With House Bill 358, sponsored by representative Novak, the Illinois General Assembly has amended the law making a few changes that home sellers should be aware of as their duties under the law are now expanded.
NEW DEFINITION OF "SELLER"
The bill requires a disclosure by a "Sellers." The law now defines sellers as "Every person or entity who is an owner, beneficiary of a trust, contract purchaser or lessee of a ground lease, who has an interest (legal or equitable) in residential real property. The law now adds an exemption with the following: "However, 'Seller' shall not include any person who has both (1) never occupied the residential real property and (2) never had the management responsibility for the residential real property nor delegated such responsibility for the residential real property to another person or entity." 765 ILCS 77/5 As such, persons who own property but delegate the property's management to others are still required to make a disclosure.
SELLER'S DUTY TO UPDATE
Under the old law, home sellers, in conjunction with their agent, usually filled out the residential real property disclosure report at the time they listed the property. That report, or a copy of that report, would usually be appended to all contract offers. Under the old law, Sellers were not responsible under the act for any inaccurate information resulting from acts, occurences, incidents or agreements arising after the date of the disclosure report. The amendment places the burden of an ongoing duty of the seller at all times prior to closing to supplement the form in writing of any error, inaccuracy or omission. 765 ILCS 77/30.
DISCLOSURE OF MATERIAL DEFECTS IN SUPPLEMENTAL DISCLOSURES
The new duty to supplement the disclosure report brings with it some additional risk to the Seller. For any supplemental disclosure, including that of a material defect, the prospective buyer will still be bound to the contract. However, in the event that the Seller had actual knowledge of the material defect at the time the prior disclosure was signed by the Seller, the prospective buyer will have the right to terminate the contract. 765 ILCS 77/40. Sellers should be mindful that the supplemental disclosure is not a vehicle for disclosing material defects after a contract is signed.
PENALTIES FOR VIOLATION
The penalties for failure to provide a disclosure are severe. Under the old law, prospective purchasers did not have any right to invalidate a contract solely because of non-compliance with the Act. Now, a prospective buyer shall have the right to terminate the contract if not provided with a disclosure. Further, a Seller who fails to comply with any duties of the act or discloses any false information on the report could be found liable for actual damages, court costs, and attorney fees. 765 ILCS 77/55
The residential real property disclosure report is not a contract. It is, however, a creature of statute and failure to comply with the statute can result in severe penalties for a Seller. Make sure to take this disclosure seriously.
So while due diligence is needed on the buyer's part, it is not always indicative of substantial defects.
If you are looking at a propertry that has this language, select a buyer's real estate agent who is familiar with foreclosures/bank owned/REO/short sale properties. If you need a referral, I would be happy to provide you with one!
Best of Luck to You!
Banks typically sell properties without disclosures and as-is. Some properties will have major defects; others may be in very good condition.
Sellers are required to disclose what they know.......but cannot disclose what they do not. Find out why the seller is declining to provide discloures and selling as-is. Then, hire a competent and thorough inspector.
I could not agree more. I highly recommend you cover yourself with a home inspection regardless of what was or was not disclosed. While the disclosure does cover some problems that may not be recognizable by a visual home inspection, the home inspector will disclose a great deal more.
Remember, the seller has an interest in selling the property and only the statutory responsibility to be forthcoming on the disclosure. An independent home inspector only works with your best interest in mind and has no reason (if they are independent) to intentionally not disclose a defect..
I will give you an example. Think about what would happen if you had no disclosure or an incomplete disclosure that did not reveal a leaking foundation (very common problem), and you did not hire an independent home inspector. After you move in, you find you have a foundation problem, and a mold problem. Now what is your recourse? Sue and hope to collect by proving deceit? (I am not a lawyer, so I only assume as a layman that that may be your case)! This is going to be costly and time consuming and there is risk you may not win.
The simple solution is to have a home inspection completed by a qualified, thorough, Home Inspector. Spend $300 or so and have piece of mind about your investment and your health. As James said below, consult an attorney and have the place inspected. Good Luck. Click my profile if you need help.
With that said, the seller will look at the offer made by the buyer and decide whether or not it is in their best interest to fulfill the buyer's request to repair or not. If the seller has completed inspections before the offer or is aware of repairs, they may place the home on the market in a "as is" state and the price should reflect these repairs that are needed and the seller does not want to complete them. (i.e. new roof, cracks in pavement....)
"As Is" homes do not necessarily mean major defects. It may simply mean the seller is not willing to give a carpet allowance, paint, or replace the old toilet.
Have your Realtor look over the disclosures and inspections to find the missing puzzle pieces (if there are any) to the "As Is". Then you can decide what the market value is on the home. Sometimes "As Is" offer great deals and sometimes they are just what they are - "AS IS".