Effective January 1, 2018, a new Illinois law will take effect which substantially changes legal requirements for selling real estate via installment payments, generally known as a contract for deed. The law does not apply to agricultural property or property over 4 acres. It also does not apply to any individual who sells less than 3 properties on installment contracts in any 12 month period.
The new law requires a covered party selling a property on a contract for deed to record the contract on the public land records within 10 days. This will prevent a property from being sold without the contract purchaser's knowledge or consent. The contract purchaser can void the deal at any time if the contract is not recorded, giving the buyer much greater rights than they had in the past.
The new law also requires a written disclosure to a buyer that they have a right to a professional home inspection. Such inspections are common in cash and institutional lender financed transactions. This provision of the act is designed to protect a buyer from acquiring property with deliberately concealed defects. A contract buyer may now be able to deduct the cost of unexpected repairs from the final purchase price.
Finally, the new law prevents the seller from evicting the contract purchaser if the purchaser has already paid 20% or more of the final purchase price. The prior law required 35%. If the contract buyer has paid at least 20%, the only way to terminate their interest is through a foreclosure proceeding just like in the case of a mortgage. It will take the seller much longer to remove a defaulting occupant under a foreclosure proceeding than it would in a typical eviction case.
If you have any questions about this new law, feel free to contact us at (847) 599-9101.