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Buyer’s Considerations Congratulations!

You've been working with your Realtor® for what seems like forever and you have finally found the property that you like enough to actually want to call your home. You've made an offer, and after going back and forth with the seller you finally reach an agreement; so the question is what do you do now? I bet if I told you that the Illinois Bar Association recommends hiring a lawyer as soon as possible that you wouldn't be surprised, but do you know why?

Under Illinois law, Realtors® who are representing buyers use their best efforts to find a property that meets their clients wants, desires and needs. Once found, they then assist the buyer in determining what they should offer; that is, determine what a fair market value for the property is. When this has been done, the Realtor® puts together a written offer by filling in the blanks on a contract form that has been pre-approved by a bar association for their use, but that is as far as they can go.

In the landmark case, Chicago Bar Association vs. Quinlan and Tyson the Appellate Court of Illinois - First District concluded that Brokers and salespersons who are not lawyers may only fill in blanks and make appropriate deletions on pre-printed standard form contracts. Making any changes to a contract that goes beyond this limited mandate is deemed the practice of law and Realtors® are not licensed to engage in this activity.

Because of this ruling it is vital that you work with an attorney as soon as possible to make sure that your interests are protected, that the terms of your agreement are carried out and your dreams are fulfilled.

Importance Of Attorneys

The value of having a seasoned real estate attorney assist you in your purchase cannot be overstated. Here are just a few of the lawyer's responsibilities when representing the purchaser:

  • Review of the initial contract and riders
  • Explain contract contingencies and monitor deadlines.
  • Advise client on suggested modifications to contract.
  • Draft necessary alterations to contract and riders.
  • Negotiate repair issues.
  • Discuss possession and timing issues.
  • Examine the survey for possible encroachments.
  • Examine the title commitment for potential issues.
  • Schedule and attend the closing to ensure compliance with the contract.
  • Review and explain mortgage documents.

As you can see from examining the responsibilities listed above, the majority of the attorney's work is actually performed PRIOR to the closing. As such, I don't quote a "closing" fee, but rather I quote you a fee for handling the entire transaction.

I invite you to contact me directly to discuss your purchase concerns without any obligation.

Guidance for Buyers

When you buy a house, you own it with all of the issues that come with it, as such, you need to have a non-interested professional (one who is not paid only if your deal closes) on your side to guide you and give you advice on how to proceed.

You need a qualified attorney in your corner.

Once you purchase the house, the seller is no longer responsible for it; in fact, there may be some defects in the house when you buy it for which the seller will not be responsible for. You may borrow money to purchase the house, but your loan is a separate transaction from the sale and the lender is not responsible for the house. In addition to the loan payments, you are responsible for maintenance of the property and the payment of real estate taxes. Your disappointment with the schools or actions of the local municipal government does not relieve you of the responsibility to pay taxes. You must keep the property insured against casualty loss. If you fail to pay taxes or keep the property insured, the lender may do so and add the amounts it pays to the principal balance of your loan. Such failure on your part is also likely an act of default under the note in which you promised to repay the money you borrowed to buy the house and that can lead to foreclosure.

If you buy the house with a spouse and the two of you become divorced, the bank doesn’t really care; your mortgage loan payments must still be paid. If they are not paid the lender will foreclose and sue both you and your spouse to get their money. (The bank is not affected by the terms of your divorce decree.) Under your mortgage agreement the property must be maintained, kept insured and the real estate taxes must be paid in a timely fashion.

The value of the house may go down rather than up. Nevertheless, the regular loan payments must be kept current, the property must be insured and maintained and the real estate taxes must be paid. No one else really cares and no one else is responsible for these matters. You are.

You may believe that the sellers, the real estate agents, the home inspector and any number of other folks have misrepresented the condition of the premises. And you may, in fact, be able to sue such persons successfully. Nevertheless, during the time before any final judgment is entered in your favor in such a lawsuit and, yes, even before you collect any damages awarded to you, your mortgage payments must be made, the property must be insured and the real estate taxes must be paid.

The neighbors may be neighbors from hell, letting their dogs and cats run loose all over your yard, partying at all hours of the day and night, (even possibly participating in criminal activities) not making even the tiniest effort to maintain their own house, perhaps letting their home go into foreclosure. While these activities may reduce the value of your home, you still have the obligation to see that your mortgage payments are made, the property is insured and the real estate taxes are paid.

Your home may be located in a subdivision that is subject to Covenants, Conditions and Restrictions of record. Such CCRs control what you can and cannot do with your property, and are managed by a Homeowners Association. The Association can require you to pay assessments to maintain the “common” areas, and can impose penalties and fines against you for refusing to follow the rules. Whether or not you feel that this is un-American, you are still required to make your assessment payments and your refusal to do so can result in you actually being evicted from your home by the HOA.

Buying a Foreclosure or REO (Real Estate Owned by Bank) property can have its own pitfalls. With these properties the lenders typically do not provide a survey, do not warrant anything (that is the property is being sold “As-Is”), don’t insure that any mechanical equipment or appliances will be in the home at the time of closing and they typically limit their contractual liability. So if they don’t honor the contract for any reason, their only obligation is to return to you, your earnest money. Often times as the buyer you are waiving, or giving up, your rights to sue the seller for specific performance; that is, the ability to force the seller to actually honor the contract and sell you the property. In addition, the lender will most likely shift to you the obligation to pay certain expenses customarily paid by the seller; such as, transfer taxes and other closing fees.

Bottom line, when your purchase property from a bank, it is a “my way or the highway” approach. On the other hand, if you as the buyer fail to close the transaction when you promised and you require additional time, the bank often reserves the ability to charge you additional amounts of money; i.e. "Penalties", to extend the closing date.

Finally, keep in mind that under IL law if the property you are purchasing from the REO is in a homeowners association in which assessments are paid, as the buyer you could be responsible for paying up to six (6) months of past due assessments and the Association's fees incurred to collect the same. (Currently a movement in Springfield to limit the amount HOAs can recover to a total of nine (9) months of assessments.)

Wire Fraud

  • 1 Don't lose your down payment to a wire fraud scheme.
  • 2 Proof that the property being purchased is insured; typically a binder from the insurance agent reflecting the lender as an additional insured and a paid receipt for the first year's premium; and
  • 3 Certified or Cashier's check made payable to the title company for the balance of funds needed to close, (if under $50,000.00*).

There Are Three (3) Key Items That A Buyer Needs To Bring With Them In Order To Successfully Close A Real Estate Transaction:

THEY ARE:

  • 1 Driver's License or some other form of photo I.D.;
  • 2 Proof that the property being purchased is insured; typically a binder from the insurance agent reflecting the lender as an additional insured and a paid receipt for the first year's premium; and
  • 3 Certified or Cashier's check made payable to the title company for the balance of funds needed to close, (if under $50,000.00*).

*NOTE: IL law requires that if the funds needed to close exceed $50,000.00 that the buyer MUST arrange to have the funds wired to the closing location in advance of the closing.