Tag: #realestatelawyer

Mortgage or cash offer when purchasing a home in Illinois

The majority of residential real estate financing in Illinois is loan contingent (mortgage) or cash (no mortgage), with variations as to each.  This post focuses on the financing options as used in the Multi-Board Residential Real Estate Contract (“MBRE”) 7.0.  The following are three types of financing used in the MBRE 7.0: 

Loan Contingency (Paragraph 7(a) of MBRE 7.0):

If the parties agree that the transaction will be subject to a Loan Contingency (mortgage), the buyer is only required to purchase the property if they are able to meet all the terms of the Loan Contingency.  The Loan Contingency provision protects a buyer from having to purchase real estate when they don’t qualify for the agreed upon loan terms (or better, with some terms), including: (a) the percentage of the purchase price to be borrowed; (b) the maximum interest rate for the loan; (c) whether the rate is fixed/adjustable; (d) the specified period of time for loan repayment; and (e) the maximum amount of ‘points’ to be paid by buyer. 

If the Buyer is unable to provide loan approval and serves notice to the Seller by the ‘Loan Contingency Date’, the Contract shall become null and void.  The default ‘Loan Contingency Date’ is either 45 days after the date of acceptance or 5 business days prior to the date of closing, whichever is earlier. Although, this date can be modified during the Attorney Review, or may be extended by mutual agreement of the parties.

Cash transaction with no mortgage (Paragraph 7(b) of MBRE 7.0):

This should be selected if the buyer wants to pay cash (no mortgage loan).  It also has the added benefit of splitting the escrow fee between the buyer and the seller (unlike when financing with a mortgage).  A seller may ask the buyer to verify they have the requisite funds to purchase the property, and the buyer may be required to provide financial information to verify those funds.  This option can be used when a buyer has sufficient money to cover the purchase, and when acquiring property that may be difficult to obtain with a mortgage loan. Unlike the Loan Contingency, the buyer is generally obligated to purchase the property, regardless of their change in financial circumstance.

Cash transaction, mortgage allowed (Paragraph 7(c) of MBRE 7.0):

This option may be selected if the buyer has the funds to purchase without a mortgage, but would like to have the option to purchase using a mortgage loan. Regardless of whether the buyer is able to qualify for a mortgage/loan, he or she is still required to purchase the property.  Some buyers that have the cash available to make the purchase, but would like to explore the option of a mortgage may choose this option.  It may appear as a stronger offer to the seller, since they know the buyer will not be able to back-out for inability to obtain a mortgage loan.   The escrow fee will be split between the seller and buyer if purchase without a mortgage loan, otherwise the buyer will pay the entire escrow fee.   

If you are unsure about your obligations/rights pursuant to the selected financing, or would like to speak with an Attorney regarding your real estate purchase/sale, please contact Blume Law

Christian Francis BlumeReviewsout of 5 reviews

This blog and any materials available at this web site are for informational purposes and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between the Law Office Of Christian Blume, LLC or Christian Blume and the user or browser.

How to ‘Hold’ Real Property with Other People

Illinois recognizes several distinct types of real property ownership when multiple people/parties are involved, this blog article will discuss the three most common: Tenancy in Common, Joint Tenancy and Tenancy by the Entirety.

Tenancy in Common:

In Illinois, tenancy in common is the default method of holding property with multiple owners. That is, unless otherwise expressly stated in the deed conveying ownership, multiple owners will hold the property as tenants in common. (See 765 ILCS 1005/1). Tenants in common have equal rights to possess the property, regardless of their percentage ownership interest.

Tenants in common need not own equal percentages of the common property, and may acquire their property at different times and through separate conveyances. Each tenant in common is permitted to sell or otherwise transfer their interest in the property at any time. However, each owner’s interest is subject to creditor’s claims. There is no right of survivorship amongst tenants in common; when a tenant in common dies, their interest in the property passes to their heirs or as otherwise provided in a testamentary document.

Joint Tenancy:

Holding property in joint tenancy requires the “four unities”: time, title, interest and possession. That is, all owners must take title at the same time, via the same title instrument, with an equal ownership interest, and with each having a right of possession. Additionally the title instrument conveying the property must expressly indicate that the property is to be held in joint tenancy.

Joint tenants have what’s called a right of survivorship; when one joint tenant dies, their interest passes to the other joint tenant(s), as a matter of law. The right of survivorship in property held in joint tenancy supersedes any testamentary document that might provide otherwise.

The joint tenancy can be severed, if any one of the four unities (time, title, interest, possession) is broken. An individual’s interest in real property held in joint tenancy is subject to their creditor’s claims.  And, a joint tenant cannot be a non-individual, such as a corporation, LLC or partnership.

Tenancy by the Entirety for Marital Property in Illinois

Illinois is one of several states that permits real property to be held in tenancy by the entirety. Tenancy by the entirety is similar to joint tenancy, but with the added element of marriage and that the real property must be maintained or intended for maintenance as a homestead by both spouses together. Spouses must obtain the ownership interest at the same time, through the same title, with equal ownership interest, with equal rights to possess the whole of the property, and the property must be maintained as a homestead by both spouses. It is important to note that Illinois permits parties to a civil union to hold property as tenants by the entirety.

Like joint tenancy, holding property as tenants by the entirety permits a right of survivorship (i.e., property passes to the surviving spouse when one spouse dies).  Unlike joint tenancy, one spouse cannot sever the tenancy by the entirety unilaterally by transferring his or her interest to the property. Property held in tenancy by the entirety protects the homestead property from creditors of only one spouse. A creditor can’t attach a lien and foreclose on a property held in tenancy by the entirety, if the debt is only owed by one of the two spouses, whereas a creditor can attach a lien and foreclose on a property held in joint tenancy. For example, if one spouse owes a debt for a credit card held in his name only, the credit card company cannot attach a lien or foreclose on property owned by both spouses as tenants by the entirety.

If property is held in tenancy by the entirety and the spouses divorce, the ownership interest will become a tenancy in common as a matter of law. If the spouses decide to elect to maintain another property together as a homestead (e.g., move to a new home and maintain ownership of the old property), the tenancy by the entirety becomes a joint tenancy. Additionally, both spouses must execute any deed, contract for deed, mortgage, or lease of homestead property held in tenancy by the entirety for it to be effective.

Christian Francis BlumeReviewsout of 5 reviews

This blog and any materials available at this web site are for informational purposes and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between the Law Office Of Christian Blume, LLC or Christian Blume and the user or browser.