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Required Real Estate Disclosures in Illinois

Required Real Estate Disclosures in Illinois

The Illinois Real Property Act requires sellers to disclose known defects and problems with a property. The law protects buyers from purchasing homes that have serious defects, and it protects sellers from liability for any defects that appear after a sale is completed.

Required Disclosures

Illinois requires home sellers to disclose in writing information regarding the quality, safety, and healthfulness of both commercial and residential real property. Sellers are required to list the following information regarding the condition of the property:

  • Unsafe Conditions. Unsafe conditions can include structural defects such as a leaking roof, loose masonry that has the potential fall, foundation cracks that could lead to building collapse, etc.
  • Environmental Healthfulness. Sellers are required to disclose whether there is asbestos, lead paint, or other known environmental hazard present on the property. However, this does not apply to all hazards. For example, Illinois does not require sellers to test for radon. Rather, the law requires sellers to provide pamphlets identifying the dangers and potential for the presence of the gas. The law also does not require sellers to identify the presence of mold, however, many buyers will request this be delivered prior to closing on the property.
  • Soil Problems. The law requires sellers to identify whether there are potential problems lurking beneath the foundation of the home or within the boundaries of the property. These include the existence of underground pits, mines, or other instability that could render the home uninhabitable or present other health and safety hazards for occupants.
  • Flood Risk. Sellers must list and itemize instances of flooding or significant water damage caused by broken sewer lines, pipe leaks, leaky roofs, etc.
  • Insect Infestation. Sellers are required to list any previous or current infestations with termites or other wood boring insects.
  • Material Defects. Before selling a property in Illinois, sellers must list any material defects such as malfunctioning heating and air conditioning systems, damaged lighting fixtures, faulty wiring, leaky ventilation systems, etc.

Exceptions to Disclosure Laws

There are exceptions within the Illinois Residential Real Property Disclosure Act where the transfer of property does not require any disclosure be made. These include when the property is being transferred as part of a divorce settlement, foreclosure, or bankruptcy. Disclosures are also not required when the property is transferred as part of an estate or being gifted to a close member of the family.

Assigning Liability for Errors and Omissions

Illinois law allows buyers to hold the seller, listing broker, buyer’s broker, or home inspector liable for errors and omissions in the disclosure forms.

The seller may be held liable for failing to disclose known defects or by transferring real property that was not in the condition promised in accordance with the obligations of the contract.

The seller’s or buyer’s broker may be held liable for making false or misleading statements. These include making false statements regarding the condition of the property, property line disputes, etc.

It is also possible to hold the home inspector liable for failing to discover or list defects on their property inspection report. However, it is common for inspectors to limit their liability in the inspection contract with an exculpatory clause. As such, most are only held liable for the cost of the inspection itself and not the overall cost of repairs or damages. As such, it is advisable that buyers verify that the home inspector carries errors and omissions insurance. In the event a serious flaw is discovered after the sale, the buyer can pursue a claim against the insurance policy.

Late Discovery of Defects

A seller can disclose defects at any time prior to closing. For example, if a buyer discovers that a foundation is cracking, roof is leaking, etc. This information must be provided in written form, and it must state that the information on the existing disclosure is inaccurate and void.

In such cases, the buyer may choose to end the deal if they believe the seller knowingly made false or incomplete statements in the disclosure. Depending on the circumstances, the buyer may hold the seller liable for damages, attorney’s fees, and court costs.

Hiring an Attorney to Sell or Purchase Property

A real estate attorney in Illinois can help verify the information disclosed is correct and in accordance with the requirements for the transfer of real property. An attorney will also review contracts and mortgage paperwork to ensure that the seller or buyer is protected against any errors or omissions or terms that could expose them to potential liability.

An attorney can also research and verify that the title is clear and free of liens. The attorney can also research area building codes and HOA rules to determine whether the buyer will be able to use the property as desired in respect to planned additions or alterations to the property, such as adding rooms, constructing outbuildings, or opening a business.

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