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?
The contract is automatically binding on the original terms
The contract is voided and the earnest money is returned
The buyer must close anyway because they already signed
The attorney-review period restarts for another 5 days
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?
A time-is-of-the-essence clause
A financing contingency
A kick-out clause
An attorney-review extension
Sections you finish are checked off in the contents.