Buying or selling real estate depends on accurate information. When material facts are withheld, misstated, or obscured, the consequences can surface long after the deal closes. Undisclosed defects, inaccurate representations, or misleading disclosures can turn what should have been a straightforward transaction into a costly and contentious dispute.
Misrepresentation and disclosure disputes can involve significant money - the cost of repairs, diminished property value, or an entire transaction gone wrong. We help buyers, sellers, and real estate professionals throughout Chicago and surrounding counties resolve these disputes and protect their interests.
Illinois Real Property Disclosure Requirements
The Illinois Residential Real Property Disclosure Act (765 ILCS 77/) requires sellers of residential property to complete a disclosure form before a binding contract is signed. This form covers 23 specific questions about the property's condition, including structural integrity, water intrusion, HVAC systems, plumbing, electrical, and environmental hazards.
Sellers must disclose known material defects - they're not required to conduct an inspection or discover problems they're genuinely unaware of. But if a seller knows about a problem and fails to disclose it, or worse, actively conceals it, they can face serious legal consequences.
The disclosure requirement applies to most residential sales, including single-family homes, condos, and small multi-unit buildings up to four units. Some transactions are exempt, including court-ordered transfers, foreclosures, transfers between family members, and new construction that has never been occupied.
Types of Misrepresentation
Not all misrepresentation is the same. Illinois law recognizes different categories, and the type of misrepresentation affects what remedies are available:
Fraudulent Misrepresentation
Fraudulent misrepresentation occurs when a seller knowingly provides false information with the intent to deceive. This is the most serious category. Examples include lying about known foundation problems, concealing evidence of water damage, or denying knowledge of pest infestations that were previously treated. Fraud can result in compensatory damages, punitive damages, and in some cases, rescission of the sale.
Negligent Misrepresentation
Negligent misrepresentation happens when someone provides false information without verifying facts they had a duty to check. This often applies to real estate agents who pass along incorrect information about zoning, property boundaries, or permitted uses without confirming accuracy. The person didn't intend to deceive, but their carelessness caused harm.
Innocent Misrepresentation
Innocent misrepresentation involves false statements made without knowledge of their falsity and without negligence. While less serious than fraud or negligence, it can still provide grounds for rescinding a contract if the buyer relied on the false information in deciding to purchase.
What Sellers Must Disclose
Under the Illinois Residential Real Property Disclosure Act, sellers must disclose known issues in several categories:
- Structural problems - Foundation cracks, settling, roof damage, or other structural defects
- Water issues - Basement flooding, water intrusion, drainage problems, or moisture damage
- Systems and mechanical - Problems with plumbing, electrical, HVAC, or other major systems
- Environmental hazards - Lead-based paint, asbestos, radon, mold, or underground storage tanks
- Pest infestations - Termites, carpenter ants, or other wood-destroying insects
- Property disputes - Boundary line disputes, encroachments, or zoning violations
- Material defects - Any other known condition that would materially affect the property's value or safety
Important note: While the standard disclosure form doesn't require sellers to disclose issues that have been fully repaired, questions asked during attorney review require direct answers. If a buyer's attorney asks "Has the property ever experienced water intrusion?" the seller cannot answer "no" simply because the problem was fixed - they must disclose the history and explain the repair.
Common Disclosure Disputes We Handle
Disclosure disputes arise in many forms. We regularly help clients with:
- Undisclosed defects discovered after closing - Water damage, foundation problems, mold, or other issues the seller knew about but didn't reveal
- Incomplete or misleading disclosure forms - Answers that technically weren't false but omitted critical information
- Active concealment - Evidence that a seller took steps to hide defects, such as painting over water stains or covering cracks
- Agent misrepresentation - False statements by real estate agents about property condition, zoning, or permitted uses
- Disclosure timing issues - Disclosure forms provided after a contract was signed or amended without proper notice
- Defense against disclosure claims - Helping sellers respond to allegations of non-disclosure, particularly when defects were genuinely unknown
Legal Consequences of Disclosure Violations
Failing to comply with Illinois disclosure requirements can result in significant legal liability:
Financial Damages
Buyers who discover undisclosed defects can pursue compensation for repair costs, diminished property value, and related expenses. If the misrepresentation was fraudulent, punitive damages may also be available.
