What is Attorney Review Period in Illinois Real Estate?

This article has been updated by Kevin O'Flaherty. The previous version was written by Matthew Dorich.

Attorney review is an indispensable step in a real estate transaction, providing a layer of legal protection before finalizing a property deal. It’s not just about paperwork; it’s a critical review that catches hidden clauses that could undermine your transaction. Attorney review period typically lasts 3-5 days, allowing for negotiation, modification, and legal issue identification.

What is the Attorney Review Process?

1. Signing the Agreement

• Once the buyer and seller agree on price and terms (like when to move in) they sign the agreement. This is the official document between the two parties.

2. Attorney Review Period

• Once the agreement is signed the “attorney review period” begins. This is usually 5 business days. Both the buyer and seller hire their own attorneys to review the agreement.

3. Attorneys Review

• The attorneys check if the contract is fair and if it protects their clients. They may suggest changes to the contract if they find any issues that could cause problems later.

4. Requesting Changes

• If either attorney requests changes they’ll send a letter to the other side’s attorney. This starts a negotiation. The attorneys will go back and forth to agree on the changes, like adjusting deadlines or fixing errors in the agreement.

5. Inspection Contingency

• While the attorneys are reviewing the agreement the buyer also schedules a home inspection to see if there are any problems with the house (like broken pipes or a leaky roof). If the inspection reveals issues the buyer’s attorney may ask for repairs or for a lower price to offset the cost of fixing things.

6. Agreement

• Once the attorneys agree on the changes and the inspection issues are resolved the agreement is finalized. This means both the buyer and seller agree on everything and are ready to move forward.

7. End of Attorney Review

• Once the attorney review period ends and all changes are agreed upon the agreement is locked in. After that no more changes can be made unless both the buyer and seller agree.

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The Role of the Real Estate Agent in the Attorney Review Process

The real estate agent is crucial during the attorney review process. They’re a guide and helper for both the buyer and seller. Here’s what they do:

Connect Everyone

The real estate agent makes sure the buyer and seller are in touch with all the right people, like attorneys, inspectors and other professionals involved in the deal. It’s like when you’re planning a big group project at school and you need to make sure all your group members are talking and working together.

Explaining the Contract

Before the attorneys get involved, the real estate agent explains the contract to the buyer or seller. They go over the main points, like the price, when the buyer can move in and what’s included with the home (like appliances). It’s like when your teacher explains the rules of a game before you start playing so you know what’s going on.

Keeping it on Track

The real estate agent also keeps an eye on the clock. Remember the attorney review period is only 5 business days. The agent makes sure the buyer and seller are meeting deadlines, like getting the inspection done on time or making decisions about contract changes quickly.

Problem Solver

If something comes up during attorney review, the agent helps find a solution. Let’s say the buyer is worried about the closing date because they need more time to get out of their old house. The real estate agent talks to both sides and figures out a new move-in date that works for everyone. The agent is like a mediator.

Keeping it Positive

Buying or selling a home can be nerve wracking and the real estate agent is there to keep things calm. They explain everything clearly and keep everyone on track.

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However, the agent’s role is limited, and they should not provide legal advice or attempt to negotiate contract terms. So while the attorneys are dealing with the legalities, the real estate agent makes sure everything goes smoothly and everyone knows what’s going on. They are like a coach, keeping the team organized and motivated the whole way!

How Long is the Attorney Review Period?

It is essential to have your real estate contract delivered to the real estate attorney who represents you as soon as possible. Attorney Review lasts from 5 business days from the date of acceptance. If you wait four days to deliver the real estate contract to your real estate attorney, the period does not extend. You or your real estate agent need to deliver the real estate contract to the real estate attorney handling the file as close to acceptance as possible. Read our article to find out Why Should you Hire a Residential Real Estate Attorney in Illinois?

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Can I Change the Purchase Price During Attorney Review?

The purchase price is not a term that parties can address during attorney review. The purchase price is generally a binding term unless a specific conditional provision is met closer to closing. The cure for this condition not being met is generally not a basis for modifying the price.

What Terms or Conditions Can be Modified During the Attorney Review Period?

The Attorney Review modifications generally include:

• Establishing the title company.
• Eliminating provisions that do not apply to the subject property.
• Potentially addressing unknown defects to the physical conditions of the property.

Attorney review can also clarify which personal property (significant appliances, specific fixtures, rosebushes, etc.) will or will not be included in the purchase.  

What is the Difference Between Attorney Review and the Inspection Period?

