Real Estate - New and Improved Disclosure Act

New and Improved Disclosure Act

If you have bought or sold a home in Illinois in the last four years, you are most likely aware of the Residential Real Property Disclosure Act. This Act requires that all persons selling residential property with one to four dwellings on it must disclose to prospective buyers certain defects in the property by completing and signing a 22-question disclosure form. A seller must disclose all defects that he actually knows are present on the property as of the date of completing the form. However, sellers do not have to make their own investigation or inspection on the property in order to fill out the form.

Under changes to the Act, a seller now must supplement this disclosure form in writing if he learns of a mistake or left something out on the document before the date of the closing of the sale. Even after a supplemental disclosure, the buyer does not have a right to terminate the real estate contract unless the seller had actual knowledge of the defect at the time when he first completed the disclosure form. However, most real estate contracts provide for an inspection of the property prior to closing to determine that the property has not changed since the contract was signed. If the mistake or omission revealed is not corrected by the date of this inspection, the buyer would have the right to demand such a repair prior to the closing.

The disclosure form now includes a warning that disclosures do not include previous problems with the property if the seller reasonably believes they have been corrected; it only reports the current condition of the property. This resolves the question asked by many sellers regarding their obligations in completing the disclosure form: "Do I have to include things that have been fixed such as the air conditioning?" Hopefully, this warning will encourage more buyers to use professional home inspectors to determine any potential defects in the home.

A buyer has the right to cancel the contract if the seller does not provide the disclosure form before the closing. A seller is defined as every person or entity who owns the property, including a beneficiary of a trust. A person who has never occupied the property and who has never had control over the property is not considered a seller.

If the seller does not comply with the Act, he will be responsible for paying damages to the buyer and any court costs. The court may also require the seller to pay reasonable attorney's fees incurred by the buyer if the buyer wins the lawsuit.

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