreement has not been reached by the Parties with respect to resolution of all proposed modifications, either Party may terminate this Contract by serving Notice, whereupon this Contract shall be immediately deemed terminated; or
- Offer proposals specifically referring to this subparagraph d) which shall not be considered a counteroffer. Any proposal not specifically referencing this subparagraph d) shall be deemed made pursuant to subparagraph c) as a modification. If proposals made with specific reference to this subparagraph d) are not agreed upon, neither Buyer nor Seller may declare this contract null and void, and this contract shall remain in full force and effect.
Prior to this change, it was common for attorneys to include language in the proposed modifications that limited the other side’s ability to reject the Contract based on the proposals, such as the following:
“Terms contained herein are only suggested or proposed modifications and should not be construed as a counteroffer, buyer reserves the right to withdraw any or all of these proposed modifications and to proceed under the terms of the original contract.”
This language purported to not permit the party receiving the modification letter to cancel the contract without responding to the proposed modifications, based solely on the proposals. 7.0 changed this practice.
Under the new Contract, the parties may designate under which provision the proposed modifications are made. If the modifications are made pursuant to 10(c), language indicating that the proposals are mere proposals and not counter-offers will be disregarded.
If the proposals are made pursuant to 10(d), they are treated as mere proposals, and may be ignored or address. However, if they are not addressed or only partially addressed, neither party may declare the Contract null and void.
It is therefore important to designate under which provision your proposals are being made. Proposals which are must have, should be made pursuant to paragraph 10(c), however other less significant proposals, that a party may not need, may be made pursuant to 10(d).
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