Rescission of the Sale
In severe cases, a court may allow the buyer to rescind the sale entirely - effectively undoing the transaction and requiring the seller to return the purchase price. This remedy is typically available when defects are so significant that the buyer would not have purchased the property had they known the truth.
Attorney Fees and Costs
If a buyer successfully proves fraud or misrepresentation, the seller may be required to pay the buyer's attorney fees and court costs in addition to damages.
Agent Liability
Real estate agents who know about material defects and fail to disclose them - or who make false statements about a property - can face personal liability. Agents have an independent duty to disclose known material facts to buyers, regardless of what the seller tells them to say.
How We Help
Our approach depends on which side of the dispute you're on and what outcome you're trying to achieve:
For Buyers
If you've discovered undisclosed defects after closing, we help you document the issues, gather evidence of what the seller knew and when, and pursue appropriate remedies - whether that's compensation for repairs, a reduction in the purchase price, or in serious cases, rescission of the sale.
For Sellers
If you're facing accusations of non-disclosure, we help you understand the claims, evaluate whether the alleged defects were actually known to you, and build a defense. Not every post-closing complaint is valid - sometimes buyers discover problems that genuinely weren't known to the seller or weren't required to be disclosed.
For Real Estate Professionals
If you're a real estate agent or broker facing misrepresentation claims, we help you respond to allegations and protect your license and reputation. We also help agents understand their disclosure obligations to avoid problems in future transactions.
Common Questions About Disclosure Disputes
Can I sue the seller after closing for undisclosed defects?
Yes. If you discover defects after closing that the seller knew about but failed to disclose, you may have grounds for a lawsuit. You'll need to show that the seller had actual knowledge of the defect, that it should have been disclosed, and that you suffered financial harm as a result. The statute of limitations for fraud claims in Illinois is generally five years, but you should act promptly to preserve evidence and your legal options. For a detailed breakdown of what the law requires, read our blog post on whether a buyer can sue a seller after closing in Illinois.
What if the seller says they didn't know about the problem?
Sellers are only required to disclose defects they actually knew about. However, circumstantial evidence can establish knowledge - for example, repair invoices, insurance claims, permits for related work, or testimony from neighbors or contractors. If a defect was so obvious that the seller must have known about it, courts may infer knowledge even without direct proof.
Does a home inspection protect the seller from disclosure claims?
Not necessarily. While buyers are expected to conduct reasonable inspections, a seller cannot hide behind an inspection to escape liability for known defects they failed to disclose. If the seller knew about a problem that the inspection didn't catch - particularly if they took steps to conceal it - they can still be held liable.
What if the problem was repaired before the sale?
The standard Illinois disclosure form doesn't require disclosure of issues that have been fully repaired if the seller believes no further remediation is needed. However, specific questions asked during attorney review must be answered directly. If asked "Has the property ever had water in the basement?" the answer must be truthful even if the problem was fixed years ago.
Can a real estate agent be held liable for the seller's misrepresentation?
Yes, in certain circumstances. If an agent knew about a material defect and failed to disclose it, or if the agent made false statements about the property (even based on information from the seller), the agent can face personal liability. Agents have an independent duty to disclose known material facts that could affect a buyer's decision.
Dealing with a Disclosure Dispute?
Whether you're a buyer who discovered undisclosed defects, a seller facing non-disclosure allegations, or a real estate professional dealing with a misrepresentation claim, we can help you understand your options and protect your interests.
Schedule a Free ConsultationWhat to Expect During Your Consultation
During your free consultation, we'll discuss your situation, review your options, and give you a clear picture of what makes sense going forward. You'll leave the call with a better understanding of your legal position and the steps you can take to resolve the dispute.