Illinois Residential Real Property Disclosure — What happens if the seller does not provide one?

The law states that if the seller of residential property in Illinois fails or refuses to provide the Illinois Residential Real Property Disclosure prior to the sale of the property, the buyer has the right to terminate the contract (765 ILCS 77/55). This is bad news for sellers — what if they simply forgot to provide the disclosure? The law doesn’t care. It doesn’t matter why the seller didn’t provide the Residential Real Property Disclosure or whether he was acting in good or bad faith. As long as the seller did not give the disclosure to the buyer, the buyer can opt out of the transaction.

While this issue is not litigated often, it did come up just recently. In Muir v. Merano, 378 Ill.App.3d 1103 (5th Dist. 2008), the buyer repeatedly asked the seller for the disclosure statement, but the seller never delivered it. The buyer then terminated the contract pursuant to state law based on seller’s failure to provide the Illinois Residential Real Property Disclosure. Seller refused to return all of the buyer’s earnest money, stating that he would only only return half of it. As a result, Buyer sued.

In court, the seller argued that since the statute does not state a timeframe for providing the disclosure, seller should be allowed to provide the disclosure just prior to or at closing. The court disagreed, stating that the purpose of the Illinois Residential Real Property Disclosure Act is to give prospective buyers the same knowledge of defects in the home that seller has, allowing the buyers to make an informed decision about whether or not to purchase. If the buyer does not receive the disclosure until just before or at closing, it is too late — the buyer is already committed to purchase.

So if you are selling your home or rental property, where do you get the Illinois Residential Real Property Report? If you have a real estate agent, he should give one to you. If not, your attorney can provide it. It is imperative that as a seller, you complete and sign this document and give it to your potential buyer.

Lastly, the Illinois Residential Real Property Act clearly states that anyone who knowingly makes false statements on the disclosure shall be liable in the amount of actual damages, court costs, and attorneys’ fees. The disclosure should be completed honestly and in good faith. It is better to address problems up front than end up in court later!