Naheed Amdani, Attorney

New Mortgage Requirement for Loans Sold in the Secondary Market

2010-07-26T14:18:00.003-05:00

Effective June 1, 2010, Fannie Mae and other investors have increased the requirements for a salable loan. Going forward:

1) Lenders are responsible for verifying the borrower's social security number.

2) Lenders must obtain documentation from the borrower, confirming that the borrower intends to use the purchased residence as his primary residence.

3) On the day of closing, lenders must confirmt that the amount of debt borrower has, the borrower's payment history, and the borrower's credit score is reconciled with the information the borrower provided when applying.

4) Loans cannot be originated, underwritten, or serviced by companies or people that are on HUD's Limited Denial of Participation List, or on the General Services Administration Excluded Party List.

Keep in mind that this does not mean that a residential loan cannot be made if it does not meet these requirements. You can obtain a residential loan that does not meet these requirements if it is not sold on the secondary market. Unfortunately, those loans are few and far between!

Home Buyer Tax Credit Closing Deadline Extended!

2010-07-19T10:32:00.004-05:00

Good news for those homebuyers who were eligible for the home buyer tax credit but could not close by June 30, 2010! If you were unable to close by the deadline, you now have until September 30, 2010 to close your real estate purchase. Because of the backlog of mortgages, Congress decided to extend the deadline for closing.

Keep in mind, if you did not enter into a real estate contract by April 30, 2010, this extension will not help you. The extension is only for those who had a valid, binding real estate contract as of April 30, 2010.

Also, you must be otherwise eligible for the tax credit. In order to qualify for the first-time buyers credit of up to $8,000, you must not have owned a home in the last three years. For the existing homebuyer credit of up to $6,500, you must have owned your home for at least the last five years. Furthermore, the home must be your principal residence, and must cost less than $800,000. Vacation homes are ineligible for the credit. There are income restrictions also. Speak to your accountant and make sure you are eligible!

Problem Tenants in Your Condominium Association?

2010-06-04T14:49:00.004-05:00

Associations frequently want to know what they can do when a unit owner rents out their condominium unit to someone who constantly violates rules. Well, assuming the association has not banned rentals altogether, there are a few options available:

1) If the condominium documents allow it, the association can assess fines to the unit for the various rule violations. Unit owners will not want to pay fines for problems their tenants are creating. In this way, unit owners are encouraged to deal more proactively with their tenants. Hopefully the unit owners can convince their tenants to comply with the association's rules, or if not, they can start the eviction process.

2) The condominium board can also terminate the lease. The Illinois Condominium Property Act allows condominium associations to terminate tenant leases, so long as the requirements of the Act are met (i.e. proper notice, eviction proceedings, etc.)

If you have problem tenants in your association, it is wise to address the problems early on, before it gets any worse!

Home Loans Based on Your Stock Portfolio?

2010-05-14T14:50:00.000-05:00

Yes, you read right. It is possible to get a loan to buy a new home based on your stock portfolio. In other words, you may be able to get through the home-buying process without any appraisal of the home and other traditional mortgage paperwork.

In order to get approved for this type of loan, you must have a reasonably high net worth and a significant stock portfolio. The stock will be your collateral, instead of your new home. Of course, the loan will still have to be underwritten based on which stocks you own.

What's the plus side of a loan based on your stock portfolio? Well, there are actually quite a few positives: 1) If you find the right lender, the processing time may be a lot faster than for a traditional home loan; this is especially helpful if you want to close early; 2) Credit scores are not as much of an issue as with traditional mortgages -- that is not to say, however, that your credit score will not be taken into account; 3) The loan typically has a fixed interest rate, which is usually lower than a traditional mortgage rate; and 4) The loan is non-recourse.

Of course, there's a downside as well. What happens if the value of your stocks drop? You have to make up the difference with cash (or other outside financing). Also, you have no option to pre-pay the loan, so you have to work with the lender to find a term that you feel will best meet your needs!

