Changes to the contract for Chicago-area home sales took effect March 1, establishing new rules for buyers' property improvement requests, deadlines for mortgage contingencies and more.
The new framework was prompted by concerns that some buyers and real estate lawyers were holding up deals because, for example, they didn't like a paint color or the window treatments.
Under the revised Multi-Board Residential Real Estate Contract, buyers can still request sellers make cosmetic changes but those requests must now be made when submitting an offer.
Previous versions of the contract addressed these inspection contingency matters within a framework of "defect" but the definition of what constituted a "defect" was never clearly defined.
The new contract now places a greater burden on buyers to show a true and material "legal" reason to pull out of deal. Specifically, it states "minor repairs, routine maintenance items and painting, decorating or other items of a cosmetic nature, no matter what the costs to remedy the same, do not constitute defects, are not a part of this contingency and shall not be a basis for the buyer to cancel this contract."
Another change states the mortgage contingency deadline must now be 45 days after the date of acceptance or five days prior to the date of closing, whichever is earlier. This will streamline both the preparation process for the real estate agent and the review process for the real estate attorney. Previously, the parties would often be too ambitious when choosing a date and it would be up to the attorney to address a longer needed period for the contingency during the attorney review and approval process. Now, the guesswork has been eliminated.
Another key change is the new provision that "the closing must take place at the title company location closest to the property." Most real estate attorneys have encountered a peer who insists on choosing a title company closest to their office, rather than the property inconveniencing buyers, sellers and their real estate agents. This change will now allow the attorneys to point to a specific provision in the contract, if this issue arises.
In all, the revisions should simplify the closing process, and make it more efficient, which is something all parties involved should appreciate.
• Neil Narut is senior underwriting counsel for Proper Title LLC