By Gary S. Mueller, Three Rivers Association of REALTORS® Attorney
As I write this article, the Super Bowl hype has started; the Olympics are around the corner; the political world is still conflicted; and our industry is still, in my opinion, trying to gets its bearings straightened as we welcome the impending Spring season. The legislature made some changes last year that may be interesting to members. The 7.0 Committee is still meeting and pushing to try to get a final “product” out and presentable in time for the Spring season. Our Association manages to keep pushing forward.
Concerning the legislature, slightly over 200 new laws became effective January 1, 2018. There are very few of the new laws that directly impact our industry. You will pleased to learn (I am sure) that the legislature took time to prohibit the use of live elephants in circuses and other traveling exhibits, designate corn as the state grain, and declare August 4 as President Barack Obama Day.
Concerning the 7.0 committee---The Committee hopes to finalize a usable version of the contract in anticipation of the Spring season. Though the Committee has pushed to the end any consideration of revisions to the financing contingency or the inspection contingency, the other paragraphs are currently being reviewed at a snail’s pace. Questions have been forwarded to my office in anticipation of Committee meetings. I welcome receipt of continued suggestions so that “your voice” can be heard and your thoughts/input considered. One agent voiced concern over the way exemptions are handled. Currently, the 6.1 contract indicates that the Seller is responsible to secure any exemption he/she/they are entitled to for any tax years that a credit is extended. Thus, if Seller current receives exemptions for homestead, senior, and senior freeze, the Seller, if basing any proration at closing on any or all of these exemptions, will need to complete any documentation required to secure the exemption for the upcoming year and taxes. If the Seller cannot or will not complete the appropriate paperwork, the buyer should be given a tax proration, at closing, that does NOT include any exemption for which the Seller refuses or cannot fill out the appropriate paperwork.
Additionally, there are a number of questions about inspections and the timing of inspections. Some suggest going back to a provision that was in the Three Rivers Association Residential Contract that specified that any repairs that did not exceed $500 would be considered minor repairs and, therefore, not subject to the inspection contingency; the seller need not address repairs that fail to exceed $500 in cost. Some asked for more time for the buyer to contract an inspection company and to complete the inspection.
Further, concerning refunds to real estate property taxes (akin to the rebate/refund extended by the Channahon School District to the property owners rather than to the person or persons who paid the bill from which the refund is calculated), some suggested that a new paragraph be inserted to address this situation. It was pointed out that the Channahon example is or may become more common. Joliet Junior College has discussed a similar refund process. Some municipalities (New Lenox, for example) provide a refund of the municipal portion of the real estate property taxes to property owners---not necessarily to the party who paid the prior year’s tax bill. In the case of Channahon, the refunds reached four figures (a thousand dollars or more). The New Lenox refund, though a few hundred dollars, does not typically reach four digits for residential property owners. It is likely that any refunds or rebates from and through Joliet Junior College would not exceed four figures for residential property owners. In any case, these refunds become problematic for newly acquired property owners. At closing, prior owner provided a proration of taxes to the buyer based on the most recent ascertainable bill. Thus, at closing, seller paid the prior year’s taxes. The refunds are being paid to the new owners based on the prior year(s) taxes----that the seller actually paid. Herein lies the problem. So…..what was considered a relatively “new” and potentially too unique situation for the Committee (does the revision happen more than 10% of the time) may become something that warrants further discussion and consideration.
As a reminder, the Will County Bar Association Real Estate Committee has recommended to the Will County Bar Association that the Three Rives Association of REALTORS ® Residential Contract no longer be approved as a contract for use in this area. I will keep you informed when I hear the final determination of the Bar Association.
These are just some of the goings on and happenings in our industry. Keep working hard. Keep pushing.
I have been giving presentations to offices concerning the 7.0 Contract. I am more than willing to come to your office as well. Please feel free to contact our office at 815) 725-7300 to set up a time for me to come to your office. Until then, take care. I hope all enjoy a very joy-filled Valentine’s Day.