New Disclosure Rules for Illinois Residential Real Estate Sales

2010-05-03T13:19:00.000-05:00

It wasn't too long ago that the Radon Disclosure became a requirement for every residential sale in Illinois. Now, the Radon Disclosure has been modified. What's new? Well, 1) If you're selling a condo or co-op on the third story or higher, you no longer need to provide a Radon Disclosure at all; 2) If you are a seller and your home previously had elevated radon levels which have since been mitigated, you will have space to disclose this on the Radon Disclosure; and 3) A new Radon Disclosure form is now available and should be used whenever a Radon Disclosure is necessary.

There is a also a new Illinois Residential Real Property Disclosure form available! Again, this new form should be used in all Illinois residential transactions. There is one primary difference between the old disclosure and the new one -- now the seller is required to disclose whether or not he is aware if the property has been used as a meth lab in the past.

Real estate agents and for sale by owner homeowners beware -- the law requires the use of the new forms! If you don't have them already and are in the process of selling a house, make sure you obtain and complete these forms right away!

New FHA Rules Taking Effect Soon!

2010-03-18T12:23:00.001-05:00

Many first-time homebuyers turn to FHA loans these days. After all, FHA loans have lower down payment requirements, and first-time homebuyers don't always have a lot of cash to put down. New FHA regulations, while making the business of lending a bit safer for the FHA, will certainly affect first-time homebuyers, who often have lower credit scores and less money.

What is the FHA doing? Specifically, it's making the following changes:

1) The up-front mortgage insurance premium (UFMIP) will be raised to 2.25%, up from 1.75%, effective April 5, 2010.

2) If the borrower's credit score is 580 or below, the minimum down payment will be increased to 10% of the purchase price of the home. Note that if the borrower's credit scroe is above 580, the current requirement of only a 3.5% down payment stands.

3) Sellers can only provide a maximum of 3% in closing cost credits. Previously sellers were allowed to provide up to 6% in concessions (though in practice, this was rare).

New EPA Rules for Remodeling of Pre-1978 Homes

2010-03-10T13:31:00.001-06:00

If you own a home built before 1978, there may be lead-based paint present in your home. Granted, you may have been through numerous remodeling projects, and you may have brand new drywall or paneling. However, unless you've had your home tested and confirmed that it is now lead-free, you have no way of confirming whether there is lead-based paint in your home or not.

The U.S. Environmental Protection Agency (the EPA) has issued new rules, which will take effect on April 22, 2010. If you are doing any remodeling work in your pre-1978 home after that date, you may only hire contractors that are certified by the EPA. Specifically, the EPA will be certifying contractors in practices that are "lead-safe". Of course, if the paint in your house is not being touched, then you may use any contractor you wish. However, most remodeling work does require at least some paint or touch-up. Therefore it is most likely you will have to hire a contractor certified by the EPA.

This new EPA rule applies not only to homes, but to schools and child care centers built before 1978 also, so long as children under the age of six are present in those schools and child care centers. However, the new rule does not apply to minor maintenance, or repairs where less than six square feet of lead-based paint is disturbed. If the work is on the outside of the home or school, the rule only applies if more than twenty square feet of lead-based paint is disturbed.

In order to avoid accidental lead poisoning, anyone with a home built before 1978, or anyone who has children in a school built before 1978, should be diligent to make sure that any lead-based paint present in their home or school does not endanger the health of their family!

How HAFA Can Help You

2010-03-03T12:41:00.001-06:00

If you qualified for a loan modification and were unable to work out a plan you could afford, and you otherwise qualify under the Home Affordable Foreclosure Alternative Program (HAFA), you should know what you can expect for participating in the program.

First and most important, you will have a plan for completing a short sale or deed in lieu of foreclosure. Many short sales languish for months. Often buyers get fed up and walk out of the deal, just waiting for the seller's lender's response. HAFA is expected to speed up the short sale process; prior to listing the property, homeowners will receive pre-approved terms for their short sales.

Second, and also important, you will be released from liability for any portion of the debt that is not paid. In other words, if you bought your home with a $300,000 mortgage, and sold the home for $250,000 in a HAFA-approved short sale, you will not be liable for the $50,000 balance to your lender.

Third, if you are able to complete a short sale or deed your home to the bank in lieu of foreclosure, you will receive $1500 towards your moving costs.

