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CLIENT RESOURCES


Real Estate FAQs
   
Attorney Review & Inspection Periods - Buyer

1. What is an attorney review & inspection letter?

The attorney review provision of the contract allows a purchaser’s attorney to submit contract modification requests to the sellers within a timely manner. The inspection provision of the contract allows the purchaser to include within the letter requests for any repairs the property may need. Even though the attorney review and inspection provisions often run on the same timeline, they are two separate contingencies in the contract.

2. What if the Buyer agreed to purchase the property in "As Is" Condition?

The Buyer can and should still conduct an inspection of the property.  If the Buyer finds the property unacceptable then the Buyer may terminate the contract within a certain timeframe.  For example, a contract commonly used, known as the “Multi-Board Residential Real Estate Contract 6.1”, allows 5 business days from the date of the contract’s acceptance to terminate the contract if the Buyer does not approve of the property in As Is condition.  The Buyer also has three other options: (a) proceed without requesting any repairs; (b) respectfully request certain repairs from the inspection report and if Seller declines then the Buyer must proceed or (c) counter offer the Seller and demand certain repairs be made or a credit given and if the Seller does not agree then the contract is terminated.  

3. Does the letter need to be submitted within a certain amount of time?

The Buyer can and should still conduct an inspection of the property.  If the Buyer finds the property unacceptable then the Buyer may terminate within a certain timeframe. For example, a contract commonly used, known as the "Multi-Board Residential Real Estate Contract 6.1", allows 5 business days from the date of the contract's acceptance to terminate the contract if the Buyer does not approve of the property in As Is condition.  The Buyer also has three other options:  (a) proceed without requesting any repairs; (b) respectfully request certain repairs from the inspection report and if Seller declines then the Buyer must proceed or (c) counter offer 

4. What if I am unable to submit my inspection requests prior to the deadline?

As long as our office is informed prior to the deadline, our office is able to request an extension on behalf of our buyers.  Sellers will usually accept an extension request as long as it is submitted prior to the deadline and the extension is for a reasonable amount of time.  Should you need an attorney review or inspection extension please notify our office as soon as possible and provide the reason for your request.

5. What information does an attorney need from a buyer before submitting the letter?

We need a copy of the purchase contract and any property disclosures or contract addendums.  If the buyer sees anything in the contract that they wish to have modified, the buyer should inform our office immediately.

Also, after the buyer has an inspection performed on the property they wish to purchase, our office needs to know specific repairs the buyer would like to request.  It is often helpful to email our office a list of the items to be requested while attaching the inspection report to the email.

Finally, our office needs the buyer’s contact information, including phone number and email address, so that we may discuss the letter with the buyer.  Our office may provide a draft of the letter to the buyer via email for their approval before our office submits it to the seller’s attorney.

6. After the letter is submitted, what is the next step?

After the letter has been submitted to the seller’s attorney, the seller’s attorney will respond.  This response can take up to several business days to receive.  Often, the sellers approve some of the buyer’s requests while denying others.  Our office forwards this response to our buyers via email immediately upon receipt.

7. How does a buyer proceed after receiving a seller’s response?

Our office will discuss the seller’s response with the buyer and address any questions they may have.  However, it is ultimately up to the buyer as to whether or not they wish to proceed by choosing one of the following options:

a)    Agree to the seller’s response;
b)    Request that certain items be reconsidered by the seller;
c)    Request an alternative means of resolution (such as a credit from the seller to the        buyer in lieu of having inspection items repaired prior to closing); or
d)   Terminate the Contract for failure to reach agreement (under the Mutli Board                  Residential Real Estate Contract 4.0 you might not be able to do this until after the        10th business day, consult with your attorney for more specific advice).

8. What if the parties do not reach agreement within a certain amount of time?

While it depends on the contract used, the contract can sometimes be declared null & void if the parties do not reach agreement to the attorney review & inspection provisions within a certain amount of time. For the contract commonly used, known as the “Multi-Board Residential Real Estate Contract 4.0”, the parties have 10 business days from the date of acceptance to reach agreement; if no agreement is reached by then, the contract may be declared null & void by either party.

9. What can I do to avoid the automatic cancellation described in the previous item?

In order to avoid this, our office requests a response from the sellers by the 8th business day and we try to have attorney review & inspection provisions concluded by the 10th business day.  If no seller response is received approximately 3 days after the letter has been submitted, please contact our office so that we may request a response from the sellers.  We may request an extension to reach agreement prior to the automatic cancellation date, but please keep in mind that if this is declined then the Seller may still cancel after the 10th business day.  If it becomes evident that the parties are not going to reach agreement before the automatic cancellation date listed in the contract, either the buyer or the seller can request an extension to the attorney review and inspection review periods or just continue to negotiate.

