January 2011

New Year, New Laws
Laws of interest to Illinois REALTORS® that take effect Jan. 1

By Julie Sullivan, Assistant Director, Legislative and Political Affairs

Ban on Private Transfer Fee Covenants - A top initiative of the Illinois Association of REALTORS® from the 2010 spring session, Public Act 96-1345 (SB 3747) declares private transfer fee covenants, which would require future buyers or sellers to pay a private transfer fee to whoever is designated in the covenant on all future transfers, to be invalid and against public policy. The legislation will continue to allow a form of transfer fee covenant currently used in some housing developments to fund the conservation of an environmentally sensitive parcel adjacent to several property owners who pay a fee for its maintenance.

Foreclosures/Short Sales Now Factor into Assessments - Some key provisions of another IAR initiative dealing with compulsory sales (defined as foreclosed and short sales properties) and their impact on the assessment process begins with the new year. Public Act 96-1083 (SB 3334) requires the Illinois Department of Revenue to include compulsory sales in its sales ratio studies for sales occurring on or after Jan. 1, 2011. Also, information compiled on the transfer declaration will include whether the transfer is pursuant to compulsory sale.

Title Company Closing Protection - As of Jan. 1 title companies will be required to provide buyers and sellers “closing protection” for the acts and omissions of their agents and they will be permitted to charge for these closing protection letters. At press time there was still ongoing debate as to how the Illinois Department of Financial and Professional Regulation will administer the program. Please log on to www.IARActionCenter.org for updated information.

Good Funds Law - Another title-related bill (House Bill 5677, P.A. 96-1457) changes Illinois’ “good funds” law regarding monies at closings. While the law establishes minimum state requirements it is possible for individual title companies to have more stringent company policies. The new law includes a change that was added to the bill at the suggestion of the IAR—a clarification that earnest money held by a real estate broker and brought to the transaction on behalf of a buyer will not have to meet the more stringent requirements (like the wiring of funds) unless the earnest money is $50,000 or more.

Spanish Language Predatory Lending Information - House Bill 5044 (P.A. 96-1166) requires the Illinois Department of Financial and Professional Regulation to create a version of its website for pages that contain information about predatory lending in Spanish.

Mortgage Loan Originator Licensing - An individual acting as a mortgage loan originator who is not employed by and acting for an entity described in the provisions concerning the definition for “registered mortgage loan originator” will be subject to the mortgage loan originator licensing requirements of the Residential Mortgage License Act of 1987. The legislation also makes changes concerning the definition of “exempt person or entity” and provides that proper signage must be included in the good business practices that each full service office must observe.

Solar Energy System Ban Restricted - Certain homeowners, property owners or condominium unit owners associations will be prohibited from adopting bylaws, deed restrictions or covenants that would ban the installation and use of a solar energy system. These associations must adopt an energy policy statement regarding the location, design and architectural requirements of solar energy systems within 120 days after it receives a request for a policy statement or an application from an association member. If approval is required for installation or use of a solar energy system, the application must be processed within 90 days after the submission of the application. If an application is submitted before the association has adopted an energy policy statement, the 90-day period does not begin to run until the date that the policy is adopted. The association is given the right to determine the specific location where a solar energy system can be installed on the roof provided it does not impair the effective operation of the system and the solar energy system would be required to meet applicable standards and requirements imposed by state and local permitting authorities. IMPORTANT NOTE: The new law does NOT apply to any building greater than 30 feet in height.

Lead Safety in Renovating/Remodeling - The United States Environmental Protection Agency (EPA) began its mandatory lead-safe certification process on April 22, 2010. While contractors and remodelers have the primary responsibility to comply with the new federal mandates, real estate professionals who are property managers may also face new compliance requirements. A new U.S. EPA pamphlet, “The Lead-Safe Certified Guide to Renovate Right” must be given to homeowners or tenants before work begins.

If you as a REALTOR® do any renovation, repair and painting work in properties that you manage you will need to be trained and certified in the new lead-paint safe work practices. If you hire an outside contractor that contractor must be trained and certified. Mandatory training and certification on lead-based paint work practices will be required for renovation, repair and painting activities in single and multi-family housing built before 1978, child care facilities and schools.

There are strict rules on equipment that can be used as well as new record keeping requirements and stiff fines are in place. If a property owner is conducting their own renovation, repair or painting activities they are exempt.

The Illinois Department of Public Health’s Lead Program licenses lead paint inspectors, lead risk assessors, lead abatement contractors, lead supervisors, and lead workers. The Lead Program also approves lead training courses for individuals. For more information, visit these links:

www.realtor.org/government_affairs/lead_paint_main
www.idph.state.il.us/envhealth/lead.htm
www.epa.gov/lead/pubs/renovaterightbrochure.pdf
www.epa.gov/lead/pubs/sbcomplianceguide.pdf

For more background on the many new laws of interest to Illinois REALTORS® and private property owners visit www.IARActioncenter.org.