Of course, your bank is not required to sign up for HAFA, but banks that do sign up receive some incentives also. Namely, the bank can get $1000 towards covering their administrative costs. If the bank is a secondary lienholder and agrees to relinquish its lien, the bank can get up to $3000 of government monies through a matching program.

If you are having trouble with your loan payments, look into HAFA to see if you qualify! For a list of criteria to qualify for HAFA, click here.

Do You Qualify for Short Sale Assistance Under the HAFA Program?

2010-02-23T15:52:00.001-06:00

The new Home Affordable Foreclosure Alternative Program, or HAFA, is meant to assist homeowners who are eligible for a loan modification but cannot work out a payment plan they can afford. Instead of being foreclosed, HAFA assists such homeowners with the short sale or deed in lieu of foreclosure process. HAFA is voluntary, and lenders are not required to sign up for it. Do you qualify under HAFA? Here's a checklist to see if you do:

1) Your loan is NOT a Freddie Mac or Fannie Mae loan.
2) Your bank or servicing company signed up to participate in the Home Affordable Modification Program (HAMP) by December 31, 2009, AND your bank has also since signed up to participate in HAFA.
3) The property in question is your primary residence.
4) Your loan is the first mortgage on the property.
5) You took out the loan before January 1, 2009.
6) Your unpaid balance is less than $729,750.
7) Your monthly mortgage payment is exceeds 31% of your gross income.
8) Your loan is already in default, OR default is reasonably foreseeable.

Craigslist Not Liable for Fair Housing Act Violations

2010-02-15T15:30:00.000-06:00

As you may already know, Craigslist is a popular site on which people can post, among other things, homes or other real estate for rent or sale. Unlike an ordinary newspaper advertisement, Craigslist content is published almost immediately after a user submits its ad to Craigslist online. Craigslist does not charge the user for this service.

However, Craigslist does not filter out advertisements based on the Fair Housing Act. A user can submit an ad with a statement such as "no minorities allowed" or "no children", and the ad will be published nonetheless. As a result, Craigslist was sued (Chicago Lawyers' Committee for Civil Rights Under the Law, Inc. v. Craigslist, Inc., 519 F.3d 666 (7th Cir. 2008)).

Although the plaintiff argued that Craigslist should be required to filter the ads, and that the ads were only posted because Craigslist exists, the court disagreed and found in Craigslist's favor. The court explained that Craigslist did not write the ads, and in an online context such as this one, Craigslist should not be considered the "speaker" of the words in the advertisement, nor even the publisher.

Bottom line -- Craigslist is not required to filter ads. If you see an advertisement for housing on Craigslist and it sounds discriminatory, it very well may be!

Condominium Insurer's Disclosure Requirements Limited to Condominium Only

2010-02-04T14:39:00.003-06:00

What happens in a situation where you own a condo, have an insurance claim, and the insurance company sends out an inspector who discovers additional damage? Well, a lot hinges on where that damage is -- it is in your condominium or not? And it also depends on whether the damage, if outside your condo, caused the damage inside your condo.

A recent case, Fichtel v. The Board of Directors of the River Shore of Naperville Condominium Association, No. 2 07 1237 (Ill. App. Ct. 2nd Dist., April 21, 2009), illustrates this point. In Fichtel, the plaintiff condominium owner had water damage in her unit and filed an insurance claim. State Farm, her insurance company, sent out an inspector to investigate the claim. During the course of the inspection, the inspector entered the attic space above the plaintiff's unit to see if the water damage was coming from there. When he came out, he told the plaintiff that the water damage was not caused by a leaky roof. However, he did not tell the plaintiff that there was mold in the attic.

The attic was not part of the plaintiff's condominium unit and was not insured by State Farm. It was a common area, and so the inspector notified the condominium board of the mold in the attic. He also allowed the plaintiff's claim for water damage, which State Farm paid.

Later, the plaintiff sued State Farm along with the condominium association. The plaintiff alleged that State Farm had an obligation and an affirmative duty to disclose the mold to her. State Farm denied the plaintiff's allegations, and the court concurred with State Farm. The court's reasoning was that the mold was not in an area insured by State Farm, it did not cause the water damage in the plaintiff's condominium, the plaintiff's water damage claim was unrelated to mold, State Farm had no fiduciary duty to the plantiff (they were only her insurer), and State Farm was only doing what it was contractually obligated to do under its contract with the plaintiff -- that is, investigating her claim for water damage.

