Tuesday, Aug. 16

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Higher than anticipated repair/renovation costs and tax increases can land property owners in hot water
New laws established to aid in making knowledgeable decisions      
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[AUG. 16, 2005]  CHICAGO – Governor Rod R. Blagojevich today signed into law three bills that will help homebuyers and homeowners obtain access to accurate and important information about their properties, including the status of tax payments and tax exemptions. The Governor also signed legislation that will help simplify home repair contracts.

The Governor signed into law House Bill 1428, which requires lenders to notify homebuyers of accurate and timely property tax payment from the buyer’s escrow account; House Bill 2462, which requires property tax exemption information to be included on the seller’s transfer declaration; and House Bill 2594, which requires home repair contracts to increase consumer awareness of contract clauses that waive the homeowner’s right to trial by jury for repair disputes.

“When you purchase or renovate a home, you need to know what to expect and you deserve access to the information that will help you make good decisions,” said Gov. Blagojevich. “These laws will give people the information they need to make educated decisions about their property taxes, and protect their rights when it comes to home repairs.”

“Protecting homebuyers and homeowners improves family and neighborhood stability. I commend Governor Blagojevich for signing into law additional protections for homebuyers and homeowners,” said Kevin Jackson, Executive Director, Chicago Rehab Network. “Too many people have been surprised by higher than anticipated property taxes, faced with property tax late fees they had no reason to expect, or left with no options for recourse by home repair contracts they did not fully understand.”

HB 1428 will allow homeowners to know if their lender paid their property taxes in a timely manner. It requires all mortgage lenders to notify a homeowner of payment dates and amounts as well as property identification information used to pay property taxes out of a homeowner’s escrow account within 45 days of the payment. To secure the mortgage, lenders often require the buyer to pay into an escrow account from which the lender pays the property taxes. Prior to this legislation, homeowners had no way to know if their lender paid property taxes on time, nor did they have access to documentation that would allow them to dispute late fee charges assessed for delinquent property tax payments.

Sponsored by Rep. Karen Yarbrough (D-Broadview) and Sen. Iris Martinez (D-Chicago), HB 1428 provides documentation to ensure homeowners know their property taxes have been paid and that prove their taxes have been paid accurately and on time. HB 1428 is effective January 1, 2006.

“A homeowner who has in good conscience paid into an escrow account and trusted a lender to follow through on their portion of the mortgage agreement should never receive a phone call and hear ‘I am buying your house because you have not paid the property taxes’ nor should that homeowner ever receive a notice in the mail that says pay your property taxes and these late fees or your home will be sold,” said Sen. Iris Martinez. “HB 1428 will provide homeowners peace of mind because they will know if their property taxes were paid in a timely manner and they will be able to verify property tax payment if they are inaccurately charged late fees.”

“Whether you are a first time buyer or on your third mortgage, banks should inform borrowers on how they spend their money,” said Rep. Yarbrough. “Under this consumer friendly bill, banks will be required to notify the borrower how much was paid, when the payment was made and what specific installment of taxes were paid on their mortgage.”

HB 2462 helps homebuyers be aware of property tax exemptions received by the previous owner. The legislation requires the sellers of a home to detail that information, received on their most recent property tax bills. Declaration of these exemptions will help homebuyers determine more accurately what property taxes they will be required to pay when they purchase the home.

This bill, sponsored by Rep. Susana Mendoza (D-Chicago) and Sen. Rickey Hendon (D-Chicago), becomes effective immediately.

Illinois homestead exemptions that must be disclosed under the new law include:

• General Homestead Exemption – reduces the equalized assessed value (EAV) up to $5,000 for a primary place of residence.

• Senior Citizens Assessment Freeze Homestead Exemption – exempts qualifying seniors from paying increased property taxes caused by inflation by maintaining a constant EAV.

• Senior Citizens Homestead Exemption – reduces the EAV by $3000 for residences owned by persons 65 years of age or older.

• Alternative Homestead Exemption – limits annual EAV increases to 7% in certain areas of the state.

“Purchasing a home is an important decision that requires a deep economic commitment,” said Rep. Mendoza. “For some families, unexpected charges, such as higher property taxes, can cause serious economic difficulties. This bill will allow potential purchasers to know ahead of time whether the amount that the seller pays in property taxes includes homestead exemptions that the purchaser may or may not be eligible for, allowing them to better estimate their true costs.”

“Homebuyers can make better decision when they have all the information they need to understand the expenses of owning a home,” said Sen. Rickey Hendon. “By specifying homestead exemptions in the closing documents, homebuyers can reference the exemptions and more accurately determine the property taxes they will owe on their new home.”

HB 2594 will simplify home repair contracts by requiring proof that a homeowner accepts or rejects any section of a contract that requires binding arbitration or waives the homeowner’s right to trial by jury. Home repair contracts often contain sections that require a homeowner to waive the right to a trial by jury or to agree that any disputes between the homeowner and the home repair company to be settled through binding arbitration.

Sponsored by Rep. William Delgado (D-Chicago) and Sen. John Cullerton (D-Chicago), HB 2594 is effective January 1, 2006.

“Few things are more frustrating than paying for an inadequate service or product. Finding out you unknowingly signed away your right to legal recourse is one of those things,” said Sen. Cullerton. “I am pleased to see Governor Blagojevich sign this bill that will clarify home repair contracts and give consumers the information they need to make educated decisions.”

“The signing of this legislation is an important step forward in protecting consumers’ rights,” said Rep. Delgado. “Legal contracts can be very complicated and many times a consumer will sign them without truly having an understanding of what they will be bound to. By requiring that contractors inform clients of these provisions, we will be able to decrease the number of cases where consumers give up their legal rights without being aware of it.”
 

 

 

 

 

 

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