Failure to Disclose Property Defects
When selling a piece of real estate, whether that real estate is sold for residential or commercial purposes, property sellers have certain duties of disclosure. They cannot mislead potential buyers by lying about material defects that could substantially affect the value and utility of the property. Residential and commercial property sales are subject to different disclosure requirements, however. Whether you are purchasing property and concerned about the potential for hidden problems, or you are looking to sell and want to make sure you cover your legal bases, it is important to have professional, experienced counsel on your side. A seasoned real estate disclosure attorney can ensure that you conduct proper due diligence and cover all of your bases before a commercial or residential real estate transaction.
Disclosures in Residential Real Estate Transactions
The Illinois Residential Real Property Disclosure Act (the Act) governs mandatory disclosures in commercial property transactions. The Act applies to sales of single-family homes, multi-family homes of up to four units, as well as condos, townhouses, and co-ops. The Act also governs certain land contracts and lease options. The Act does not cover new construction that has yet to be occupied, commercial properties, foreclosure sales, or transfers due to bankruptcy, divorce, or probate.
Under the Act, a seller must fill out a disclosure form answering 23 questions about the state of the property. The seller must answer honestly and completely to the best of the seller’s actual knowledge. The seller can answer “no” or “not aware” in response to various questions if the seller has no actual knowledge of the given issue.
The 23 questions pertain to the condition of the property. They cover known defects such as lead paint, radon, or asbestos, the state of the building’s structure (roof, foundation, floors, windows, doors, etc.), fires and flooding, plumbing, and air conditioning, among other things. The disclosure form is not meant to be a replacement for any inspection the buyer wishes to conduct before making an offer or prior to closing, or any additional warranties the parties may wish to negotiate, but the disclosure is an affirmative requirement on the part of the seller.
If the seller gives the buyer the form after the deal has been closed, and material defects are identified, the buyer has the right to rescind the purchase contract within three days. The right to rescission only exists if the buyer receives the form after closing; if the buyer receives the form before the purchase contract is executed, then the buyer is still bound by the contract.
Remedies for Failure to Disclose Residential Property Defects
If a seller fails to answer the questions on the form honestly or otherwise violates their disclosure duties, the purchaser has the right to rescind the contract or sue for damages. The seller could be liable for actual costs incurred as well as court costs. The seller might even be ordered to pay the buyer’s attorney fees if the buyer prevails in showing the seller knowingly violated their duties under the Act.
If you have been misled during the purchase of a home, a dedicated real estate property defect lawyer can help you get your money back. We can help you hold an unscrupulous seller accountable for their misleading conduct and ensure that you are not left with a damaged property for which you overpaid.
The Seller’s Duty in Commercial Real Estate Transactions
The Illinois Residential Real Property Disclosure Act applies only to residential real estate transactions. Transactions concerning commercial property are not subject to the Act, but commercial property buyers are protected in other ways.
A commercial seller is bound by any representations and warranties they affirmatively make during the negotiation and sale process, as well as by the terms of the purchase agreement. For that reason, it is especially important for commercial real estate buyers to engage in proper due diligence, inspecting the property for themselves and generating a list of important questions to ask the seller. The purchase agreement can be made subject to various representations as well, incorporating many of the disclosures required for residential purposes.
A seller is not permitted to lie or materially mislead about the property they are selling. If a seller makes a representation that turns out to be false, the seller could be liable for breach of contract and even fraud. A purchaser induced to execute a transaction based on a material misstatement or omission can seek to rescind the contract of sale and pursue additional damages based on the harm caused by the seller’s misrepresentation.
If you’re in need of experienced, talented, and detail-oriented legal representation for your Chicago-area commercial or residential real estate purchase or sale, contact the offices of Pluymert, MacDonald & Lee, Ltd. for a consultation, in Hoffman Estates at 847-310-0025, or in Des Plaines at 847-298-5030.