What is a residential purchase agreement, and what needs to go in it?

When buying or selling a house in Illinois, you are required to complete a residential purchase agreement before you can complete.

Its purpose is to make sure all of the important factors in the transaction, such as purchase price and means of financing, are recorded. It’s designed to offer protection to everyone involved.

A purchase agreement is the result of negotiations between both parties as to the terms of the sale, and once signed by both buyer and seller, it’s a legally binding document.

Legally required information to be contained in the purchase agreement 

There is certain information that needs to go into the document. This includes:

  • A declaration by the seller of any material defects or unsafe conditions they are aware of on the property. For example,  issues with the foundation, plumbing, or roofing.
  • If the house was built before 1978 and has a history of lead-based paint exposure.
  • Disclosing any Radon gas exposure on the property.

Useful documents to attach

As a buyer, you should attach a mortgage pre-approval letter to the form. This letter is provided by the bank and states how much it is willing to lend you in accordance with your credit score and financial situation. This helps the seller to better understand your financial credibility.

A buyer can also offer an earnest money deposit to the seller. This is a percentage of the offer price, which is delivered as a show of good faith when the document is signed.

While Illinois does not require you to use a lawyer in preparing a residential purchase agreement, you are required to have an attorney review the final document before you sign it. This is because of the legal consequences that come with signing the document. Taking some legal advice early on in the process helps you make sure your legal rights are protected and that your best interests are met.