Page 25 - John Hundley 2010

Sharp Thinking

No. 40 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. December 2010

Flurry of Legal Developments Affects

Real Estate Industry As 2010 Ends

2010 is closing out with a flurry of legal activity affecting the real estate industry. This issue of Sharp
Thinking provides a run-down of the recent developments.

Home Inspectors May Limit Liability to Customers
Neither exculpatory clauses limiting liability nor liquidated-damages clauses limiting financial recovery
nor limitation clauses as to the time suit may be brought are void in Illinois home inspection contracts, a
panel of the Appellate Court ruled December 1.
In Zerjal v. Daech & Bauer Constr., Inc., __ Ill.App.3d __, 2010 WL 4913477 (5th Dist. 2010), the
court in Southern Illinois said that while exculpatory clauses are generally disfavored, they are
enforceable unless (1) enforcement would be against settled public policy or (2) something in the social
relationship of the parties militates against enforcement. The panel found neither exception to apply. It
further found that the limitation of damages to the cost of inspection was not unconscionable.
In addition the court held that where the parties in the contract expressly provided that suit had to be
brought within two years, that period was enforceable notwithstanding Illinois’ general rule that suits on
written contracts are not barred until 10 years after breach.
‘FSBO’ Operator Penalized For Violating Real Estate Licensing Law

A “for sale by owner” assistance company and an individual associated therewith have each been
penalized $7,500 for violation of the Real Estate License Act (225 ILCS 454).
Notwithstanding multiple disclaimers that the company was merely an advertising service and that the
individual was not a real estate broker, a panel in the Appellate Court’s Fourth District ruled November 30
that the state’s professional regulation department was correct in holding that the individual’s conduct in
fact violated the act.
However, the court reduced the $25,000 penalty imposed by the department on the individual to the
$7,500 imposed on the company by agreement, the court finding no basis for a larger fine against the
individual who fought the charges. Gruwell v. Ill. Dep’t of Fin. & Prof. Regulation, __ Ill.App.3d __, 2010
WL 4912920 (4th Dist. 2010).
Fraud Voids ‘As-Is’ Clause

Fraud in the formation of a real estate contract can void an “as is” clause in that contract, a panel in
the Appellate Court’s Second District ruled November 19.

Moreover, Napcor Corp. v. JP Morgan Chase Bank, __ Ill.App.3d __, 2010 WL 4874619 (2d Dist.
2010), holds that such a rule is applicable even in cases where the Residential Real Property Disclosure
Act (765 ILCS 77) does not apply, such as sales of commercial properties.

●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●●
Sharp Thinking is an occasional newsletter of The Sharp Law Firm, P.C. addressing developments in the law which may be of interest. Nothing contained in Sharp
Thinking shall be construed to create an attorney-client relation where none previously has existed, nor with respect to any particular matter. The perspectives herein
constitute educational material on general legal topics and are not legal advice applicable to any particular situation. To establish an attorney-client relation or to obtain legal
advice on your particular situation, contact a Sharp lawyer at the phone number or one of the addresses provided on page 2 of this newsletter.