Chapter 13 Property Condition Disclosure Report

The Residential Real Property Disclosure Act defines the prospective buyer as:

- "Any person or entity negotiating or offering to become a owner or lessee of residential real property by means of a transfer for value to which the act applies."

Any action for violations of the Residential Real Property Disclosure Act must be taken or initiated no later than:

- 1 YEAR from the date of occupancy or date of recording of the issue of the residential real property

How long does a person have to initiate a action for a violation of the property disclosure act?

- 1 year

Then after the statements section the form then lists:

- 23 statements about the property to which the seller must provide the yes, no, or not applicable answer - These statements cover everything from structural defects to environmental concerns

What must be printed on or be included with the Residential Real Property Disclosure Report Form?

- A copy of the actual Disclosure Act

Based on Illinois law:

- A copy of the actual Disclosure Act must be printed and included with the Residential Real Property Disclosure Report form

A buyer has a 3 business-day right to terminate a contract or agreement without any liability or recourse and have his earnest money deposit returned IF:

- A material defect IS DISCLOSED after the buyer and seller agree to a deal

The Residential Real Property Disclosure Act requires:

- A seller to prepare a disclosure document when he or he signs a standard listing agreement

The Residential Real Property Disclosure Act applies to:

- ANY TRANSFER by sale - ANY TRANSFER by exchange - ANY TRANSFER by installment land sale contract - ANY TRANSFER of assignment of beneficial interest - ANY TRANSFER of a lease with a option to purchase - ANY TRANSFER of a ground lease, or assignment of ground lease of RESIDENTIAL REAL PROPERTY

The seller must disclose material defects of which he or she has:

- Actual knowledge

As of January 1, 2015, the new Residential Real Property Disclosure Act Report Form will have a:

- Additional 2 property features added to item #6. This adds windows and doors and walls and floors

Under the Residential Real Property Disclosure Act, the seller of residential real property is required to complete:

- All appropriate items in the disclosure document

Under certain circumstances, the seller is not liable for

- Any error, inaccuracy, or omission of any information delivered in the Property Condition report

The term SELLER does NOT INCLUDE:

- Any person who has NEVER occupied the property - Any person who has NEVER had the management responsibility for the property or has NEVER delegated that responsibility to another person or entity

The Residential Real Property Disclosure Act applies to:

- Any transfer of residential real property, with some exceptions

The next paragraph In the Residential Real Property Disclosure Act after the explanations of any of the sellers 23 items is:

- Certification by the seller that the information provided was based on actual knowledge of the seller without any specific investigation into any of the problems - This is followed by a space for the sellers to sign and date the report

A Licensee must never:

- Complete the disclosure forms

Once the seller has completed the Residential Real Property Disclosure form, then it's the sellers responsibility to:

- Deliver the written disclosure statement to the buyer BEFORE THE SIGNING OF A WRITTEN AGREEMENT BY THE SELLER AND THE BUYER THAT WOULD REQUIRE THE BUYER TO ACCEPT A TRANSFER OF THE REAL PROPERTY

What became part of the disclosure form after 2010?

- Disclosure of a meth lab on a property

A seller in the Residential Real Property Disclosure Act is defined as:

- Every person or entity that is a owner - Beneficiary of a trust - Contract purchaser - Lessee of a ground lease who has a interest either legal or equitable in residential real property

Even though a licensee cannot fill out a Residential Real Property Disclosure Act Report, it's still important for the licensee to:

- Explain the report contents to the seller and answer any of his or her non-legal questions

Below the 2 notes is the section and space for:

- Explanations for any of the 23 items that were marked "yes". - If necessary, a seller can attach additional sheets if more space is needed

A licensee must NEVER:

- Fill out the Residential Real Property Disclosure Act documents - The seller or the sellers attorney or the sellers power of attorney must complete the disclosure documents

When a seller lists a problem on this disclosure form:

- He or she is not obligated to fix the problem

In Illinois, the Residential Real Property Disclosure Act requires that when a seller signs a standard listing agreement then:

- He or she must prepare a disclosure document

Any person who knowingly violates or fails to perform any duty prescribed by any provision of this Disclosure Act or reports any information they know is false will be liable:

- In the amount of actual damages and court costs, and the court may award reasonable attorney fees incurred by the prevailing party

After the 3 paragraphs there is the next paragraph which has the statements where the seller must:

- Indicate a "yes" for correct and a "no" for incorrect or a "not applicable" with regard to the sellers property - The seller must provide a explanation for any "yes" answers. The seller can use the additional information area on page 2 for explanations if needed

In some communities, the seller is also required to complete a inspection report, in this case the:

- Inspector checks the house for defects and these defects are listed in the report

A Residential Real Property Disclosure Act must disclose to the buyer any:

