The recently completed legislative session in Springfield was very eventful. For the busy Designated REALTOR®, review these three statutory changes for upcoming action items affecting your practice:

1.Amendment to the Illinois Residential Real Property Disclosure Act (the Act) – HB 2098 – effective immediately upon Governor’s signature

Definition of Seller gets a “new” limitation

This is correct. You are not seeing things. The recently revised Act that became effective in May 2022 is already being amended. Many of the definitions remained similar to the prior version, but in the cleanup, there was an unintended consequence involving the definition of “seller”. This definition is important because, with a few exceptions as defined in the Act, the seller must complete the disclosure report for residential sales transactions.

Seller is a defined term in the Act and means…” every person or entity who:

(1) is a beneficiary of an Illinois Land Trust; or

(2) has an interest, legal or equitable, in residential real property as:

(i) an owner.

(ii) a beneficiary of a trust.

(iii) a beneficiary pursuant to testate disposition (with a will), intestate succession (without a will), or a transfer on death instrument; or

(iv) a contract purchaser or lessee of a ground lease.

Including the unmodified “beneficiary of a trust” produced the unintended consequence of requiring many more folks to fall under the definition of seller if not otherwise excluded under the Section 15 exemptions.

The Section 15 exemptions remain the same. The amendment provides that the definition of seller now does not include a beneficiary who both (i) never occupied the residential real property AND (ii) never had management responsibility for it. (Emphasis added and, as a special note, this language did appear in the original act but did not get picked up in the revision.)

The bottom line here is if a seller is a beneficiary who does not fall under one of the exemptions and has never lived in the property and never had management responsibility for it; that beneficiary does not have a duty to complete a disclosure report. However, if the beneficiary is not otherwise exempt, and the beneficiary does live in the property, or doesn’t live there but does manage the property, i.e., as an absentee owner, that beneficiary will be a seller by definition and need to complete a disclosure report to the best of the beneficiary’s actual knowledge.

2.Illinois Radon Awareness Act (RAA) – HB 2217
Effective 01.01.2024

Amended Radon Awareness Act requiring disclosure to Tenants

First, kudos to our Illinois REALTORS®’ community for responding to a call for action to stop a more stringent stand-alone bill that would essentially give tenants the right to cancel a residential lease at any time during the lease period if a radon hazard is found.

The result of the concerted effort was a more sensible approach to tenant protection and disclosure within the existing RAA. The RAA has been amended making radon disclosure mandatory for most leases of dwelling units. (The current RAA only requires disclosure if there is an outstanding test result showing a hazard that has either not been remediated or retested showing no hazard).

Here is a list of the substantive changes to RAA, all dealing with residential lease situations (provisions related to residential sales remain the same):

• Additional Definitions
  • Dwelling unit
  • Lease
  • Lessor
  • Mobile home
  • Radon
  • Radon Contractor
  • Tenant
• Includes leases on the third floor or above as exclusions (no disclosure required)
• Adds new Section 26 (removes Section 25)
  • Outlines the disclosure process for lessors to prospective or existing tenants requiring lessors to provide.
  • (1) Illinois Emergency Management Agency pamphlet – Radon Guide for Tenants
  • (2) Copies of any records or reports that indicate a radon hazard, AND
  • (3) A disclosure report (language is included in subsection (f) of the RAA)
• A tenant gets 90 days to conduct a radon test in their unit.
  • Tenant shall provide results to lessor within 10 days.
  • If a hazard results from the test, tenant may terminate the lease if lessor does not mitigate using a radon contractor.
  • After 90 days, the tenant may conduct a test but may not terminate the lease.
  • If, during the 90 days, a radon hazard is indicated, lessor may hire a radon contractor to do another test.
    • If the test result is negative, this can be used as proof of no hazard for 2 years.
    • If the test does show a hazard, the lessor may elect to mitigate.
• There is no requirement or obligation for tenant or landlord to choose to test and/or to mitigate.
• If the lessor does not provide documents at the beginning of the lease, the tenant may conduct a test and if there is a hazard, the lessor may hire a radon contractor to mitigate or to perform another test.
  • If the lessor does not dispute the test result or mitigate within 60 days, the tenant may hire a radon contractor at tenant’s expense but must have the lessor’s express consent regarding the installation of the system, or the tenant may terminate the lease. (Only in situations where the lessor does not give all the documents and disclosures at the beginning of the lease).
• Subsection (f) contains the statutory language for the disclosure report.
• The new RAA will apply to leases entered on or after 01.01.2024.
• Home rule is preempted by this statute.

3.Illinois Real Estate License Act (RELA) – SB 1866, legislative pp. 53-110
Effective 01.01.2024

Omnibus Bill containing Real Estate License Act revisions

Most of the changes to RELA were non-substantive, like changing pronouns or the way to which something was referred.

• The cumulative time limit for a member of the Real Estate Administration and Disciplinary Board was changed from 10 to 12 years and terms remain four years long.
• RELA was amended in three ways to clarify a prohibition against locking a seller into an agreement to list their home for a very long time and a prohibition against filing a lien or anything purporting to be a lien against the property to assure payment of a residential commission or compensation. There are no property lien rights for commissions or compensation residential sales transactions in Illinois.
  • Section 1-10 definition of “brokerage agreement” inserts the clause “or the performance of future activities” into the existing definition:

“Brokerage agreement” means a written or oral agreement between a sponsoring broker and a consumer for licensed activities, or the performance of future licensed activities, to be provided to a consumer in return for compensation or the right to receive compensation from another….

• Section 10-25 is amended to say that a written brokerage agreement must either have a definite termination date, or in any event, if it is effective for longer than one year, the client must receive an annual right to terminate by giving no more than 30 days’ written notice.

No licensee shall obtain any written brokerage agreement that does not either provide for automatic expiration within a definite period of time, and if longer than one year, provide the client with a right to terminate the agreement annually be giving no more than 30 day’s prior written notice. Any written brokerage agreement not containing such a provision shall be void.

• Section 20-20(a) adds new subparagraph (47) which states that it is a violation of the Real Estate License Act to file liens or record written instruments for non-commercial, residential real property that relates to the broker’s compensation for licensed activity under the Act. Note that there have not ever been property lien rights for residential transactions.