Selling a home can be stressful: finding the right agent, determining a listing price, preparing your home for showings, conducting open houses, negotiating offers, etc. Home owners have likely become intimately aware of many of the imperfections and issues of their home. Do those homeowners need to disclose all such issue in their disclosure reports?
Illinois law requires the disclosure of certain defects, not all defects. One disclosure form your real estate agent will likely ask you to complete is the Illinois Residential Real Property Disclosure Statement, which is a requirement, pursuant to the Illinois Residential Real Property Disclosure Act.
What is the Illinois Residential Real Property Disclosure Act?
The Illinois Residential Real Property Disclosure Act (765 ILCS 77/1 et. seq.) requires property transferors (e.g. sellers) to make certain disclosures of material defects. The Act applies to single family homes, multi-family homes (up to 4 units), condominiums, town-homes and co-ops. The Act does not apply to certain types of transfers pursuant to court order and others. An exhaustive list can be found in the statute (765 ILCS 77/15).
When does the Seller complete the IL Real Property Disclosure Statement?
The real estate listing agent may ask the seller to complete the form prior to listing or prior to entering into a written contract. The Act requires the seller to deliver a copy of the disclosure statement to a prospective buyer prior entering into a contract for the purchase and sale of the property (765 ILCS 77/20).
What must be disclosed?
General items of disclosure include issues related to flooding, material defects, and the presence of harmful elements. Areas of concern include: structure, roof, walls, windows, doors, electrical, plumbing, well, heating/air condition/ventilation, septic, sanitary radon, asbestos, lead, termites, and other items (including knowledge of use of the property for the manufacture of methamphetamine). A full list can be found at 765 ILCS 77/35.
*A material defect “means a condition that would have a substantial adverse effect on the value of the residential real property or that would significantly impair the health or safety of future occupants of the residential real property unless the seller reasonably believes that the condition has been corrected.” 765 ILCS 77/35.
Does the Seller have to investigate each specific question when making the disclosures?
No, the Act specifically provides that the seller is not required to investigate or make inquiries into the specific nature of the items in the disclosure report.
What if the buyer is aware of a defect, but the seller failed to disclose the defect on the disclosure statement?
In many residential real estate transfers, a buyer will conduct an inspection during the attorney review and inspection period. The buyer may have the option to declare the contract null and void due to material defects discovered through an inspection. But what if the buyer doesn’t decide to cancel the purchase?
If the seller made the error, inaccuracy or omission with actual notice or knowledge, the Seller is still liable, even if the Buyer later discovers the error. “A seller who knowingly makes a false statement is subject to liability under the Act; no exception is made because of a buyer’s knowledge of the defect.” Woods v. Pence, 708 N.E.2d 563, 303 Ill.App.3d 573, 236 Ill.Dec. 977 (Ill. App. 1999).
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