The Illinois Real Estate Lawyers Association recently released the new Multi-Board Residential Real Estate Contract 6.0. The contract used throughout Illinois in most residential real estate sales, the 6.0 Contract made many technical and procedural changes to the earlier 5.0 version. The Contract changed, among other things, the buyer’s right to cancel the contract after a professional inspection, altered the mortgage contingency paragraph and updated the representations a seller is required to make to the buyer prior to and at the Closing.
First, the earnest money paragraph was amended to better reflect the ways buyers and brokers handle earnest money payments. The new Contract 6.0 allows buyers to tender their earnest money a certain number of days after the seller’s acceptance of the Contract and to designate a specific party to hold the earnest money. The old 5.0 version of the Contract provided that the earnest money be paid upon acceptance, a practice that rarely reflected reality. The new Contract also allows third parties, like attorneys or title companies, to hold the earnest money.
The new version of the Contract also changes the timeframe for a buyer to obtain a mortgage commitment from their lender. Version 5.0 required a “firm written commitment” from the lender before the mortgage contingency could be satisfied. The new version, by contrast, only requires that the buyer prove that the loan has been submitted to the underwriter by a certain date.
Buyers also now have the option to cancel the Contract if the inspection, radon, insect or lead report reveals a serious defect in the property and the parties cannot come to a resolution as to how to fix the defect. The seller still has the right, though, to request the inspection report upon which the cancellation is based.
Finally, the new version of the Contract requires that the seller make several representations to the buyer regarding code violations, boundary line disputes, rezoning or hazardous waste materials affecting the property, among other things. The Contract also requires that the seller make the same representations to the buyer at Closing. This means that in the event the seller becomes aware of any dispute or violation after acceptance, the seller must notify the buyer. Any failure by the sellers to be truthful in their representations could be grounds for rescission of the Contract. Additionally, the buyer may have grounds to sue the seller for damages.
To find out more about how an attorney can help you understand the scope of your obligations under the new Multi-Board Contract, please contact Lavelle Law at 847-705-7555 and ask to speak with Courtney Kleshinski.