Attorney Review & Inspection Periods - Seller

1. What is an attorney review & inspection letter?

The attorney review provision of the contract allows a purchaser or seller’s attorney to submit contract modification requests to the other party’s attorney within a timely manner.

The inspection provision of the contract allows the purchaser to request any repairs that they think the property may need.

2. When do Sellers need to submit an attorney review letter to the buyers?

Generally, if the seller or seller’s attorney finds any contract modifications are necessary to make the contract more evenhanded, or that would help to clarify any discrepancies or unclear language in the contract, our office will submit a seller’s attorney review letter.  A seller should contact our office immediately with any questions regarding the contract or requests for modification.

3. Does the letter need to be submitted within a certain amount of time?

The deadline to submit an attorney review & inspection letter depends on the contract used.  For example, a contract commonly used, known as the “Multi-Board Residential Real Estate Contract 5.0”, allows 5 business days from the date of the contract’s acceptance to submit a letter to the seller’s attorney.  In order to avoid passing the deadline, an accepted contract should be forwarded to our office immediately upon receipt.

4. How do sellers know when the buyer has submitted a letter?

When representing sellers, our office requests the seller provide us with their email address.  We forward all letters from the buyers’ side to our sellers for their review and record via email as an attachment in PDF format.

If you do not have an email address we can fax or mail these documents to you.

5. How do sellers respond to a buyer’s attorney review & inspection letter?

Once the seller has reviewed the buyer’s requests, please contact our office via email, fax or phone with any questions.  We will respond to a seller’s questions and work with them to draft a response.  Please note that since we want you to receive this information as soon as possible, the letters are often sent to you before the attorney on file has had a chance to review the letter.  We will advise on how to respond to the attorney review requests.

For the inspection requests, when the buyer requests certain repairs, it is up to the seller to evaluate, and approve or deny each request.  A seller may wish to obtain estimates for the costs of repairs before agreeing or declining said repairs.  A seller may also decide to offer to provide a buyer with a closing cost credit for a given dollar amount in lieu of repair(s).

6. What if the parties do not reach agreement within a certain amount of time?

While it depends on the contract used, the contract can sometimes be declared null & void if the parties do not reach agreement to the attorney review & inspection provisions within a certain amount of time. For the contract commonly used, known as the “Multi-Board Residential Real Estate Contract 4.0”, the parties have 10 business days from the date of acceptance to reach agreement; if no agreement is reached by then, the contract may be declared null & void by either party.

7. What can I do to avoid the automatic cancellation described in the previous item?

In order to avoid this, our office strongly recommends the sellers contact us to discuss their response immediately after they receive our emails so that we have attorney review & inspection provisions concluded by the 10th business day.  If it becomes evident that the parties are not going to reach agreement before the automatic cancellation date listed in the contract, either the buyer or the seller can request an extension to the attorney review and inspection review periods.

Mortgage Contingency - Buyer

1. What is a mortgage contingency?

It is a contingency based on the buyer obtaining a loan under the terms set forth in the contract.  If a loan cannot be obtained under these terms, the buyer reserves the right to terminate the contract for failure to obtain financing and seek return of all earnest money.  (Some contracts may allow for the seller to attempt to obtain financing on the buyer's behalf which may prevent the contract from terminating.)

2. What is a reasonable amount of time to ask for to obtain a full loan commitment?

Generally 3 to 4 weeks is standard amount of time after the date of acceptance.  However, in some instances, if additional time is necessary, an extension may be sent to preserve the Purchaser’s rights and earnest money.

3. How long do I have to apply for a loan?

The Multi-Board Residential Real Estate Contract 5.0 and several others allow 5 business days from the date of acceptance of the contract.  If a loan is not applied for within the 5 business days, you are voiding the protection that the mortgage contingency provides.  If additional time is necessary to apply for a loan, contact your realtor and attorney immediately so that a proper notice and an extension is given on your behalf.

4. Why would a mortgage contingency extension be necessary?

To preserve the rights of the Purchasers to obtain a loan under the terms set forth in the contract, or more favorable terms.  If a loan cannot be obtained, the purchasers may cancel the contract with return of earnest money.

5. If the sellers deny the mortgage contingency, what options do I have?

A buyer can do 1 of 2 things if this happens:

1)    The buyer can elect to proceed without the financing or mortgage contingency.  However, if the buyer makes this election and is unable to close because of financing problems, the buyer would be in default of contract and may forfeit their earnest money; or

2)    The buyers can send notice to the sellers terminating the contract for failure to procure loan financing.  If the sellers agree, the buyer is entitled to a return of all their earnest money.  Most contracts allow for the seller to obtain financing on the buyer's behalf, at seller cost and expense.  Thus, if the buyer elects to terminate the contract for failure to obtain loan financing, the seller may attempt to obtain financing on the buyer's behalf.  Per the contract, the buyer would be obligated to provide any necessary information to the sellers' lender so as to try to obtain a mortgage commitment and close the loan.

