A recent case, Karimi v. 401 North Wabash Venture, 2011 IL App (1st) 102670 (July 26, 2011) Cook Co., 2d Div. demonstrates that earnest money, no matter how much, can be forfeited when a liquidated damages provision is properly enforced. In Karimi, the buyer contracted to purchase a $2.188 million condominium at Trump Tower in 2003. When the unit was almost ready, as per contract, the seller identified a closing date for October of 2008. At that time, the buyer was unable to obtain financing. The parties agreed to extend the closing date to May of 2009. The buyer was still unable to obtain financing and the condominium did not close. Subsequently, the seller terminated the contract and kept the earnest money (well over $300,000) as liquidated damages pursuant to the contract. The seller later sold the unit for $2.5 million. The buyer sued for the return of his earnest money. The court found that per the… read more →
Last month, the Illinois Housing Development Authority (IHDA) announced that $200 million dollars had been committed to the SmartMove loan program, a program designed by IHDA to assist first-time homebuyers and veterans. Where is all this money coming from? Well, to fund the $200 million necessary for this program, the IHDA is selling tax-exempt mortgage revenue bonds to private investors. If you qualify for the SmartMove program, you could obtain either a 30-year fixed-rate loan, or FHA, VA, or USDA financing. You could also receive up to $6,000 towards your down payment and closing costs. This $6,000 (or lesser amount, depending on how much you qualify for) would be in the form of a 10-year, zero-percent forgivable loan. If your loan requires mortgage insurance, your mortgage insurance rates would be about 1/3 less than the rates offered by conventional sources of mortgage financing. Of course, you have to meet the… read more →
The Home Repair and Remodeling Act, Public Act 97-235, has been revised once again! The new changes will kick in on January 1, 2012. Here is what you need to know: 1) Roofing contractors must put their licensing number and the licensee’s name on their commercial vehicles. Failure to do this will result in a $250 penalty. However, a hearing will be scheduled, and if the problem is corrected before the hearing, no penalty will be imposed. 2) Contractors may not accept any compensation (monetary or otherwise) for allowing out-of-area contractors to use their name or license. 3) Contractors may not advertise, or promise, that they will pay an insurance deductible on behalf of their customers. They may also not advertise or promise that they will rebate or reimburse an insurance deductible to their customers. 4) A customer may cancel his contract with his contractors if the contractor is supposed to be paid… read more →
A recent case in New Jersey, Montpen SC, L.L.C. v. Mathews Art, Inc., Superior Ct. New Jersey, No. A 5036 09T3 (March 30, 2011), highlights the importance of negotiating, and knowing, the terms of your lease. In Montpen, the principal owner of a commercial lessee signed a lease with a guaranty, in which he guaranteed up to one year’s rent for any default during the initial term of the lease, or during an extension or renewal of the lease. The lease specifically stated that if the tenant were simply to “holdover” after the expiration of the lease, without an “extension” or “renewal” of the lease, then the lease was neither extended nor renewed. The lease was extended multiple times, but at one point, when it came time to renew or extend, the parties could not agree on the rent. The tenant stayed in the space for a year, making monthly payments to the landlord. Eventually the tenant stopped making payments. By… read more →
The Federal Housing Administration (FHA) has updated its lending guidelines regarding condominiums. Here are the most significant changes: 1) Previously, FHA approval was available to condominium associations if no more than 15% of units had fallen behind on their assessment payments. Moreover, since many lenders are notorious for not paying assessments on bank-owned properties, the FHA exempted bank-owned units from this 15% guideline. Now, however, the FHA will look at all units in the association, even if they are bank-owned, to make sure that no more than 15% of units are past due. 2) If a condominium association is new construction (not a gut rehab or remodel), only 30% of the units must be owner-occupied. Previously, the requirement was 50%. 3) At least 30% of the units must be sold before the FHA wil provide any FHA loans at the association. If you are buying a condominium and trying to… read more →
The Illinois legislature recently passed the Tenants Radon Protection Act. Under this new Act, landlords are not required to conduct any radon testing. However, if the landlord is leasing a unit that is on or below the third floor of a building, and if the landlord does in fact have a radon test disclosing hazardous radon conditions, then the landlord must disclose the results of that test to the tenant or prospective tenant. If the landlord mitigates the radon hazard and obtains a radon test showing that the hazard is no longer present, the landlord need not disclose the past radon hazard to prospective tenants. If the tenant tests for radon, finds it, and presents the results of the test to the landlord, the landlord then has 30 days to obtain another radon test. Moreover, the landlord must then disclose the radon hazard to subsequent lessees, until a radon test proves that the radon hazard is… read more →
Since FHA mortgages can require a down payment as low as 3.5% of the purchase price, more and more buyers are applying. If you are putting your condominium on the market, or if you are on the board of a condominium association where it has been difficult to sell condominium units, you may want to consider getting the association FHA approved. This will make it easier for potential buyers to purchase in your association. Unfortunately, not all condominium associations will qualify for FHA approval, but if your association meets the following criteria, you have a good shot: 1. No one investor can own more than 10% of all units. 2. Only up to 15% of units can be past due on assessment payments. 3. Only up to 25% of the association can be used for commercial purposes. 4. At least 50% of the units must be owner-occupied. If your association meets… read more →
When you’re buying a house, you should have it professionally inspected. Sure, everyone knows that. And in this day and age, with so many foreclosures on the market, mold testing has become quite common. But what about radon testing? Should you do it? Radon is not tested as often as it should be, even though over a third of all homes tested for radon do actually contain high levels of radon. After smoking, radon is the number 2 cause of lung cancer in the United States. And it’s everywhere, because it starts in the soil. Then why don’t more people test their homes for radon? Well, you can’t see it, and you can’t smell it. It has no color and no odor. People tend to be less concerned about things that they cannot sense in any way. However, radon is even more dangerous because of its invisibility. People tend to… read more →
In a recent case, Ortiz v. Jesus People, USA, 210 Ill. App. LEXIS 1221 (1st Dist. 2010), the court found the defendant corporation liable for damage caused by a tree on defendant’s property. Specfically, the tree had a large tree limb that extended over a public sidewalk. The plaintiff was riding her bicycle on a windy day, stopped on the sidewalk under the tree, and was severely injured when the limb suddenly broke and fell on her. The plaintiff sued the the corporate defendant, as well as the city. The court determined that the city was not responsible for the tree or its limbs, since the tree was located on private property. However, the jury found the corporate defendant at fault. The jury felt that because of the type of the tree (a particularly brittle variety) and the general condition of the tree, the defendant could have reasonably foreseen that… read more →
Earlier this year, in In re: Kellie Cooper, 2011 Bankr. LEXIS 562 (2011), a buyer of residential property in Des Plaines, Illinois sued the seller for misrepresentation and fraud. In this case, the Buyer and Seller entered into a contract for the purchase/sale of the property. During the Buyer’s professional inspection, however, a number of serious problems were noted by the inspector. As a result, the Buyer canceled the Contract. Some time thereafter, the Seller contacted one of the real estate agents involved via electronic mail, and stated that a number of the repairs were completed. The Seller also provided a number of repair bills to the Buyer. The Buyer and the Seller signed a new contract in the summer of 2006, and closed before the end of the summer. The Buyer walked through the Property, but did not conduct another professional inspection. The Buyer stated that the Seller made specific verbal statements… read more →