Most insurance policies are very specific -- they will only cover your condominium, not anything else. If you have any damage to your condominium and your insurance company's inspector investigates areas outside of your condominium for the cause, he is not obligated to disclose anything he finds that is not relevant to your claim. He is an inspector for the insurance company, not an inspector for you. If you are concerned that areas outside of your own condominium unit may be suffering damage, it is best for you to hire your own inspector to investigate.

Commercial Lease Drafting -- Repairs v. Replacements

2010-01-28T15:02:00.000-06:00

If you are the landlord of commercial space, be extremely cautious when drafting your lease provisions with respect to repair and replacement of portions of the leased premises. Commercial tenants should also review their leases carefully to determine what they are responsible for. In order to avoid any potential disputes later, it is better to be clear upfront and delineate responsibilities in detail in a manner that is consistent with what both parties have bargained for.

Case in point: In Quincy Mall, Inc. v. Kerasotes Showplace Theatres, LLC, 903 N.E.2d 887 (Ill. App. Ct. 4th Dist., February 27, 2009), the commercial lease between the mall and the tenant, a theater, included a "general repair" clause with respect to the roof. Under the terms of that clause, the tenant was responsible for repairs to the roof. Eventually, the roof required replacement. When the mall failed to replace it in a timely manner, the theater informed the mall it would replace the roof and deduct the cost of the roof from its rent.

The court supported the tenant's position, because the lease did not contain a clear provision about roof replacement, only about roof repair. The lease stated only that the tenant was responsible for repairing the roof, not replacing it. Therefore the burden of replacing the roof remained with the landlord.

Bottom line -- When reviewing your commercial lease, make sure you understand exactly what your responsibilities are! When something breaks, you should know who needs to fix it.

Can a Tenant be Required to Obtain Insurance Against the Landlord's Negligence?

2010-01-21T17:31:00.001-06:00

Sure, why not? A recent case, Clarendon American Insurance Company v. Prime Group Realty Services, Inc., Nos. 1 08 0791 and 1 08 1985 (Ill. App. Ct., 1st Dist.,March 26, 2009), specifically statest that if the landlord and tenant enter into a lease requiring the tenant to name the landlord as an additional insured, covering all losses, whether or not they occur as a result of the landlord's negligence, then the tenant must comply with the insurance provisions of the lease, or be in violation of the lease.

In the Clarendon case, the tenant argued that it was not fair for the tenant to have to procure and maintain insurance for the landlord's negligent acts. The court disagreed -- the terms of the lease were explicitly agreed to. Moreover, the court distinguished between insurance and indemnification. It is against public policy for a party to be indemnified for its own negligence. It is not, however, against public policy to have another party insure the negligent party against its own negligence.

When entering into any commercial lease, the insurance and indemnification provisions should be reviewed carefully and agreed to by all parties to prevent any misunderstandings, and hopefully, any litigation down the line!

Landlords and Recent Amendments to the Illinois Human Rights Act

2010-01-06T13:15:00.001-06:00

As most landlords know, they cannot and should not discriminate against tenants or prospective tenants based on age, race, religion, gender, color, or family status. Pursuant to a recent amendment to the Illinois Human Rights Act, a new protected class is being added to that list -- people protected by orders of protection. Note this new law specifically applies to people who are actually protected by the order of protection, not to people the order of protection has been obtained against.

A landlord, or, for that matter, a seller of real estate, cannot discriminate against a potential tenant or buyer solely because they have an outstanding order of protection, whether that order of protection was issued by an Illinois court or an out-of-state court. As a landlord, if you enter into any leases, make sure that there is nothing in the lease that could violate the Illinois Human Rights Act. Lease provisions need not be directly in violation of the Illinois Human Rights Act -- any lease provision that could lead to eviction due to the actions of others (i.e. the person who the order of protection has been obtained against), should be reviewed carefully to prevent alleged violation of the Illinois Human Rights Act.

