Addressing Your Real Estate Law Questions
Whether you're a homeowner, renter, real estate investor, or professional, knowing the legal principles surrounding real estate transactions in Illinois is essential to avoid legal pitfalls.
As real estate attorneys in DuPage County, Illinois, we've provided some of the most frequently asked questions about real estate in Illinois to help you understand the state's laws and make informed decisions. Contact us at Donna Craft Cain PC to set up a consultation and receive personalized guidance.
What Are the Key Real Estate Laws in Illinois?
Real estate in Illinois is governed by a combination of state statutes, local ordinances, and common law. Some of the key laws affecting real estate in Illinois include:
Illinois Compiled Statutes (ILCS): The primary source of real estate law in Illinois is found in the Illinois Compiled Statutes (ILCS). Notably, the Real Property Act (765 ILCS 5/) and Landlord and Tenant Act (765 ILCS 705/) contain critical provisions that apply to real estate transactions, leasing, and property rights.
The Illinois Residential Mortgage License Act of 1987: This law regulates mortgage lending and protects consumers from predatory lending practices in residential real estate transactions.
Illinois Human Rights Act: This law prohibits discrimination in housing based on race, color, religion, sex, national origin, disability, familial status, and other protected categories.
Real Estate Transfer Tax: The Real Estate Transfer Tax (35 ILCS 200/31-1) imposes a tax on the transfer of real estate in Illinois. This law requires both the buyer and seller to file specific tax forms at the time of the sale.
The Illinois Residential Tenants’ Rights Act: This act governs the rights and responsibilities of residential landlords and tenants in Illinois. It covers issues such as security deposits, lease agreements, eviction procedures, and maintenance requirements.
Reviewing the key real estate laws in Illinois is essential for a smooth transaction, protecting your interests, and complying with state regulations throughout the process.
Do I Need an Attorney to Buy or Sell Property in Illinois?
Illinois law doesn't require a buyer or seller to hire an attorney to buy or sell real estate. However, legal representation is highly recommended.
Real estate transactions involve complicated legal documents and procedures, and an attorney can help you understand the terms of contracts, make sure the title is clear, and guide you through closing.
While some buyers and sellers may feel comfortable handling the transaction without an attorney, having one can reduce the risk of errors or disputes. A real estate attorney in DuPage County, Illinois, can assist in drafting or reviewing the purchase agreement, help with title searches, and represent your interests at closing.
What Is the Difference Between a Deed and a Title in Illinois Real Estate?
In Illinois, a deed and a title are two distinct concepts related to property ownership.
Deed
A deed is a legal document that transfers ownership of real property from one party (the seller) to another (the buyer). The deed must be signed, dated, and notarized to be valid. There are several types of deeds, including:
Warranty deed: Offers the greatest level of protection to the buyer, as the seller guarantees that the title is clear and there are no encumbrances (such as liens or claims).
Quitclaim deed: Transfers whatever interest the seller has in the property but doesn't guarantee the title is free from encumbrances.
Special warranty deed: Provides some assurances about the title but only for the time the seller owned the property.
Title
Title refers to the legal right to own and use a property. When you hold the title to a property, it means you have legal ownership of the property. A title search is typically conducted during a real estate transaction to make sure there are no outstanding claims or issues with the title.
Clarifying the difference between a deed and a title in Illinois real estate is essential for securing proper ownership and creating a successful property transaction.
What Is the Process for Closing a Real Estate Transaction in Illinois?
The closing process involves several steps that culminate in the transfer of ownership from the seller to the buyer. These steps may vary slightly depending on the specific transaction, but generally include the following:
Sign the purchase agreement: Once the buyer and seller agree on terms, they'll sign a purchase agreement outlining the conditions of the sale, including the purchase price, contingencies (such as financing), and timelines.
Title search: A title search is conducted to make sure that the title to the property is clear. The search will reveal any liens, claims, or disputes that may affect the transfer of ownership.
Schedule an inspection: A home inspection is typically conducted to identify any issues with the property. If problems are found, the buyer may request repairs or credits, or the sale may fall through.
Obtain financing: If the buyer is financing the purchase, they must finalize their mortgage loan. The lender will typically require an appraisal of the property to confirm its value.
