Do I have to hire an attorney for my closing?
Although Illinois does not require that an attorney conduct your closing, almost every Buyer hires a closing attorney. Since the cost of title insurance does not increase when an attorney represents you at a closing, most Buyers hire one. While title insurance companies are generally reliable and efficient, their services are limited to conducting the closing. Their employees cannot draft, review or interpret your Contract. Your attorney will negotiate the terms of your Contract, especially if there are inspection items, and provide vital guidance to you throughout the whole process.
What closing costs am I required to pay at closing?
In Illinois, the Buyer usually pays the following costs at closing:
1) Title Insurance related Costs. These include the cost of the lender’s insurance policy and the closing fee. If it’s a cash deal, the closing fee is split evenly among the Buyer and Seller.
2) Transfer Tax: When a title changes hands from one owner to another, a transfer tax will be imposed locally (by state, city and county). The responsibility of paying these fees (state and county) many times are paid by the Seller. For many cities and local municipalities (counties) there are local transfer charges which vary by amount and are applied to either Buyer or Seller. Therefore, most of these costs the Seller will pay, but you may pay a portion of the costs as well. The amount depends on where the property is located and on the purchase price. For example, a home located in Chicago, Illinois, and county of Cook, with a purchase price of $200,000, the Seller will pay for the state transfer tax (about $200), county transfer tax (about $100) and a portion of the City transfer tax (about $600). You, the Buyer, will pay the other portion of the city transfer tax of about $1,500.
3) Home Inspections: The average cost is $300 to $600. This is optional, but usually highly recommended for residential homes so that you are aware of any hidden defects or upcoming repairs that the home needs.
4) Recording Fee. The cost to record Deeds and Mortgages in the Recorder’s Office ranges from $50 to $150. In Cook County, the cost of the first two pages is $40.00 and $2.00 for each additional page. Most Deeds are less than 2 pages and most mortgages are16 to 30 pages.
5) Costs Associated with Mortgage Financing. If you are financing your purchase, your lender will provide you with a Good Faith Estimate of Closing Costs. The Good Faith Estimate will include the above described costs as well as the Lender's costs.
6) Attorney Fees. If a Buyer hires his or her own attorney to review the closing documents, this charge will generally appear on the closing statement. For residential properties, this is usually a flat fee amount and usually varies anywhere from $500 to $700.
7) Other Fees: Of course there may be other fees associated with buying your property, such as a condominium association fee for moving in or to transfer ownership, etc. Your closing attorney should explain these fees to you in detail prior to or at closing.
Must I be present for my closing?
If it’s a cash deal (no lender financing), then most likely you may not have to attend closing. Your attorney can prepare a Power of Attorney document, and can act on your behalf. If you are purchasing the property by getting financing though a lender, then you must check with your lender to make sure a Power of Attorney will be acceptable. Most of the times, though, the lender would prefer that you attend the actual closing.
What types of claims would a Title Insurance Policy protect against?
There are many claims covered under a typical Title Insurance Policy. A few are listed below:
a. False impersonation of a Seller or other persons previously in title;
c. Improperly executed Deeds;
d. Deeds executed without a required spouse's signature;
f. Undisclosed heirs or descendants of former owners of your property;
g. Survey matters; and
h. Liens appearing after closing but prior to recording of instruments.
I need to bring $50,000.00 to my closing. What forms of payment are generally acceptable in Illinois?
By Illinois law, any amount $50,000 or more must be wire transferred to the title company before the closing. Any amount below $50,000, Buyer may submit funds by a cashier's check. You may request more instructions from the individual title company handling your matter.
What costs can I expect to pay at closing?
In Illinois, the Seller generally pays the following fees:
a. Transfer Tax: When a title changes hands from one owner to another, a transfer tax will be imposed locally (by state, city and county). The responsibility of paying these fees (state and county) many times are paid by the Seller. For cities and local municipalities (counties), there are local transfer charges which vary by amount and are applied to either Buyer or Seller. Therefore, most of these costs you will pay, but the Buyer may pay a portion of the costs. The amount depends on where the property is located and on the purchase price. For example, a home located in Chicago, Illinois, and county of Cook, with a purchase price of $200,000, the you, the Seller, will pay for the state transfer tax (about $200), county transfer tax (about $100) and a portion of the City transfer tax (about $600). The Buyer will pay the other portion of the city transfer tax of about $1,500.
b. Survey. A Seller is generally required to purchase a current survey prior to closing for all properties other than condominiums. If the property is in a flood zone, a flood certificate will also be required. The price of a survey varies depending on the size and location of the property. The cost of a typical residential survey ranges from $400 to $800.
c. Title Insurance Related Costs. These include the fees to search and examine the title to the property, the cost of the owner’s insurance policy. If it’s a cash deal, the closing fee which is usually paid by the Buyer is split evenly among the Buyer and Seller.
d. Any Costs Associated with Clearing Title Defects. These costs may include obtaining and recording documents such as Affidavits, Satisfactions or Releases.
e. Attorney Fees. If the Seller hires his or her own attorney to review the closing documents, this charge will generally appear on the closing statement. For residential properties, this is usually a flat fee amount and usually ranges anywhere from $500 to $700.
f. Other Fees: Of course there may be other fees associated with selling your property, such as fees to obtain city zoning and water certificates, condominium association fees for preparing a Paid Assessment Letter or 22.1 Disclosures, a credit for past real estate property tax, real estate broker fees, etc. Your closing attorney should explain these fees to you in detail prior to or at closing.
What is a 1031 Exchange and under what circumstances may a Seller benefit from one?
A 1031 exchange is an option under the Internal Revenue Code that allows a Seller to use the proceeds from the sale of investment property for the purchase of replacement investment property. As long as the rules are strictly adhered to, the procedure allows a Seller to defer the payment of capital gains taxes.
The Buyer of my property has hired a home inspector and asked me to make numerous repairs to the property. Which repairs am I required to make?
The terms of your contract dictate which repairs are required. Your Contract also specifies a time frame in which you must respond to the Buyer's request. Generally, it’s best to speak with your real estate agent and attorney to help you review the list of items and see what repairs, if any, you should complete, provide the Buyer a closing credit to remedy these items, or simply refuse any requested repairs.
I am purchasing a condominium unit and my real estate agent told me that I have the right to review certain documents. What documents is she referring to?
In Illinois, the Buyer of a condominium unit from a non-developer has the right to review certain documents prior to closing if he or she makes a written request for copies from the Seller. A Buyer has the right to cancel the contract within three (3) business days of receipt if the documents are not acceptable to the Buyer. A Buyer may request more than three business days in the contract.
The documents to be provided are as follows:
a. Articles of Incorporation; b. Rules and Regulations; c. Bylaws; d. Amendments (if any); e. Declaration of Condominium; f. Most recent year-end financial statement; g. Financial Budget for current year and upcoming year; and h. 22.1 Disclosure Statement.
Any costs of obtaining these copies should be paid by the Seller. If you have not received the copies prior to closing, the closing may be extended for up to 3 days after receipt. A party buying a condominium owned by a developer has fifteen (15) days to cancel the contract instead of three (3). Any right to terminate the contract ends upon closing, even if you have not received the documents or even if you have received an incomplete set of documents.