Illinois Real Property Disclosure Act
Updated: Mar 6, 2021
The Illinois Real Property Disclosure Act (the “IRPD”) was adopted in Illinois in 1998, intending to protect purchasers of residential properties against Sellers that fail to disclose home defects. The IRPD applies to all forms of residential properties, single family residence, including properties containing up to four residential dwelling units, townhomes, condominiums, and cooperatives. The IRPD requires the Seller to deliver to the buyer a Real Property Disclosure Report, with 23 different enumerated items required to be disclosed, including but not limited to:
▸ material defects including faulty wiring, HVAC failures, and damaged fixtures;
▸ flooding including disclosure of all known flooding regardless of the source;
▸ unsafe conditions code or structural defects like foundation damage or a leaking roof;
▸ environmental Issues including lead paint and asbestos (except Sellers need not complete radon testing);
▸ insects and Pest infestations, particularly termites; and
▸ soil conditions affecting the structure of the house (abandoned well);
If the Seller fails to provide a disclosure report to the buyer, the buyer has the right to terminate the contract any time prior to closing.
No Duty to Investigate.
The IRPDA does not require the seller to complete an investigation or hire inspectors to locate defects. The IRPDA applies to defects known to the seller. Any new defects discovered after the seller has issued the report to the buyer must then also be disclosed in a subsequent or updated disclosure report.
Opt-Out of the Illinois Real Property Disclosure Act.
Under the IRPDA, even where the contract includes an “As Is,” clause, the seller must still provide the buyer with a disclosure report, unless the property is in such a condition as to be uninhabital, in which case no disclosure report is required. “As Is” means the buyer is buying the property with all faults or defects, often disclosed or undisclosed, with the buyer accepting all risk of the physical condition of the home. “As Is” clauses typically include waivers any form of warranty in the purchase contract, including written, implied or verbal.
Certain transfers of the home are excepted from the requirement of delivery of a disclosure report, typically where there is not an arms length sales transaction, including transfers in a divorce settlement between spouses (but not sales to 3rd parties), foreclosures sales, bankruptcy liquidations, or estate planning and probate transfers. You need not complete a disclosure form if you never occupied the property, never personally managed the property, or hired a third party manager to manage the property.
Failure to properly disclose a material item can undo the sale and perhaps expose the seller to significant monetary damage awards including recovery of court costs and legal fees. Brokers who knowing submit false disclosure reports can be liable as well.
Other Types of Disclosure>
The IRPDA is not the only disclosures required with a purchase and sale transaction.
Illinois Radon Disclosure Requirement
The Illinois Radon Awareness Act, 420 ILCS § 46/1 et seq., requires delivery to the buyer of two pamphlets about radon hazards before executing a purchase and sale agreement. The first pamphlet is from the Illinois Emergency Management Agency, titled: "Radon Testing Guidelines for Real Estate Transactions." The second pamphlet, "Illinois Disclosure of Information" is a statutory disclosure (420 ILCS § 46/10), declaring that the property might present the potential exposure to radon. The disclosure law does not require the seller to conduct radon testing or mitigation; however, many Illinois form real estate contracts include seller testing.
Federal Law Requiring Lead Disclosure
Federal law requires disclosure of potential lead paint and other lead hazards, as described in "Required Disclosures When Selling U.S. Real Estate."
Robert K. Feldman
Attorney at Law