- Material defects, which are known hazards or problems with the structure or the heating, plumbing, mechanical, or electrical systems

When a seller lists a problem on the disclosure form then he or she is not:

- Obligated to repair the problem - However, the buyer may request either repair or a price break because of the problem

As of 2010, disclosure of meth labs on a property is included:

- On the disclosure form

Under Illinois law, a licensee must ALSO disclose any material facts about the:

- Physical condition of the Property about which the licensee has actual knowledge

Once a seller has completed the disclosure form, the seller must deliver the written disclosure statement to the:

- Prospective buyer before the signing of a written agreement that would require the prospective buyer to accept a transfer of the Residential Real Property

A Residential Real Property Disclosure Act document applies to residential real property, which the act defines as:

- Real property with not less than 1 nor more than 4 residential dwelling units - Units in residential cooperatives - Condo units, including the common elements of a condo building

The last paragraph is followed by:

- Spaces for the buyers to sign and give the date and time

If prior to closing, the seller has actual knowledge of a error, inaccuracy, or omission in any prior disclosure document after delivery to a buyer:

- That seller must provide a written supplemental disclosure

The last paragraph of the report explains:

- That the buyer is aware that the parties may choose to negotiate the sale of the property "as is"

On page 2 below the 23 statements are two "notes". The first note states:

- That the disclosures are not intended to cover the common areas of a condo, but instead, just the actual residence and any "limited" common areas that are exclusive to the condo unit for sale

The second note states:

- That the disclosures pertain to the "current" condition of the property and do not include prior problems that the seller believes were fixed

A copy of the actual Disclosure Act must be printed on or be included with:

- The Residential Real Property Disclosure Report Form

The 1st paragraph of the disclosure report states that:

- The parties can still contract for sale of the property in a "as is" condition if they do choose - The seller may still be responsible for continuing to advise the buyers about the property's condition, even after the report has been delivered - Completing the report creates a legal obligation for the seller - The seller may be wise to consult a attorney before completing the report

If a material defect is disclosed in the Residential Real Property Disclosure Report then:

- The prospective buyer has a 3 business-day right of rescission

What happens if a material defect is disclosed is the Residential Real Property Disclosure Report, either after acceptance by the prospective buyer or after the execution of a offer:

- The prospective buyer has a 3 business-day right to either terminate the contract without any liability or recourse and have his or her earnest money deposit returned

This unit is about:

- The residential real property disclosure act and what sellers need to do to comply

If the seller fails or refuses to provide the disclosure document prior to the transference of the residential property, then the buyer has:

- The right to terminate the contract

A seller is not liable for any errors, inaccuracy, or omissions of any information that is delivered in the property condition report IF ANY OF THE FOLLOWING IS TRUE:

- The seller had no knowledge of the error, inaccuracy, or omission - The error, inaccuracy, or omission was based on a reasonable belief that a material defect or other matter disclosed had been corrected - The error, inaccuracy, or omission was based on information provided by a public agency or company like surveyors or licensed engineers

Disclosure documents must be completed by:

- The seller or the sellers attorney or power of attorney

Who can and cannot fill out the property condition disclosure documents?

- The seller or the sellers attorney or power of attorney - The licensee must NEVER complete the disclosure forms

The disclosure act does not obligate:

- The seller to make any specific investigation or inquiry in a effort to complete the disclosure statement

Additional exemptions to the Residential Real Property Disclosure Act are:

- Transfers from one co-owner to one or more other co-owners - Transfers of Testate or Intestate - Transfers made to a spouse or to a person or persons who are legal descendants of one or more of the sellers - Transfers from a entity or company that has taken title to residential real property from a seller trying to relocate - Transfers to or from any government entity - Transfers of newly-constructed residential real property that has NOT BEEN OCCUPIED

HOWEVER, the Residential Real Property Disclosure Act provides some exemptions which are:

- Transfers under a court order - Probate, judgements - Eminent Domain - Specific Performance - Deed in Lieu of foreclosure

The last paragraph also explains that:

- the Residential Real Property Disclosure Act does not substitute for any inspections or warranties either party may wish to obtain or negotiate - The fact that the seller is not aware of a problem doesn't mean that one doesn't exist - The buyer knows that he or she may request a inspection by a qualified

Below the NOTICE paragraph are:

1. Blank lines to enter the property address, including city, state, and zip code, followed by the sellers name

After the property information there are 3 paragraphs that state and give:

2. A place for the seller to enter the date the report was completed and to mention that the information does not reflect any changes that may have been made after that date 3. It goes on to say that the disclosures on the form are NOT warranties of any kind 4. This section also defines the terms "am aware" and "material defects" 5. This section ends and states that even though the statements given are not warranties, a buyer may choose to rely on the information to decide whether to make a offer and if so what kind of offer