What to Know About New Construction Contracts in Illinois

Buying a house is likely the biggest purchase you will make in your lifetime, next to purchasing a business or company. Depending on your wish list and budget, you may consider an older home or new construction. Besides being brand-new, one of the benefits of new construction is getting to pick out all the appliances, tile, flooring, fixtures, and more. However, it is also important to understand the legal details of your construction contract to make sure your rights are protected and you are not taken advantage of as a new homeowner. An experienced real estate attorney can guide you through this major endeavor so you can build the house of your dreams.

Reading the Fine Print

New residential construction contracts are legal documents that typically have been prepared by the builder. They will include many details of the agreement between the builder and the buyer, such as tax information, blueprints and specifications, warranties covering materials and workmanship, zoning ordinances, closing date, and more.

Giving a builder earnest money can be risky. If the builder files bankruptcy, disappears, or closes the business altogether, that money is most likely gone. Therefore, it is recommended that any earnest money is minimal. It is best to deposit the money with a third-party escrowee.

Before signing a contract for your new construction home, it is imperative that you read through the fine print. Here are a few helpful tips to protect yourself:

  • Do not agree to price escalators if the builder fails to start or complete the structure within a designated time period
  • Do not agree to pay a penalty for failing to close
  • Do not agree to release the builder from liability for their negligence
  • Do not sign a contract that does not have mutual remedies if a party defaults

It is also critical that you do some research before hiring a contractor. Talk to friends or family members who have had new houses constructed before. The majority of home builders are honest and reputable, but there can be some who are not as trustworthy. Time spent investigating can prove invaluable, and a knowledgeable real estate attorney can help you with this important step.

Contact a Wheaton, IL Real Estate Lawyer

Buying new construction can be exciting and nerve-wracking at the same time, since you want to ensure your rights are protected during the process. At Stock, Carlson & Duff, LLC, we understand the complex nature of real estate law, including new construction contracts. Our skilled DuPage County real estates attorneys represent buyers and sellers at closings in both residential and commercial real estate transactions. We have successfully resolved disputes involving boundary lines, encroachments, easement, and survey issues. Call us today at 630-665-2500 to schedule a confidential consultation.

Source:
https://www.newhomesource.com/learn/understanding-your-new-home-sales-contract/

What Are the Most Common Types of Commercial Construction Contracts?

Illinois commercial real estate lawyer, IL real estate attorney, A commercial real estate development project will often represent a lucrative business opportunity for all parties involved. However, significant construction may be needed before a developer can realize the full potential of a property. Whether a new building will need to be built, an existing building will need to be refurbished, or other types of construction will be needed to ensure that a property will be able to serve its purpose, these construction projects can represent a major investment of time and money. To ensure that work will be completed properly, a construction contract will be needed, and the right type of contract should be selected based on the work being done.

Four Types of Construction Contracts

When parties sign a contract, they are making a legal agreement, and they will both be required to meet their contractual obligations. A contract should fully outline the scope of the work being performed and the responsibilities of each party. It should state the price of the project and how this amount may change if unforeseen circumstances occur, and it should detail a payment schedule and the penalties for late payments. Any relevant documents, such as blueprints and specifications, should be included in a contract.

Depending on the needs of the project, a contract will typically fall into one of the following categories:

  • Lump-sum/fixed price – A contract may specify the total amount that will be paid to a contractor for all of the work performed during a construction project. This amount is usually based on the contractor’s estimate of the costs of work performed, along with a markup that will allow them to earn a profit. Since these contracts are not very flexible, they are usually used in projects that involve easily-defined work with a set schedule and little chance of changes.
  • Time and materials – In this type of contract, a builder will be paid on a regular basis (usually daily or weekly) for the costs of materials and labor. These contracts are more flexible, and they are usually used in situations where the full scope of a project has not yet been defined.
  • Cost-plus – A contract may specify that a builder will be paid based on the actual costs of completing a project. The builder will be reimbursed for expenses such as materials and labor, and they will also receive an additional amount, which may be a fixed fee or a percentage of the total costs. These contracts allow for flexibility while a project is ongoing, and they may protect the property owner’s interests by specifying a maximum price that will be paid.
  • Unit pricing – For smaller projects or those which require detailed accounting, a contract may specify the exact costs involved for all materials and tasks. These contracts can ensure that a property owner knows exactly how money is being spent, and they allow for easy adjustment to a project’s total price if changes are needed. However, unit pricing contracts can be time-consuming to create, since they are very detailed.

