Hepler Broom, LLC

Illinois Residential Real Estate Sellers Take Note: Your Obligations Have Changed

June 28, 2022

by Timothy P. Collins

It’s now officially summer, the busiest time of year for the residential real estate market in Illinois. That makes it a great time for sellers and buyers to take note of recent changes to the Illinois Residential Real Property Disclosure Act (the “Act”), 765 ILCS 77, which was signed into law earlier this spring. All parties to residential real estate transactions entered into after May 13, 2022, must comply with the new provisions of the Act, including a seller’s obligation to provide an updated Residential Real Property Disclosure Report (the “Disclosure Report”).

Original Provisions that Remain in Effect

The purpose of the Act is to protect buyers of residential real estate from sellers who fail to disclose known information regarding the condition of the real estate. It also provides buyers with certain rights during the transaction and after closing if the seller doesn’t comply with its obligations imposed by the Act.

Under the Act, a seller has an obligation to complete and provide to a buyer a Disclosure Report. This Disclosure Report answers questions and includes information about the condition of the real estate during the time the seller owned it. The seller must disclose known material defects to a prospective buyer. Some of the information a seller must provide about the real estate includes:

  • flooding or leakage, including in the crawl space, basement, roof, ceilings, or chimney
  • material defects in the roof, ceilings, chimney, walls, windows, doors, or floors
  • material defects in the various mechanical systems, including electrical, plumbing, heating, air conditioning, ventilating, and septic, sanitary, or other disposal systems
  • structural defects
  • boundary or lot line disputes
  • environmental conditions, including the presence of asbestos or elevated levels of radon

The Act requires a seller to report to the buyer any issues with the condition of the real estate of which the seller is aware.

Changes Created by the New Act

Definition of Seller

The new Act changed the definition of who is a considered a “seller.” See 765 ILCS 77/5. Of note, the new Act no longer exempts from the disclosure obligation persons or entities who: (1) never occupied the real estate, and (2) never had management responsibility for the real estate or delegated that responsibility to another person or entity.

Changes to Disclosure Report Requirements

The Disclosure Report must now include information about whether the real estate is insured against flooding. In addition, the Disclosure Report must now be provided to a buyer before the contract is signed. If the Disclosure Report is not provided until after the contract is signed and a material defect is disclosed in a subsequent Disclosure Report, the buyer can terminate the contract within five business days.

Under the new Act, a seller has an ongoing duty to update the Disclosure Report until the time of closing, including any errors, inaccuracies, or omissions of which the seller becomes aware. Additionally, even if the seller makes a supplemental disclosure, the new Act allows a buyer to terminate the contract if: (1) the seller knew about the issue but failed to disclose it in the original Disclosure Report. (2) the defect cannot be repaired prior to closing, or (3) the seller refuses to repair the defect. Thus, a seller can no longer simply fill out the Disclosure Report at the time of listing and then stand on that disclosure with no obligation to provide updates.

Finally, under the prior version of the Act, the Disclosure Report had to be delivered personally or by facsimile. The new Act streamlines the disclosure process by allowing the Disclosure Report to be delivered to a buyer by email or other electronic delivery means.

The Takeaway

Sellers, buyers, real estate agents, and attorneys should be aware of these recent changes to the Illinois Residential Real Property Disclosure Act. If a seller fails to comply, including adhering to the new Disclosure Report provisions, a buyer who suffers damages because of that seller’s failure to comply may be able to recover costs and attorney’s fees in any resulting litigation.

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