Illinois Law – Property Defects – What You Should Know

On Behalf of | Mar 16, 2022 | real estate law |

Buying a home is an exciting and risky process. A large amount of money is at stake for both parties and the buyer relies on the seller to be forthright. Thus, if a new homeowner discovers a defect in a home after closing the sale, it can be difficult to know how to address the issue.

Are there legal remedies, or is the buyer out of luck? The answer depends on a number of factors, including the state.

Real estate matters are often resolved using state law. In Illinois, disputes involving property defects during a residential property sale are generally governed by the Residential Real Property Disclosure Act. For the purposes of this law, the seller is any person or entity that owns, is the beneficiary of a trust, or otherwise has an interest in the property. The prospective buyer is the person or entity negotiating or offering to become the owner of the property.

How does the Illinois Residential Real Property Disclosure Act impact buyers and sellers?

The law requires the seller fill out a disclosure document. The seller must include all applicable information within the disclosure document and provide the buyer with the document before the transfer of the property. The law does not require the seller to conduct a specific investigation into potential issues, only to disclose the issues that they are aware of at the time of filling out the document.

The disclosure document includes an array of information, including:

  • Leaks. This applies to any problems with flooding or leakage.
  • Structural. Examples include problems with the foundation like cracks or bulges as well as any issues with windows, doors, walls, or the roof.
  • Plumbing. Problems which require disclosure include issues with the water heater and treatment systems as well as sprinkler systems or swimming pools, if applicable. The law also requires disclosure of known issues with septic or sanitation systems.
  • Water. The seller must disclose any known defects to a well or other issue with drinking water.
  • Conditions. Additional unsafe conditions such as the presence of asbestos, lead paint, lead in the water pipes, soil issues and underground pits or earth stability issues.
  • Pests. This includes termites and other wood boring insects.

The seller is not liable for an inaccuracy or omission if the seller was unaware of the problem or provided the information based on the guidance provided by a licensed engineer, pest control specialist or other professional. Basically, the law requires the seller provide information on any defects that they know about. As such, a potential defense to allegations of a breach is that the seller was unaware of the alleged defect.

If desired, the potential buyer generally has three business days after receipt of this document to terminate the contract. The buyer may also be able to terminate the contract if the seller fails or refuses to provide the document prior to the sale.

What happens if a seller does not disclose a known defect?

The penalties that come with a failure to follow this law are severe. A seller who knowingly fails to disclose a material defect is responsible for the actual damages, or money lost, by the buyer. The court can also require the seller to cover court costs and the attorney fees incurred by the buyer to litigate the matter.

It is important to note that there is a time limit to these claims. In general, the buyer must move forward with this type of claim within one year of the date of possession, occupancy or recording of the instrument of conveyance of the property. Claims filed after this date will likely be barred so it is important not to delay in seeking out an attorney to review and file your claim well prior to the deadline.

Other issues to address before a closing

Property defects are just one issue that demands attention in a real estate transaction. Other matters such as land-use restrictions, liens on the property and defective titles can also present complications and trigger legal disputes and financial losses.

Thus, before signing any purchase agreement, buyers and sellers alike would be wise to consult an attorney and address potential problems as soon as possible.