Thankfully it seems none of us will be guilty of that when having clients sign the new Illinois 7.0 Real Estate Contract. If you’re like me, the first thing you looked for when you enthusiastically poured over the 7.0 was if the “Intent to Proceed” deadline, a provision almost ubiquitously deleted in attorney modifications, was still there. With the 7.0, we call all breathe a sigh a relief that it has been removed (sort-of) and replaced with the much more reasonable contingency calling for the buyer’s loan application within 10 days. Another positive change to the loan contingency modifications in the 7.0 is the automatic assignment of the loan approval deadline to 45 days after the Date of Acceptance or 5 business days prior to closing. While the difference between 45 days and 60 days might not seem that significant, the real gem of this change is the addition of “5 business days prior to closing” or whichever is early. What this does is make sure that the loan approval deadline is always within timeframe of the contract closing date, eliminating another item that needs to be hashed out in the Attorney Review period.
While the loan contingencies in the 7.0 are the big-ticket items, some other changes of note to be aware of is the addition of the Waiver of Professional Inspections provision in Paragraph 11. Even when a buyer initials the As-Is provision of the contract, there is always some room for ambiguity in how the inspection period is going to go; at least with this new provision, we have the potential to gain more clarity up front. Another fun item to look out for is the minor changes in language in the Inspection Contingency (Paragraph 12) that make a big difference. Both the 6.1 and 7.0 have tried to rein in the Inspection Contingencies and the possible repair requests that buyers can ask for by stipulating that “minor repairs and routine maintenance items” are not considered as defect. However, the 7.0 added a key sentence stating “A request by Buyer for credits or repairs in violation of the terms of this subparagraph shall allow Seller to declare this Contract terminated and direct return of Buyer’s Earnest Money”. What this means is that, without modifying this provision in the Attorney Review period, if your buyer wants a minor repair corrected, just asking that is grounds for the cancellation of the contract and buyer cancellation of the contract based on said minor items, would be grounds for default. However, this provision doesn’t address is the type of loan the buyer is getting. If the buyer is applying for an FHA loan, then some of the items required to be repaired in order to get approval might be considered “minor” under the terms of the contract. While this addition to the inspection contingency is making a valiant effort to make the inspection period less cumbersome for all parties, your seller should make sure to always be aware of the type of loan their buyer is getting, and the potential requirements down the line.
Haley Franklin is a paralegal at The Law Office of Beth Mann, PC