3.3 Purchase Contracts
Key Takeaways
- Most Illinois resales use the Multi-Board Residential Real Estate Contract, which contains a built-in attorney-review and inspection rider
- The customary attorney-review period is 5 business days from acceptance unless the contract states otherwise
- A valid contract needs competent parties, mutual assent, consideration, legal purpose, and a written/signed description of property and price (Statute of Frauds)
- Time-is-of-the-essence must be expressly stated; it is not implied in Illinois contracts
- If neither attorney disapproves or proposes changes within the period, the contract becomes binding
The Multi-Board Residential Contract
Most Illinois resale transactions use the Multi-Board Residential Real Estate Contract, a standardized form jointly maintained by several REALTOR® and bar associations. Its hallmark Illinois feature is a built-in attorney-review and inspection rider, which gives both sides a short window after acceptance to involve counsel and inspectors before the deal hardens.
Elements of a Valid Contract
Illinois follows general contract law plus the Statute of Frauds, which requires real-estate contracts to be in writing and signed to be enforceable.
| Element | What It Means |
|---|---|
| Competent parties | Legal age, sound mind, authority to contract |
| Mutual assent | Offer and acceptance — a true "meeting of the minds" |
| Consideration | The purchase price and the promise to convey |
| Legal purpose | A lawful transaction |
| In writing & signed | Statute of Frauds; identifies parties, property, and price |
An offer is not a contract until the seller accepts the exact terms; any change is a counteroffer that rejects the original offer and shifts the power to accept back to the other party.
Core Contract Provisions
| Provision | Typical Content |
|---|---|
| Parties | Full legal names of buyer(s) and seller(s) |
| Property | Common address plus legal description |
| Price & financing | Purchase price, loan type, down payment |
| Earnest money | Initial deposit, often increased after attorney review |
| Closing date | Target date for transfer of title |
| Possession | When the buyer takes possession |
| Contingencies | Attorney, inspection, financing, sale of buyer's home |
Attorney Review, Contingencies, and Time-Is-of-the-Essence
The Attorney-Review Period
Under the Multi-Board form, the customary attorney-modification and inspection window is 5 business days after the date of acceptance. During this window a party's attorney may approve, propose modifications, or disapprove.
| Action During Review | Result |
|---|---|
| Both attorneys approve / stay silent past the deadline | Contract becomes binding |
| One attorney proposes modifications | Parties negotiate the proposed changes |
| Parties cannot agree on proposed changes | Contract is voided, earnest money returned |
| Attorney disapproves the entire contract | Contract terminates |
A key trap: attorney review lets a lawyer modify or disapprove terms — it is not a license for a party to renegotiate price simply because they changed their mind. Modification proposals must be made in good faith.
Common Contingencies
| Contingency | Purpose | Typical Window |
|---|---|---|
| Mortgage / financing | Buyer secures a loan commitment | ~21-45 days |
| Inspection | Buyer inspects and requests repairs | 5-10 business days |
| Sale of buyer's property | Buyer must close on their current home | Often paired with a kick-out clause for the seller |
| Appraisal | Property must appraise at/above price | Tied to lender timeline |
A kick-out clause lets a seller who accepted a home-sale-contingent offer keep marketing the property; if a better offer arrives, the seller gives notice and the first buyer must remove their contingency within a stated period (often 72 hours) or release the contract.
Time Is of the Essence
In Illinois, time-is-of-the-essence is not implied — it must be expressly stated. When the clause is included, missing a deadline (such as the closing date) is a material breach. When it is absent, courts allow a reasonable time to perform. Knowing that this clause must be written in, not assumed, is a recurring exam point.
Earnest Money, Remedies, and Contract Lifecycle
Earnest Money
Earnest money is the buyer's good-faith deposit, signaling serious intent. In Illinois resales it is commonly 1-3% of the price, frequently structured as a small initial deposit at acceptance with an increase after the attorney-review and inspection period closes. The deposit is held by the listing/sponsoring broker or a title company in a special escrow account, never co-mingled with the broker's funds, and is credited to the buyer at closing.
| Earnest Money Fact | Detail |
|---|---|
| Typical amount | 1-3% of purchase price |
| Held by | Sponsoring broker or title company |
| At closing | Applied to the buyer's funds due |
| On buyer default | May be forfeited per contract terms |
| On disputed cancellation | Held until resolved; interpleader if needed |
Remedies for Breach
| Aggrieved Party | Common Remedies |
|---|---|
| Seller (buyer defaults) | Retain earnest money as liquidated damages; or sue for actual damages |
| Buyer (seller defaults) | Specific performance (force the sale, since each parcel is unique); or damages; or refund of earnest money |
| Either | Mutual rescission and return to pre-contract position |
Because real estate is considered unique, courts will order specific performance — compelling the seller to convey — a remedy not generally available for ordinary goods. This is a favorite exam distinction.
The Contract Timeline
- Offer — buyer submits the Multi-Board contract with earnest money.
- Acceptance — seller signs without changes (any change is a counteroffer).
- Attorney review / inspection — customary 5 business days to modify, disapprove, or approve; inspection issues raised here.
- Contingency period — financing, appraisal, and any sale-of-home contingencies cleared.
- Clear to close — title work, survey, and final walk-through completed.
- Closing — deed delivered, funds disbursed, possession transferred per the contract.
Worked scenario: A seller accepts an offer, then receives a higher offer two days later and tries to cancel. If the attorney-review period has passed with no disapproval and no time-is-of-the-essence escape, the contract is binding — the seller cannot simply walk for a better price, and the first buyer could seek specific performance. The lesson: acceptance plus an expired review period creates an enforceable contract, and "a better offer came in" is not a lawful basis to terminate.
Under a standard Multi-Board contract, the buyer's attorney proposes modifications during the review period and the seller refuses every change. What is the result?
A buyer wants assurance that the seller cannot keep shopping the property after accepting a home-sale-contingent offer, while the seller wants the freedom to take a better offer. Which provision addresses the seller's concern?