Closing disclosure: A closing disclosure is provided to both the buyer and seller outlining the final costs of the transaction. This includes the purchase price, closing costs, taxes, and any credits or adjustments.
Closing day: On the closing day, the buyer and seller sign the necessary documents to finalize the sale, including the deed of transfer. The buyer also provides payment for the purchase, and the seller delivers possession of the property. Afterward, the deed is recorded with the county, and ownership officially changes hands.
Familiarizing yourself with the process for closing a real estate transaction in Illinois can help determine a seamless and efficient experience from contract to completion.
How Are Property Taxes Assessed in Illinois?
Property taxes are assessed at the county level, and property owners are required to pay these taxes annually. These taxes are based on the assessed value of the property, which is determined by the county assessor, but there are other factors that are considered as well, including:
Assessment process: The property is assessed at 33 1/3% of its market value. This value is then multiplied by the local tax rate to determine the property tax liability. The county assessor uses various methods to determine the fair market value of the property, including comparing it to similar properties in the area.
Tax rates: The local government sets property tax rates, which can vary widely depending on the municipality or county. Higher tax rates are typically found in urban areas, where the demand for services is greater.
Exemptions: Illinois offers several property tax exemptions that can reduce the amount of taxes owed, including the General Homestead Exemption, the Senior Citizens Homestead Exemption, and the General Homestead Exemption for Veterans with Disabilities.
Appeals: If a property owner believes their property has been over-assessed, they can appeal the assessment through the local board of review. An appeal must typically be filed within 30 days of receiving the assessment notice.
Knowing how property taxes are assessed in Illinois can help manage your financial responsibilities and assure compliance with local regulations.
How Do Landlord-Tenant Laws Work in Illinois?
Illinois has specific laws governing the relationship between landlords and tenants. The Illinois Residential Tenants' Rights Act and the Landlord and Tenant Act establish the rights and responsibilities of both parties. Landlord-tenant laws focus on the following:
Lease Agreements: A lease agreement is a legally binding contract that outlines the terms and conditions of the rental arrangement, including rent amount, lease duration, and rules for the property. Illinois law requires leases to be written if the rental term exceeds one year, but verbal leases can be valid for shorter periods.
Security Deposits: In Illinois, landlords may charge a security deposit, but the amount is typically capped at one and a half times the monthly rent. The landlord must return the security deposit, minus any deductions for damages, within 45 days after the tenant moves out.
Eviction: Eviction procedures in Illinois require landlords to follow specific legal steps. If a tenant fails to pay rent or violates the lease agreement, the landlord must give a written notice of termination. If the tenant doesn't comply, the landlord must file an eviction lawsuit in court. Self-help evictions, such as changing locks or removing tenants’ belongings, are illegal in Illinois.
Tenant Rights: Tenants in Illinois have the right to a habitable living space, which includes proper plumbing, heating, and safety measures. Landlords are required to make necessary repairs and make sure the property meets building codes.
Familiarizing yourself with landlord-tenant laws in Illinois can help protect both parties' rights and assure a fair and lawful rental experience.
What Are the Real Estate Transfer Taxes in Illinois?
When transferring real estate in Illinois, both the state and local governments impose transfer taxes. The Real Estate Transfer Tax Act (35 ILCS 200/31-1) governs these taxes, which are paid at the time of closing.
The state imposes a transfer tax of $0.50 per $500 of the sale price (or $1 per $1,000). This is typically paid by the seller, but the parties can negotiate who will cover this cost.
In addition to the state tax, cities like Chicago impose their own transfer taxes. For example, Chicago charges an additional $3.00 per $500 of the sale price (or $6 per $1,000).
Reviewing how real estate in Illinois functions is crucial for anyone involved in buying, selling, renting, or investing in property. Whether you're looking to purchase a new home or you're dealing with landlord-tenant issues, it can be helpful to have a real estate attorney in DuPage, Illinois, on your side.
Contact a Real Estate Attorney Today
If you're interested in learning more about real estate in Illinois and you need a real estate attorney, don't hesitate to reach out to our firm today. We serve clients in Villa Park, Cook County, Kane County, Will County, McHenry County, and Lake County. Contact us at Donna Craft Cain PC today to schedule a consultation.