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What Is Attorney Review in Real Estate?

What Is Attorney Review in Real Estate?

What is attorney review in real estate 1

In Illinois, attorney review is a 5-business day period that allows a property buyer’s or seller’s attorney to review and approve or disapprove a real estate contract. Sometimes, provisions will also allow the attorney to amend a real estate contract as well. When a person is buying a commercial or a residential property in Illinois, the real estate contract that he or she signs often contains an attorney review clause. 

Working with a real estate attorney when buying or selling a commercial or residential property can help a buyer or a seller protect his or her rights and interests. The buyer or the seller must understand what is contained in the attorney review clause to avoid getting bound by unfair contract conditions.

Understanding the Attorney Review Period in Real Estate Contracts 

A person purchasing real estate must sign a real estate contract presented by a realtor or a real estate agent. The seller must also sign the contract, setting the transaction in motion. The presence of an attorney review clause in the initial contract allows for its review and, in some cases, modification. The initial contract is a confirmation of the agreed-upon real estate price and the attorney review timeframe. 

What Is the Duration of the Attorney Review Period?

The attorney review period starts immediately after the buyer and seller sign the initial real estate contract. The period is usually five business days. 

What Happens During the Attorney Review Period?

During the attorney review period, the attorney of the buyer or the seller will decide whether to approve, reject, or initiate negotiations to change the contract. The review period allows an attorney to review the contract, ensuring that all necessary signatures and initials are well-placed. The attorney may declare the contract null and void if one of the parties opts to walk away from the deal.

It is common for an inspection provision to exist in real estate contracts as well, and many buyers take advantage of this time to have the property in question inspected.  

If the buyer fails to secure an inspector during the attorney review period, the attorney can ask for an extension. This extension buys more time for the buyer to obtain an inspection report, which is an instrumental part of purchasing a property. Provided the buyer has an inspection already scheduled, requesting an extension is generally an easy task.

Within the five-day attorney review period, the attorney will review the contract on behalf of the buyer or seller. Some contracts allow for revisions, while others only allow for approval or disapproval. In most cases, the purchase price and closing date are off-limits under attorney review.  

If the contract is not approved or can be revised, the buyer’s real estate attorney may propose changes to the contract to advance the buyer’s interest. For instance, the lawyer may recommend appraisal contingencies to enable price negotiations if the appraisal value of the property is lower than anticipated. The attorney may seek to add the right to terminate the contract without violating the terms of the contract if the lender removes an already assigned mortgage commitment. The attorney may also ask for a receipt of documents, including permits, warranties, back titles, and tenant leases. 

The seller’s attorney may seek to restrict the buyer’s inspection rights to specific functional defects rather than cosmetic items or systems in good working condition but have surpassed their useful life. The attorney may also modify the contract to give the seller the right – but not the duty – to perform repairs before the buyer’s right of cancellation. 

The other party can agree or disagree with the proposed modifications. The party may make counter-proposals or more proposals. Either party can abandon the transaction without incurring penalties if there is a lack of mutual agreement. The negotiations are deemed successful if both parties mutually accept the terms of the modified contract.

If neither party proposes changes within the five-day attorney review period, the initial contract terms will remain unchanged. Both parties will then be subject to the terms of the initial contract.

Involving an Attorney in a Real Estate Transaction

A person who wants to buy a home or learn more about how to sell a home in Illinois can ensure his or her rights are protected by having Chicago real estate attorneys review and modify the contract if necessary. 

Chicago real estate attorneys who are familiar with Illinois real estate laws can review the contract to ensure it addresses the possible issues that are likely to derail the transaction process. When involved in a real estate transaction from the onset, an attorney may prevent certain unanticipated or negative events from happening. 

A real estate attorney represents the best interests of the buyer or seller throughout the transaction. If a real estate dispute, including chain of title, lot line challenges, or other contract issues, arises, the attorney will investigate the issue and provide the client with suggested solutions or legal options. If the dispute escalates into a lawsuit, the attorney may also offer legal representation for the client.  

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