When most Illinois property owners sell real estate, there is a law, the Illinois Residential Real Property Disclosure Act, that requires that they provide a copy of a completed Illinois Residential Real Property Disclosure to all prospective buyers. The act imposes certain liability on the Seller for certain errors, inaccuracies, or omissions. What does that have to do with Illinois leases? A lease transaction, after all, is not a sale.Like everything in the law, tings are not always as simple as they might seem. First, the law specifically includes within its requirements that installment land sale contracts, ground leases, and assignments of ground leases are within the scope of the law. Second, and more important in today’s troubled economic environment, is the including within the scope of compliance of the “lease with an option to purchase”.
Section 10 (756 ILCS 77/10) of the law reads as follows:
Except as provided in Section 15, this Act applies to any transfer by sale, exchange, installment land sale contract, assignment of beneficial interest, lease with an option to purchase, ground lease, or assignment of ground lease of residential real property. (emphasis added)
So what are we to make of this? Well, this means that if a residential lease includes any sort of a provision relating to an option in the tenant to purchase the rental unit, the landlord must provide the tenant with an Illinois Residential Real Property Disclosure.
If the disclosure is required and not provided,a tenant may have certain rights against the landlord!
Section 55 of the Act (765 ILCS 77/55) provides:
Violations and damages. If the seller fails or refuses to provide the disclosure document prior to the conveyance of the residential real property, the buyer shall have the right to terminate the contract. A person who knowingly violates or fails to perform any duty prescribed by any provision of this Act or who discloses any information on the Residential Real Property Disclosure Report that he knows to be false shall be liable in the amount of actual damages and court costs, and the court may award reasonable attorney fees incurred by the prevailing party.
Illinois Landlords adding an option to buy to an Illinois lease would be well advised to be aware of and to comply with their obligations under this law relating mostly to “sales” of real estate! Illinois landlords seeking assistance with lease drafting should feel free to contact us to see if we are a match for an attorney client relationship.