Real estate contracts in Illinois play important roles in property transactions, including first-home purchases, investment property sales, and commercial real estate leases. Learning what to include can help all parties avoid mistakes and ensure smoother transactions in Chicago and Des Plaines. For example, an ironclad contract can prevent sellers from backing out if they get better offers.
You deserve protection when you conduct property transactions. Call The Rogoff Law Group today at 847-768-2194.
Types of Real Estate Contracts in Illinois
Purchase agreements are the most common type of real estate contract in Illinois.
Purchase Agreements
These agreements contain the terms and conditions for a property sale. They include details such as the purchase price, closing date, and contingencies (such as financing or inspection requirements).
Residential purchase agreements are for single-family homes, condominiums, and other residential properties. Clauses relating to home inspections and appraisals are common.
About 1.3 million small businesses operate in Illinois, accounting for 99.6% of businesses in the state. Commercial purchase agreements are for office buildings, retail spaces, and other types of commercial real estate. Commercial purchase agreements may involve nuances such as zoning and environmental regulations.
Lease Agreements
Lease agreements are rental agreements between a property owner (landlord) and a tenant. Residential lease agreements for apartments and other residential units in Chicago or Des Plaines should include the rent amount, lease term, and security deposit, among other details.
Contracts for Deed (Installment Contracts)
Some real estate contracts in Illinois call for the seller to keep the title to the property until the buyer pays the full purchase price, usually in installments.
Option Agreements
Option agreements are common with an investment property for sale. They give buyers the right, but not the obligation, to purchase a property at a predetermined price during a specific period.
What Are the Key Elements of a Real Estate Contract in Chicago and Des Plaines?
Legally binding and enforceable real estate contracts in Illinois must contain certain key elements.
Offer and Acceptance
One party makes an offer, and the other party accepts it. The offer must be clear and definite.
Consideration
Consideration refers to something of value that the parties exchange. In real estate contracts, it usually means the purchase price or the promise to pay rent. If a contract does not include consideration, it may not be enforceable.
One common situation when a seller breaches a real estate contract involves the seller backing out when he or she gets a higher offer from another buyer. This should not be possible unless the contract has specific contingencies.
Legal Capacity
All parties to a real estate contract must have the legal capacity to enter into the contract. For example, they must be of legal age and sound mind. Corporations, trusts, and other entities also must have the authority to enter into the contract.
Lawful Purpose
The contract must be for a lawful purpose. Contracts dealing with illegal activities, such as zoning violations or fraudulent misrepresentation, are void and unenforceable.
Specific Property Description
A real estate contract must contain a clear and specific description of the property the contract covers. This typically involves the property’s legal description, which may include the address, lot number, or other information that identifies it.
Terms, Conditions, and Contingencies
The contract needs to outline terms and conditions such as the purchase price, payment terms, closing date, and any contingencies that one or both parties must satisfy before the contract is finalized.
For residential real estate, common terms, conditions, and contingencies deal with financing, home inspections, and appraisals. For commercial real estate, typical terms, conditions, and contingencies address zoning requirements, lease agreements, and environmental assessments.
Signatures
All parties to real estate contracts in Illinois must sign for the contracts to be legally binding. By signing, the parties show that they have read, understood, and agreed to the terms of the contract.
Common Mistakes to Avoid in Real Estate Contracts
Mistakes when writing or signing Illinois real estate contracts may lead to delays, financial losses, and legal disputes.
Inadequate Property Descriptions
The legal description of the property should be accurate and thorough. Otherwise, a vague or incorrect description can lead to disputes over what exactly is being sold or leased.
Skipped Contingencies
Contingencies offer the parties protection. For example, forgetting to include a financing contingency could leave a buyer legally obligated to purchase a property even if he or she cannot get a mortgage. The buyer not buying the property potentially constitutes a breach of contract in real estate.
No Financing Plan or Unclear Plan
Financing is an important part of many transactions, especially those involving investment properties. The contract should include how the buyer aims to finance the purchase and what happens if that planned financing does not occur.
Inadequate Review
Real estate contracts in Illinois can be long and crowded with jargon. However, careful review is necessary. Missing the relevance of just one clause or detail can have major implications.
For instance, a clause might require the buyer to pay for repairs that he or she earlier did not agree to fund.
Not Using Professionals
A real estate agent can help protect clients’ interests and offer insights into the market. Meanwhile, real estate lawyers can help buyers and sellers protect their rights, avoid unintended consequences, and identify potential issues.
How much does a real estate lawyer cost? It depends on the complexity of the situation and whether the lawyer charges a fixed fee or an hourly rate. Fixed fees are common for drafting or reviewing contracts.
No Defined Responsibility for Repairs and Maintenance
Residential and commercial real estate contracts should clearly define who is responsible for repairs and maintenance. A commercial lease should have the tenant and landlord agree on who handles repairs. A purchase agreement should cover who completes any necessary repairs before closing occurs. Contact us today at The Rogoff Law Group for help with your real estate contracts in Illinois.