The Attorney Review period runs concurrently with the Inspection Review period. Homebuyers in Illinois are allowed to hire a licensed inspector to investigate the physical condition of the subject property. The inspection review period allows the buyer to uncover all of the issues with a piece of property that is not readily noticeable when the buyer makes the purchase offer on a home. This process is designed to allow the buyer to fully understand the property's condition on the date they assume ownership of it.  

What if the Inspection Reveals Unknown Issues in Property?

Issues on the property inspection are pretty common and can be addressed between the attorneys on a file. The buyer can request repairs for the defects discovered in the property in certain circumstances. The buyer may also determine that they will undertake those repairs on their own in exchange for credit at closing. The sellers are not required to make repairs or provide credit in most situations. The buyers are also not allowed to request repairs or replacements, so the defects addressed under this provision must be for significant items that materially affect the purchased property.  

Other Common Issues That Arise During Attorney Review

Contract Changes

• What happens: Either the buyer or seller’s attorney may want to change the contract terms, such as moving the closing date, changing deadlines or adding new language to protect their client.
• Why it’s a problem: If the other side doesn’t agree to these changes, the deal can be delayed or die. Both sides have to agree to any changes before moving forward.
• Example: The seller’s attorney may want to change the closing date because the seller needs more time to move out but the buyer may not agree if they already scheduled movers.

Contingency Disagreements

• What happens: Real estate contracts have contingencies which are conditions that must be met for the deal to go through. For example the contract may be contingent on the buyer getting financing or selling their current home. If these contingencies aren’t met the contract can be cancelled.
• Why it’s a problem: If either side wants to change or cancel a contingency it can delay or kill the deal.
• Example: The buyer may ask for more time to get a mortgage but the seller may not want to wait and can threaten to cancel the deal.

Title Issues

• What happens: During attorney review a title search is done to make sure the seller actually owns the property and there are no legal claims (like unpaid property taxes or liens) against it.
• Why it’s a problem: If there are title issues it can delay the sale or even kill the deal until the issues are resolved.
• Example: A title search shows the previous owner didn’t pay off a construction lien. This lien must be paid off before the sale can move forward.

Fixtures and Appliances Disputes

• What happens: Sometimes there’s confusion about what’s included in the sale. For example the contract may not be clear on whether the appliances or fixtures (like light fixtures or curtains) are staying with the house or not.
• Why it’s a problem: If the buyer thinks these items are staying and the seller is taking them, this can cause a dispute during attorney review.
• Example: The buyer assumes the kitchen appliances are included in the sale but the seller is taking them to their new home. The attorneys will need to clarify if they are included in the deal.

Financing Issues

• What happens: The buyer may have trouble getting financing especially if there’s an issue with their mortgage approval.
• Why it’s a problem: If the buyer can’t get the loan to buy the property the sale may die. This can cause the buyer to ask for more time to get financing or the seller to find another buyer.
• Example: A buyer’s loan is delayed because the bank needs more documentation and they request an extension on the closing date.

Personal Property Disputes

• What happens: The buyer and seller may not agree on what personal property is included in the sale like furniture, outdoor equipment or custom window treatments.
• Why it’s a problem: This can cause friction if both sides have different expectations.
• Example: The buyer expects the seller to leave behind a custom built shed in the backyard but the seller is taking it with them.

Unclear Deadlines

• What happens: Sometimes the deadlines in the contract (for things like inspection, mortgage approval or closing) aren’t clear or realistic. One side may ask for more time to meet a deadline.
• Why it’s a problem: This can cause stress or delay if one side wants to move faster than the other.
• Example: The buyer’s financing is taking longer than expected so they request a new deadline for mortgage approval.

Can the Contract Be Cancelled During Attorney Review?

Yes, suppose the parties cannot agree to the terms of the contract or address any other issues during this period. In that case, the parties can terminate the contract at no cost to either party. The parties may not cancel the contract based on the agreed purchase price.  

Once Attorney Review is Closed, Are There Any Other Ways to Cancel a Contract?

From the buyer's side, the contract can be canceled if they are willing to forfeit their escrow money. Sellers cannot generally terminate the contract once attorney review is cleared unless there are other contingencies built into the contract that allow for cancellation.

Conclusion

In conclusion, navigating the attorney review period is a vital step in ensuring that your real estate transaction is secure and that your interests are fully protected. Understanding the nuances of this process, from modifying contract terms to addressing property inspection issues, can be complex. That's why it's essential to have an experienced real estate attorney on your side. At O'Flaherty Law, our attorneys are here to guide you through every aspect of your real estate transaction, ensuring a smooth and successful outcome. Contact us today to discuss how we can help safeguard your investment.