While many landlords may never find out if their tenant is the beneficiary of an order of protection, landlords that do find out must not discriminate against a tenant or proposed tenant as a result.

Can the Illinois Homeowner Protection Act help you?

2009-12-24T17:18:00.001-06:00

The Homeowners Protection Act (HPA) is meant to help Illinois homeowners who are at least 30 days behind on their mortgage payments. Regardless of the homeowner's income or the size of the loan, the law places certain requirements on lenders:

1) Lenders must notify homeowners in writing when the loan is more than thirty days past due.

2) Lenders must provide an opportunity for the homeowner to obtain housing counseling within 30 days. If a homeowner chooses to get counseling, he can contact any U.S. Housing and Urban Development (HUD) certified counseling agency.

3) In their written notice, lenders must clearly state that if the homeowner seeks housing counseling, the homeowner will receive an additional 30 day grace period.

4) Lenders cannot start foreclosure proceedings until they have provided this notice and allowed the counseling and grace periods, if applicable, to pass.

If you are in a situation where foreclosure on your home was initiated prior to April 9, 2009 (when the HPA was signed), it is too late for the protections of the HPA. Additionally, the law only applies to each loan once; if you default on a loan the first time, the HPA will apply. If you are able to work out a payment plan with the lender and default again, the HPA will not apply, and you will receive not further grace periods under the HPA. If the loan is not on your principal place of residence, it does not qualify under the HPA. Moreover, if you have applied for bankruptcy, the HPA will not apply.

Assuming you otherwise qualify for the protections of the HPA, keep in mind that this law will expire on April 8, 2011.

Illinois Down Payment Assistance Program!

2009-12-17T19:40:00.001-06:00

For homeowners who are taking advantage of the Illinois Housing Development Authority's (IHDA's) Home Start program, down payment assistance may be available. The IHDA will loan you 3% of your purchase price, up to $6,000, if you meet certain criteria:

1) You must be a first-time homebuyer (unless you are a veteran).
2) You must qualify for and secure an IHDA 30-year fixed rate loan.
3) You must meet purchase price guidelines.
4) You must meet certain income requirements.
5) You must be willing to participate in homeownership counseling.

The IHDA's down payment assistance loan has zero percent interest, payable in 10 years. Moreover, the loan may be forgivable. For more information directly from the IHDA, click here.

Whether or not you qualify for this program does not affect your ability to receive the current $8000 tax credit for first-time homebuyers. For more information on that credit, click here.

Contractors and Lien Notices

2009-12-10T18:09:00.001-06:00

Effective January 1, 2010, the Mechanics Lien Act shall be amended to require contractors to provide written notice to a homeowner within ten days after recording any lien against the home. This amendment applies specifically to contractors and owner-occupied single-family homes. Subcontractors and other types of homes are not covered by the amendment. Furthermore, the amendment only applies to contracts entered into after January 1, 2010.

The legislature intends the ten-day rule to be quite strict. If a contractor files a lien and fails to notify the owner of a single-family owner-occupied residence that a lien has been filed, the lien is extinguished to the extent of any actual damages the owner incurs as a result of the lien, so long as the damages were incurred before the contractor provides notice of the lien.

Residential contractors should take care to comply with this new law in order to preserve their liens!

New Tax Incentive Program for Vacant Buildings

2009-12-04T15:41:00.003-06:00

Vacant buildings are taking a toll on county tax rolls. In order to encourage occupancy of vacant buildings, the Illinois legislature has approved Public Act 96-755 (HB 4120). Effective January 1, 2010, the legislature will grant local governmental authorities an incentive for abating any portion of property tax on a building that was vacant for at least 24 consecutive months prior to being occupied by a business.

In order for a local government to abate any portion of the property tax, a majority of its governing body must vote in the abatement's favor. The abatement cannot be for longer than two years, and the total tax abatement for all taxing districts involved cannot exceed $4 million dollars.

The legislature hopes that this new tax incentive program will encourage business-owners to buy and take over vacant buildings!

Homebuyer Tax Credit Extended!

