When you purchase real estate in Illinois, you will negotiate with the seller and come to an agreement. Once you both agree on the terms in principle, you will sign a real estate contract. Once both parties sign the contract, the real estate attorney is brought into the transaction (if not already done). This time period is known as the attorney review period, and time becomes of the essence regarding the transaction.
One common misconception is that once the real estate contract is signed, every detail in the contract is final and can’t be changed. Unlike other contracts, you can amend a real estate contract after it has been signed. Although we ask our clients to let us know before a contract is signed, the fact is, once you sign a real estate contract an attorney has five business days for a “review period” and to propose modifications.
The purpose of the attorney review period is to allow the buyer’s and seller’s attorneys to review the contract and propose modifications. During the review period, the attorney reviews the contract, makes sure all the appropriate signatures and initials are in the proper places, that there are no unclear terms, no missing clauses, or potential risks, and verifies the contract states what was intended. Either party can request changes, and if we cannot agree on the changes, the contract can ultimately be canceled by either party.
During this period, the buyer has the option to get an inspection on the property. Once the inspection report comes back, our office will review the report with our client. The buyers will use the inspection report to ask the seller to fix any items related to the property. It is standard practice to ask for non-cosmetic items, but you are still negotiating. If you are unable to get an inspector out within the review period, we can ask for an extension. If you have something scheduled, asking for an extension should not be a problem.
Another thing to keep in mind about the attorney review period is what happens to the earnest money. When a buyer signs a real estate contract they will put “money down” to show the seller how serious they are about wanting to purchase the property, this is known as earnest money. If the contract is canceled during the attorney review period, the buyer will get their earnest money refunded. However, if the attorney review period passes and then the buyer wants to cancel the transaction, the seller has the right to keep the earnest money.
Both buyers and sellers must understand the attorney review period and its significance in a real estate transaction. Consulting with an attorney is highly recommended to ensure your rights and interests are protected. It is best to get the contract to our office as soon as possible because missing deadlines could cost you money.