6. What can I do to ensure that my loan is being processed in a timely manner?

Provide all necessary paperwork to your lender as soon as it is requested (i.e loan application, bank statements, pay stubs etc.)  Also, you can set up weekly phone conferences with your loan officer/processor to obtain updates.  You may also seek the advice of the professionals you work with which includes our office and your real estate agent.

Mortgage Contingency - Seller

1. What is a mortgage contingency?

It is a contingency based on the buyer obtaining a loan under the terms set forth in the contract.  If a loan cannot be obtained under these terms, the buyer reserves the right to terminate the contract for failure to obtain financing and seek return of all earnest money.  (Some contracts may allow for the seller to attempt to obtain financing on the buyer's behalf which may prevent the contract from terminating.)

2. Why would a mortgage contingency extension be requested?

It is requested when the lender is missing information that he/she needs to grant an unconditional loan commitment.

3. Why must this request be put in writing?

They must put this in writing due to the fact that the mortgage contingency date was agreed upon in the real estate contract so it will protect the purchaser’s right to the return of the earnest money in the event of no loan approval.

4. What happens if I do not accept the mortgage contingency extension?

It is common practice to grant the first mortgage extension if it is for a reasonable amount of time.  However, if you wish to deny the extension, the purchaser has an opportunity to withdraw/waive the contingency and proceed with the closing or the purchaser may cancel the contract if buyer feels they will not be able to obtain a loan and do not wish to risk their earnest money.

5. What happens if the Purchaser does not have a mortgage commitment by the contracted date?

The purchaser’s attorney may send an extension request in writing for additional time or waive the contingency.

6. What happens if the Purchaser’s loan is denied within the mortgage contingency date?

If purchaser is still denied a loan the purchaser may cancel the contract with full return of earnest money provided back to the purchaser. In the 5.0 Multi-Board Residential Real Estate contract and other contracts, it states that the seller at their expense may obtain a loan with the same terms or more favorable terms of the contract for the purchaser.

7. What happens if the loan is denied outside the mtg. cont. date and an extension has been requested?

If an extension was never requested and notice was not provided within the mortgage contingency, the contingency is then waived.  However, if an extension is requested outside the contingency, Purchaser is in breach of contract and could forfeit their earnest money and you may elect to cancel the contract or you may grant the extension and proceed with the closing.

Top 10 Buyer Questions

1. How does my money get to closing?

Your lender will handle sending the amount of the loan to the title company.  The difference must be brought to closing by you.  If the amount you owe at closing is under $50,000 then you may obtain a cashier's check for that amount made payable to the title company.  If the amount is over $50,000 then you must have the money wire transferred to the title company before closing.  Please note that we always suggest bringing in a little more than necessary as a cushion in the event there are any changes made at the closing table.  Typically, the money should be transferred before 3 p.m. on the business day before your closing.  However, please check with your bank to determine how long a wire transfer will take as some banks require more than 24 hours notice.  Due to the instances of wire fraud that is becoming more and more common in real estate transactions, our office does not provide the title company's phone number or wire instructions via email because email is susceptible to hacking. We recommend that buyers, lenders and real estate agents google the title company's phone number and contact the title company directly to obtain wire instructions.  We understand that this adds an additional step on your end however, the risk of loss far exceeds the inconvenience.

2.  How much money do I need to send to closing?

The only numbers that we can provide are the purchase price, tax credits and our fee. The rest of the numbers come from third parties (the lender and the title company).  If you are purchasing with cash then we will let you know an estimated amount you need to bring to closing once we have the necessary figures from the title company.  If you are using a lender then you must talk to your lender and they will inform you how much you will need to bring to closing.  Unfortunately, with the new lending guidelines we are no longer provided your loan information before closing.  The Closing Disclosure is only sent to you for privacy purposes and so we may not see the final numbers until the time of closing.  If you would like for us to review the Closing Disclosure to check the numbers for accuracy then please feel free to send it to us for review and then we can advise you on an estimated amount for you to bring to closing.


3.  What do I need to bring to closing?

Please make sure to bring at least two forms of identification as your lender may require more than just one form.  A driver's license, state ID or passport will be accepted.  Please check with your lender if you will need to use some other type of identification.  Additionally, if you are obtaining homeowner's insurance then please bring the receipt if you have prepaid for the first year of insurance.  If you have not prepaid for the first year of insurance then please bring the information for your insurance company so that the amount needed can be mailed to the insurance company at closing.  Finally, please make sure that any money needed for closing has been handled.  Please see "How does my money get to closing?"