2009-11-16T14:35:00.000-06:00

Great news for homebuyers! Congress voted to extend the $8,000 tax credit for first-time homebuyers, which was initially slated to expire on November 30, 2009. Not only that, Congress expanded the credit to existing homeowners -- if you are an existing homeowner, you can qualify for a credit of up to $6,500 if you buy a new home.

In order to qualify for the first-time buyers credit, you must not have owned a home in the last three years. For the existing homebuyer credit, you must have owned your home for at least the last five years. To qualify for either credit, you must sign a purchase contract by April 30, 2010, and close by June 30, 2010. Furthermore, the home must be your principal residence, and must cost less than $800,000. Vacation homes are ineligible for the credit.

If you are single and earn less than $125,000, you are eligible for the full credit of $8,000 (for first-time buyers) or $6,500 (for current homeowners). The credit starts to phase out above an income level of $125,000. If you are married, the credit starts to phase out over $225,000 in joint income. Note that the value of the home must be at least $80,000 for you to receive the $8,000 tax first-time homebuyer tax credit, and the value of the home must be at least $65,000 for you to receive the $6,500 existing homeowner tax credit. If the value of the home is less than that, you can get up to ten percent of the value of the home. I.e. if you buy a home for $43,000, you are only eligible for a credit of up to $4,300.

If you qualify and have already filed your 2008 tax return, you can amend it and receive an immediate credit. If not, you can file the credit with your 2009 tax return, or, if you close after 2009 taxes are due, you can amend your 2009 tax return. The credit is a straight credit -- i.e. if you file your taxes and don't owe any money, the goverment will actually send you a check for $8,000 (if you are a first-time buyer and otherwise qualify).

Will these credits stimulate real estate sales? Maybe, maybe not. Some say they do, some say they don't -- what really happens remains to be seen!

Illinois Condominium Property Act and FHA Financing

2009-11-03T15:25:00.000-06:00

The Department of Housing and Urban Development (HUD) did not allow FHA financing for condominiums which were part of an association that had a "right of first refusal" in their condominium declaration. Effective November 2, 2009, however, HUD will allow FHA financing for condominiums in associations that have a right of first refusal on their books, so long as the association otherwise meets HUD's eligibility requirements.

In order to assist potential buyers of such condominiums, the Illinois legislature has amended the Illinois Condominium Property Act to clearly state that no association may exercise its right of first refusal just because the buyer is obtaining FHA financing. These new laws are, of course, good news for many condominium buyers who seek to take advantage of the FHA's low down payment requirements!

Cook County Real Estate Tax Increases for 2008 Second Installment

2009-10-25T22:35:00.000-05:00

Despite decreased home values, the collective total tax burden for Cook County property-owners will rise approximately 4.2% for the 2008 tax year. It appears that overall, the city's taxes will increase more than suburban taxes, because the collective tax burden for city property-owners will be about 6% greater than last year. Because of the way real estate taxes are calculated, collective property values (for tax purposes only) increased 9.96% in the city and 8.23% in the suburbs.

Both the suburbs and the city are comprised of multiple taxing bodies, such as schools, libraries, park districts, governmental bodies, etc. Even though the value of your home may have gone down, and you may have even had a successful assessed value appeal, the various factors that go into determining your tax rate may have gone up. For example, the Chicago Board of Education increased its tax requirements by over five percent, and the City of Chicago government needed a 1.6% increase. The Forest Preserve District and the Metropolitan Water Reclamation District increased their budgets by 4.5% each.

Is there any good news in all of this? Well, taxes going up is seldom good news. However, as the bills are coming out late, homeowners can hold on to their money a little bit longer.

One more tidbit: Typically, the first installment tax bill of any given tax year in Cook County is exactly half of the previous full-year bill. Starting with the 2009 first installment tax bill, however, this is going to change. The 2009 first installment tax bill will be 55% of the total 2008 tax bill.

