Real Estate Contract Review and the Illinois Attorney Review Period

A real estate contract attorney does two things during the Illinois attorney review period: reads the contract you signed against what you actually agreed to, and sends the letter that changes what needs changing. The period itself is a contract term, not a statute. Paragraph 13 of the Multi-Board Residential Real Estate Contract 8.0, the form used across Chicago and the suburbs, gives the attorney for either party five business days after the Date of Acceptance to approve the contract, disapprove it (not solely because of the price), or propose modifications to anything other than the purchase price. If the parties have not reached written agreement on all proposed modifications within ten business days after acceptance, either party may terminate. If no notice is served in the five days, the right is waived and the contract stands as signed.

Khatib Law LLC reviews residential and commercial purchase contracts for buyers and sellers across Cook, Will and DuPage counties from its Palos Heights office. Hani H. Khatib, Attorney at Law · CPA · LL.M. (Taxation), handles the review. Because the five days start on the Date of Acceptance, contact the office the day your contract is accepted.

Three things attorney review is not. It is not the inspection contingency: paragraph 15 covers physical defects, runs on its own five-business-day clock, and is limited to the major components of the home, and a buyer can waive one and keep the other. It is not a free look: a disapproval under paragraph 13(b) cannot be based solely on the purchase price, and walking away for reasons unrelated to the contract terms invites a dispute over the earnest money. And it is not a second negotiation of the price: a buyer who wants a lower price after inspection asks for a credit under paragraph 15, not a price change under paragraph 13.

Anything other than the purchase price. The changes we propose most often in the southwest suburbs:

• Tax proration. Cook County bills a year behind, and reassessment years in the south and west townships push bills up. Buyers ask for a proration above 100 percent of the last full-year bill; sellers hold at 100 or 105. Paragraph 12 also makes the seller responsible for preserving any homeowner or senior exemption reflected in the bill used for proration.
• Closing and possession dates, including a short post-closing possession for the seller with a daily charge and an escrow.
• Condominium document contingency. The seller must obtain the section 22.1 documents on demand (765 ILCS 605/22.1); the buyer's attorney adds the right to cancel if they reveal a special assessment, underfunded reserves, litigation or a rental restriction.
• Well, septic and flood items for unincorporated Palos, Orland and Homer townships: a potability test, a septic inspection, and confirmation of flood-zone status.
• Personal property and fixtures: what stays and in what condition, with a specific list.
• Seller credits and repair escrows that the lender will accept.
• Financing terms: the interest-rate cap in paragraph 8 that lets a buyer out if rates move.
• Riders and addenda the other side attached, which get deleted or rewritten as often as they get accepted.

For sellers, the review is defensive: strike contingencies that let the buyer walk at no cost, and tighten the inspection and financing deadlines. We also confirm that the disclosures required before signing were in fact delivered (the Residential Real Property Disclosure Report under 765 ILCS 77/20 and the radon disclosure under 420 ILCS 46/10), because a missing disclosure gives the buyer a termination right the contract cannot take away.

If neither attorney serves notice within five business days, paragraph 13 is waived and the contract is enforceable as signed. There is no second chance, and an agent's assurance that "attorney review is still open" does not extend a deadline the contract fixes.

If a 13(c) letter was sent and written agreement on all proposals has not been reached by the end of the tenth business day after acceptance, either party may terminate by serving notice. The contract says the termination is absolute once given and cannot be undone by withdrawing a proposal. Earnest money is then disbursed under the contract's escrow terms, which in a paragraph 13 termination means it returns to the buyer. If neither side terminates, the contract continues on its original terms plus whatever changes were agreed in writing.

If a party serves a disapproval within the five days, the contract is terminated outright. A disapproval that is in substance about the price is the one that gets litigated, so we draft disapprovals, when a client needs one, around the contract terms that justify it.

1. Parties, property, price and dates

   Day one · the day the contract arrives

   Correct legal names, marital status where it affects the deed, the PIN and legal description, what is included in the price, and every deadline entered on a calendar the day the contract arrives.

2. Contingencies

   Day one · in the same read

   Financing, inspection, appraisal, sale of the buyer's home and condominium documents, and whether each one favors our client as written.

3. Title, survey and disclosures

   Days one to two · before the letter is drafted

   What the seller must deliver (an extended-coverage title commitment and, except for condominiums, a survey dated within six months), what exceptions the buyer must accept, and whether the required disclosures were delivered before signing.

4. Prorations, credits, transfer taxes and riders

   Days one to two · usually about an hour of review

   The proration percentage, who pays state, county and municipal stamps, any municipal certificates the ordinance requires, and each rider read against the main contract for conflicts.

5. The tax read

   Before the letter goes out · within the five business days

   Whether the way title is taken, the proration or the allocation of price between a building and a business affects a tax return; see why one adviser for law and tax changes the advice.

Buyers can read what follows the letter on our buyer's attorney page; sellers and investors will find the closing process on the real estate hub.

1. The proration percentage is a tax forecast

   Choosing between 100, 105 and 110 percent means estimating the next Cook County bill from the assessment, the equalization factor and the local rate. We do that arithmetic instead of accepting a custom.

2. Allocation of price

   When a contract covers a building and a business, or a two-flat with a rental unit, the allocation written into the contract sets depreciation and gain for both sides. Getting it into the contract during attorney review avoids an argument at tax time.

3. One privileged engagement

   The contract advice and the tax advice come from the same attorney under attorney-client privilege.