4.  Why can't I pick the time of my closing?

We will do our best to try and accommodate any closing time requests, but we must insist that you keep the entire day of your closing open for scheduling purposes. There are several parties involved in every transaction and we must consider all of their schedules.  This includes the buyer and seller, the attorneys, the title company and the lender.  The title company may not have the time or location available that you are requesting.  Also, if a lender is involved they may not be able to insure the money and paperwork are received at the title company by the time you are requesting.  Please note that closings may occur between Monday and Friday and between the hours of 9 and 5.  A closing with a lender takes on average two hours for completion.  A cash transaction generally takes less than an hour.

5.  Can the Seller cancel the deal on me?

Yes, there are several contingencies in the contract which will allow a seller to cancel on a purchaser.  The first contingency is the attorney review period.  This contingency allows any purchaser or seller to cancel within the first five business days after the seller has accepted the contract for any reason except purchase price.  Therefore, the seller may cancel the contract within the first five business days and does not need to provide any reasoning for doing so as long as it was not due to the purchase price.  Additionally, if either party proposes any changes to the contract under the modification provision and the parties cannot come to an agreement on those changes then either party may cancel the contract.  The second contingency is the inspection period.  The purchaser has five business days to have an inspection and request certain items be repaired by the seller.  If the seller and purchaser cannot come to an agreement on those repairs then either party may cancel the contract.  Third, if the purchaser has a financing contingency in the contract then the Seller may have the right to cancel the contract if the purchaser cannot meet those deadlines in the contract and needs an extension. The Multi Board contract states that if a purchaser does not meet either of the financing deadlines as set in the contract then the seller has two business days from the date in the contract to cancel.  Finally, if the purchase has a home sale or home contingency then the seller may cancel the contract if the purchaser needs an extension to either of those dates.

6.  Why is this title company being used?

In Illinois we fund at the closing table.  This essentially means that all parties attend the closing and the money is disbursed at the closing table.  The title company provides the means to close the transaction.  The Seller's attorney will choose the title company and the closing will generally occur at one of the title company's locations.  The title company will check the title to the property to confirm that the seller has the right to sell to you, that all past taxes have been paid, that there are no liens on the property that would encumber a transfer of the property, etc. Additionally, the title company will provide a member of their staff to handle the closing.  That person is called the "closer" and he or she will handle ensuring all paperwork has been appropriately completed so that the lender will agree to fund the transaction.  Any money required in the transaction must be sent to the title company for later disbursement.  The closer will confirm that all required funds have been received and will handle any necessary payments due from the closing.

7.  Can the final walk through occur after closing?

We highly recommend that you have your walk through prior to the closing time. The walk through is the only time for you to check the property and make sure it is in the same condition as it was when you made your original offer and to check that any agreed upon inspection repairs have been completed.  This allows you to bring up any issues that you had at the walk through and come to a solution with the Seller before you close on the property.  In rare instances the walk through cannot be completed prior to closing for some reason.  Generally this occurs when the Seller cannot be out of the property before the closing time due to moving issues or because the parties have agreed that the Seller may maintain possession of the property after closing.  In these instances we would advise you on the best course of action that will allow you time to check the property after closing and work out any concerns you might have from the walk through with the Seller.

8.  Who has to attend the closing, does my spouse have to attend?

The short answer is that anyone on title to the property should attend the closing.  If you are purchasing cash then anyone you want to be on the title to the property should attend the closing unless you want to sign a power of attorney over to an attorney in our office so that we may finalize the closing for you.  If you are purchasing with a loan then your lender will make the final decision as to who must attend the closing and if a power of attorney may be utilized.  Anyone signing for the loan must attend the closing due to the fact that they will have to sign some of the loan documents.  Please make sure to confirm with your lender that this will be allowed so that the loan documents can be appropriately created.  Your lender will also need to approve any power of attorney used at the closing.  If they doe not allow a power of attorney then you must attend your closing.

9.  When can I move in and get possession/keys of my new home?

You will receive the keys and possession of the home once your transaction closes. This means that the money has been received at the closing table from you and/or your lender and all closing documents have been appropriately signed.  If you are using a lender then the transaction will not close until the lender has reviewed and approved the signed lender's package.

10.  I need the proceeds from my sale to purchase my new home and I need to Close the same day.  What happens if my purchase is scheduled first followed by my sale?

We always try to ensure that the sale is scheduled first and the purchase scheduled shortly thereafter.  Once the sale closes then we will handle the transfer of any proceeds from the sale to the purchase closing.  If the closing of the purchase must happen before the sale then an attorney in our office will attend your purchase with you and will let the title company know that transaction cannot close until your sale is final.  Once your sale closes then we will let the appropriate parties for your purchase know and we will handle making sure any required proceeds from your sale are received at your purchase so both transactions can be finalized.