The Homeowners Rights Act and Notice to Homeowners in Foreclosure

2009-10-19T23:07:00.005-05:00

If you are being foreclosed, the Homeowners Rights Act (Public Act 095-0961) applies to you. Under this act, which took effective at the start of 2009, lenders must attach a Homeowner Notice to residential suits filed in Illinois. The Homeowner Notice should advise homeowners of the options available to them -- i.e. homeowners have the option to (i) have the loan reinstated if they can bring it current within 90 days, (ii) sell the home, or refinance the loan to pay the loan off within the applicable redemption period, and (iii) collect surplus funds if the bank forecloses and then sells the home for a profit. Additionally, the Homeowner Notice must clearly state how the homewoners may contact the lender to discuss a workout package or demand a payoff amount. The Homeowner Notice should also ask the homeowners to consider seeking legal assistance.

What happens if your lender violates the Homeowners Rights Act and does not provide you a Homeowner Notice? Well, you can petition the judge in your case to award you damages for violating the act. You can also receive attorneys' fees and costs if you prevail in the foreclosure suit, a counter-claim, or a motion related to the act. The purpose of the act is not to penalize lenders, but rather to give homeowners clear notice of their rights and options, especially since many homeowners are not aware of what steps they can or should take once a foreclosure suit has been filed.

Landlords and the Tenant Utility Payment Disclosure Act

2009-10-08T11:45:00.000-05:00

If you are an Illinois landlord, and you rent apartments where utilities are not separately metered, you should be aware of the Tenant Utility Payment Disclosure Act (765 ILCS 740/1). Under the Tenant Utility Payment Disclosure Act, the landlord must disclose, the formula he uses for determining each tenant's share of utilities when he has multiple tenants and the utilities are not individually metered.

The landlord should disclose this information prior to demanding payment for utilities. The disclosure can be written into the lease, or consist of a separate document. The landlord's formula should take into account the usage of all of the units metered together. Upon a tenant's request, the landlord should also provide a copy of the whole utility bill.

Condominium associations are also required to clarify how they are billing common utilities; however, in the case of most condominium associations, utilities are billed as per the condominium declaration, based on each unit's individual ownership share in the association.

Proper Service of a Five-Day Notice

2009-09-30T11:15:00.000-05:00

If you are an Illinois landlord, you may have had the misfortune to come across a tenant who refuses to pay rent. What should you do? Serve a five-day notice. How should you serve the notice? Properly. What does service of a proper notice involve?

1) The notice should be worded properly. For more information on the proper wording of a five-day notice, click here.

2) The notice should be served properly. According to the Illinois Forcible Entry and Detainer Statute, a five-day notice must be served by a) personal delivery, b) leaving the notice with a person who is at least 13 years old and resides at the property, or c) sending the notice to the tenant via certified or registered mail. In the event that the tenant has vacated the premises and no one is living there, you can also post notice on the tenant's door.

Before sending a five-day notice, you should check with your attorney and make sure it is correct in every way. Improperly phrased or served five-day notices can hurt your chances in court. Even if you make it through trial, an improperly served five-day notice can cause landlords a lot of headache at appeal. In fact, in a recent court decision, American Management Consultant, LLC v. Carter (2009 Ill.App.LEXIS 530, 3rd Dist., 2009), the landlord lost the appeal, even after winning at trial, because, among other reasons, the service of his five-day notice was deemed improper.

No Jury Trials Allowed in Certain Real Estate Cases

2009-09-25T15:43:00.005-05:00

In a recent case, Anderson v. Klasek (2009 Ill.App.LEXIS 708, 5th Dist., 2009), the Buyers sued the Seller, the Seller's real estate agent, and their own home inspector after closing on a home that was infested with termites and had purportedly been treated for the same. The home inspector settled the case outside of court, but the Seller and the Seller's real estate agent decided to proceed to trial. The real estate agent demanded a trial by jury, which the judge granted.

Subsequently, the Buyers lost the case. They filed an appeal on the grounds that the Residential Real Property Disclosure Act, which was the basis of part of their claim, did not allow for trial by jury. The appellate court agreed, stating that the Illinois legislature had not allowed for trials by jury when drafting the Residential Real Property Disclosure Act. Cases that fall within the purview of this Act should therefore be tried in front of a judge, not a jury. The court also added that the Real Estate License Act and the Consumer Fraud and Deceptive Business Practices Act should also be tried in front of a judge, not a jury.

When bringing cases before the court, attorneys and real estate practitioners should keep in mind that a jury trial might not always be an option!