Illinois Real Estate Contracts: What's on the Exam

Contract law is heavily tested on the Illinois real estate exam. Illinois has specific disclosure requirements under the Residential Real Property Disclosure Act and the Radon Awareness Act that add state-specific layers to general contract law. Here's what to know.

Essential Elements of a Valid Real Estate Contract in Illinois

Offer — A specific, definite proposal to enter a contract on stated terms
Acceptance — Unconditional agreement to all terms of the offer
Consideration — Something of value exchanged (typically purchase price and earnest money)
Competent Parties — Both parties must be 18+ and mentally competent
Lawful Purpose — Contract cannot require illegal activity
In Writing — Required by Illinois's Statute of Frauds for real estate contracts

An oral agreement for the sale of real estate is unenforceable in Illinois.

Contract Types by Enforceability

Valid: All elements present; fully enforceable by both parties.

Void: No legal effect from inception. Example: contract for illegal purpose.

Voidable: Valid unless one party elects to void. Example: contract signed under duress or fraud.

Unenforceable: Cannot be enforced in court — typically an oral real estate contract.

The Real Estate Purchase Contract in Illinois

Illinois residential transactions typically use the Illinois Real Estate Purchase Agreement (often the attorney approval addendum is included, reflecting Illinois's strong attorney involvement in real estate transactions). Key provisions:

Identification of buyer and seller
Property address and legal description
Purchase price and earnest money amount
Financing terms and mortgage contingency
Closing date and possession date
Inspection contingency
Attorney review period (typically 5 business days — unique to Illinois)
Disclosure acknowledgment
Inclusions and exclusions

Illinois is an "attorney state." While attorneys are not legally required in Illinois, it is very common practice for both buyers and sellers to use attorneys. The attorney review/approval period is a standard contract feature in Illinois — especially in the Chicago area. This is tested on the Illinois exam.

Illinois Residential Real Property Disclosure Act

A major Illinois-specific topic. The Residential Real Property Disclosure Act requires sellers to: - Complete and deliver a Residential Real Property Disclosure Report to the buyer - Disclose known material defects and conditions affecting the property - Deliver the report before or at the time the buyer makes an offer

Buyer's rights after receiving the disclosure: - The buyer may rescind the contract within a specific period after receiving the disclosure (if it was not provided before signing) - If the seller knowingly provides false or incomplete information, the buyer may have grounds for damages

What must be disclosed: Structural defects, water/moisture problems, heating/cooling system issues, plumbing problems, electrical problems, environmental hazards, zoning violations, and other known conditions.

Radon Awareness Act

Illinois requires sellers to provide the Illinois Radon Awareness pamphlet to buyers of residential property. This is a statutory requirement unique to Illinois.

Radon is a naturally occurring radioactive gas found in soil — it is the second leading cause of lung cancer. Illinois requires this specific disclosure because of radon prevalence in parts of the state.

Earnest Money in Illinois

Deposited into the brokerage's trust account after the contract is accepted
Governed by Illinois trust account rules under 225 ILCS 454
If the deal closes: applied to purchase price or closing costs
If buyer defaults without valid contingency: seller may retain as liquidated damages
If seller defaults: buyer recovers earnest money and may sue for breach

Illinois Transfer Tax at Closing

At closing, Illinois transfer tax must be paid: - State: $0.50 per $500 of purchase price (seller typically pays) - Chicago: Approximately $5.25 per $500 (buyer and seller may negotiate allocation) - Other municipalities may have their own transfer taxes

Common Contingencies in Illinois

Mortgage contingency: Buyer may exit if unable to obtain financing Inspection contingency: Buyer may inspect and request repairs or credit Attorney approval period: Either party's attorney may review and approve (or disapprove) the contract within the specified period (typically 5 business days in Chicago area) Appraisal contingency: Buyer may renegotiate or exit if property appraises low

Breach of Contract Remedies

If buyer defaults: - Seller retains earnest money as liquidated damages - Seller may sue for specific performance or actual damages

If seller defaults: - Buyer may sue for specific performance (force the sale) - Buyer may sue for monetary damages - Buyer may rescind and recover earnest money

For Illinois contract practice questions and full mock exams, visit [CARealestate.com/states/illinois](https://carealestate.com/states/illinois).