Homeowner's Insurance

If a buyer is purchasing a property with a loan, the lender will generally require the buyer to purchase homeowner's insurance to protect the lender's investment.  However, even there is no lender in a transaction because the buyer purchased the property with cash, it is generally recommended that the buyer still purchase homeowner's insurance to protect their purchase and reduce potential liability.

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6.0 Contract Is Now Available

The new 6.0 real estate contract is now available.  There are significant changes, especially to the mortgage paragraphs so be sure your attorney is aware of the changes and how they impact the client.

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How Should the Seller Leave the Property?

Typically, unless the parties have an agreement to the contrary, a seller shall clean the property, remove all clutter, and leave the property in "broom swept" condition prior to vacating the premises.  If the seller fails to do so, he/she can be liable for damages to the buyer for the cost to remove such items and clean the premises.

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Where Will My Real Estate Closing Occur?

Per most contracts, closings will usually occur at the title office nearest to the subject property.  It is typically a requirement that the title office be located in the same county as the real estate being purchased.

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Remote Closing

If a buyer is looking to close remotely, meaning they will not physically be present at the closing, he/she must approve it with their lender.  The title company and attorneys likely will be able to coordinate such a closing, but lenders may not approve.  In a cash deal with no lenders, it is typically much easier to accomplish.

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New Closing Statement Coming Soon

The settlement statement at closing will soon be significantly changing and will no longer be produced by HUD.  It will be slightly longer, but hopefully easier to understand.

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Homeowner's Insurance Required By Lenders

If you are buying a property using a mortgage, you will be required by your lender to carry homeowner's insurance.  This is because the property is acting as collateral for the loan, so if the property is destroyed or damaged, any insurance proceeds will first be paid to the lender until their interest is covered, then any additional proceeds will be payable to the buyer.

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Home Warranty Section

In the new 6.0 contract, the home warranty section was moved to the optional paragraphs. Be aware that the language is slightly different, with an actual cost to be inserted.

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6.0 Real Estate Contract Coming Soon

The new 6.0 Real Estate Contract should be available within a couple weeks. It looks like it will be approved for use all over northern Illinois.

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Purchase Contingency

If your home purchase is contingent on the sale of your prior house, be sure to indicate that on the contract.  This will enable you to terminate the contract if you are unable to sell the house. 

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Acceptance Date

When signing a contract as a seller, make sure you enter an Acceptance Date with your signature.  This is a very important date as the rest of the contract tolls from this date.

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"As-Is" Contracts

Even if the property is sold "as-is," the buyer can still terminate the contract following an inspection if it is not satisfactory.  The buyer just may not have the right to raise inspection items.

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Verbal Representations

Make sure any offers made by the opposing party are in the contract.  Otherwise, they are difficult to enforce.

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Home Warranty

If a buyer is unsure of the condition of the property, they can ask the seller to purchase a home warranty for them prior to closing.  It will usually cost a few hundred dollars and will usually last about 13 months from closing.  Based on the coverage, it can protect many fixtures as well as the house itself.

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Final Walkthrough

As a buyer, make sure everything is in acceptable condition during the final walkthrough of the property.  This would be your last change to raise any final issues or revisit inspection items that have not been completed.  Once the closing takes place, you lose your leverage and authority to raise these issues.

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Attorney Review Period

Before signing a contract, make sure there is an Attorney Review period in the contract in order to protect yourself.  This will allow your real estate attorney to propose any modifications or clarifications, in addition to being able to terminate the contract if you so choose.

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Post Possession Agreements

Post-possession agreements allow the Seller to stay in possession of a property after closing. We generally advise against them for buyers, but if necessary, we recommend an adequate escrow holding to protect against damages in addition to a daily per diem.

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Down Payment Assistance

When a buyer is receiving financial assistance with their down payment for closing, many lenders will require a gift letter and verification of funds prior to closing.  Make sure you check with your lender if you will be receiving assistance.  Feel free to contact a real estate lawyer with our office with any questions.

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Dual-Agency for Real Estate Brokers

We generally recommend that clients do not use a realtor as a dual agent, meaning they represent both parties. There is an inherent conflict of interest as they are trying to get the highest price possible for the seller and the lowest price possible for the buyer.

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Sellers Provide Title Insurance

Sellers provide title insurance at closing.  Title companies' charges for this will be within $100 of each other, and can range from $900-$1600 or more depending on the sales price.

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