Contact Our DuPage County Commercial Real Estate Attorneys

At Stock, Carlson & Duff, LLC, our attorneys are highly experienced in construction contracts and other commercial real estate concerns. Whether you are a developer or a builder, we can help you draft a contract that will meet your needs, and we can work with you to resolve any contract disputes either inside or outside the courtroom. Contact our Wheaton construction contract lawyers today at 630-665-2500.

Sources:

https://www.thebalancesmb.com/common-types-of-construction-contracts-844483

https://www.stovallconstructioninc.com/news/types-commercial-construction-contracts/

What You Need to Know About Buying an REO Property in 2020

IL real estate attorney, Illinois real estate lawyer, If you are trying to find a new home at a good price, you might have family and friends mentioning that you try to find a foreclosure property. In theory, this is not a bad idea. A home that is for sale because the current owner defaulted on his or her mortgage could sell for far below market value. In the wake of COVID-19, however, foreclosures have all but stopped, thanks largely to a moratorium put in place on foreclosures on federally insured mortgages. Private lenders have mostly followed suit, which means that there are probably not many foreclosure properties available. The good news is that you may have another option for finding a good value: a real estate owned home, more commonly known as an REO property.

What Is an REO Property?

When a home is foreclosed on due to default on the mortgage, the lender (or current holder of the mortgage loan) will eventually seize the home and attempt to sell it. This sale usually takes place at a public auction. In most cases, a foreclosure auction does not give participants the opportunity to see the property or inspect the home ahead of time. This means that bidders are effectively making offers on a property about which they know very little. Additionally, the highest bidder is usually required to pay cash for the property at the time of the auction. Financing is uncommon at foreclosure auctions.

With all of this in mind, some foreclosure auctions do not result in the sale of the home. If the property does not sell, it still belongs to the bank or lender. At this point, the home is considered real estate owned or REO.

Buying an REO Home

Once a property becomes REO, the bank will usually start to take steps to sell the home. After all, the lender already lost money on the defaulted mortgage, so there is a vested interest in making some of that money back. An REO transaction is handled in much the same way as a standard real estate deal. The bank may enlist the help of a real estate agent to get the home listed on the “normal” listings. Prospective buyers can see the home and have it inspected. They can also make regular offers and arrange financing instead of having to frantically outbid other buyers at the auction.

Most REO properties are sold “as is,” which means that any repairs that need to be done will usually be the buyer’s responsibility. The selling lender is unlikely to arrange for the repairs or to drop the price to account for them. Therefore, it is advisable to include a contingency clause with your offer that gives the option of canceling the deal if the inspection reveals that the repair bill will be more than you can handle.

Why an REO Property Might Work Now

As the Chicago region and the rest of the country slowly starts to open back up again amidst concerns regarding COVID-19, the real estate market has suddenly flooded with people looking to buy a new home. In fact, the influx of prospective buyers has, by most accounts, tilted the market pretty substantially in favor of those with homes to sell. It can be tough to buy a home in a “seller’s market,” as prices are often higher, and sellers are less willing to include extra considerations in the deal compared to sale in a “buyer’s market.”

While there are significantly fewer foreclosures in process right now, a seller’s market gives lenders the incentive to get their REO properties listed and up for sale. REO properties are still typically priced on the lower end of the price range for comparable listings, so you might be able to find a great deal even in a seller’s market.

Call a Wheaton Real Estate Lawyer for Guidance

As things start to get back to some semblance of normal in the wake of COVID-19, lenders will be seeking to move REO homes as quickly as they can. While deals are out there, the process of buying an REO property can be complex. Contact an experienced DuPage County residential real estate attorney to get the help you need. Call 630-665-2500 for a confidential consultation at Stock, Carlson & Duff LLC today.

 

Sources:

https://www.investopedia.com/terms/r/realestateowned.asp

https://www.forbes.com/sites/forbesrealestatecouncil/2020/09/21/a-newfound-reality-buyers-currently-outnumber-sellers-in-housing-market/

https://www.washingtonpost.com/business/2020/09/10/home-prices-reach-record-high/