Prorations are covered by Paragraph 9 of the Multi-Board Residential Real Estate Contract 7.0 (“Contract 7.0”). The Contract 7.0 language governs the real estate contract in the suburbs of Chicago, Illinois. The Contract 7.0 is a standard real estate contract used by buyers, sellers, real estate agents, and attorneys.
Paragraph 10 addresses the Attorney Review Period. It is standard for each party to have an real estate attorney review the residential real estate contract signed by the parties. A real estate attorney will examine the contract and listen to their client to determine what modifications are in the best interest of their client.
Pro-rations is a critical area that is addressed by buyers and seller’s real estate attorneys. For example, we have a transaction now in the South Suburbs of Cook County where the pro-ration was 110 percent. The standard tax-prorations range from 105 percent to 110 percent depending on the location of the property. In this instance, there is a dispute over the 110 percent tax-pro ration.
The seller’s attorney wants a 105 percent tax pro-ration and we disagree. In most cases, the Contract 7.0 language will prevail when there is no agreement on modifying the terms of the residential real estate contract. There are times where a residential real estate attorney will find it reasonable and necessary for pro-rations to change. One such reason, which often occurs in Kendall County and Grundy County is new construction neighborhoods are not fully assessed.
In this instance, buyers should be careful because the tax prorations on the standard real estate contract may be insufficient to protect their interests. For instance, in many cases, the re-assessment of a full-tax year will significantly increase the real estate tax bill. In this instance, the standard 105 percent or 110 percent tax pro-ration may be insufficient to protect the buyers from receiving a huge tax bill, which should have been accessed to the sellers.
Additionally, the nature of the tax benefits applicable to the property may have changed. For example, the homestead exemption may be inapplicable because a real estate investor purchased the property and never resided in the property. Hiring an effective and experienced real estate attorney is critical when purchasing residential real estate in the suburbs of Chicago, Illinois.
Skilled and Precise Real Estate Attorneys and Law Firm