Material facts and property defects
Material facts and material defects: who must say what?
A known roof leak, a financing deadline and a seller’s negotiating limit can all matter to a transaction, but they do not follow the same disclosure rule. Start with the person who knows the information, the person who would receive it and the duty that connects them. Then check the condition, timing and any exception.
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The short answer
A material transaction fact is broader than a physical defect. Illinois licensees must disclose to their clients actually known material transaction facts, subject to the statutory confidentiality and other qualifications. A seller’s licensee must timely disclose to prospective-buyer customers actually known latent material adverse physical facts that a reasonably diligent inspection would not reveal. Separately, a covered seller completes the residential disclosure report using the Act’s actual-knowledge rules. As-is terms do not erase these distinct duties.
Reviewed October 27, 2026. The public PSI outline lists disclosure of material facts and defects in national VII.C. The entire Property Disclosures domain has seven of the 100 scored national broker questions, including property-condition, inspection, environmental and government topics. This page has no separate guaranteed quota. These are original teaching scenarios, not recalled exam questions, a property inspection or a decision about a private contract.
Follow the information from source to recipient
- Identify the relationship. A client is represented by this licensee; a customer is not represented by this licensee and may have a different agent. Do not assume that a person is everyone’s customer just because a form is missing or that a customer receives no protection. Name the seller, seller’s licensee, buyer, buyer’s licensee and actual recipient before applying the duty.
- Separate the three rules. Section 15-15 concerns duties to a licensee’s client, including actually known material transaction facts and the specified confidentiality and off-site qualifications. Section 15-25 requires honesty to customers and separately addresses the seller-licensee duty concerning actually known latent material adverse physical facts. The residential seller report is another obligation under another Act. Completing one form does not automatically perform every licensee duty.
- Use the correct meaning of material. A fact can affect a transaction without describing a broken component. The residential form’s material-defect definition concerns substantial adverse value effect or significant impairment of future occupants’ health or safety, unless the seller reasonably believes the condition has been corrected. An ordinary cosmetic preference is not automatically a material defect. The actual form questions must still be answered as written.
- Read the knowledge and visibility facts. An old stain does not establish its technical cause, current activity or severity. A report or admission can provide actual information, but do not invent an unrepaired current defect from an undated allegation. For the specific Section 15-25 physical-fact duty, the fact must actually be known, latent, material and adverse, and not discoverable by the customer’s reasonably diligent inspection. A patent condition does not cancel honesty or every other duty.
- Keep confidentiality within its definition. Section 1-10 excludes material information about the property’s physical condition from confidential information. Qualifying negotiating information is different. A seller’s instruction to keep a known hidden material physical problem secret does not turn it into protected bargaining information or authorise false advertising.
- Keep the seller report within its scope. The Act covers specified residential property and transfers, with particular Section 15 exemptions. Ownership through an entity, an investor’s lack of residence or the label trust is not a universal answer. A covered seller completes all report items and delivers the report before signing the contract. The broker does not substitute the broker’s knowledge for the seller’s certification.
- Apply actual knowledge without inventing a universal inspection exemption. Section 25 requires the seller to disclose actually known material defects and does not, under that Act, require a specific investigation or inquiry to complete the report. Its liability protections retain their conditions, including a reasonable belief in correction or specified professional/public information without knowledge of its error. That does not waive other legal or contract duties, licensee reasonable care or the consequences of known false information.
- Treat repairs and later information honestly. The form’s current-condition and reasonable-correction language is not a promise that an invoice erases a recurring problem. If, before closing and after delivery, a seller becomes aware of an error, inaccuracy or omission in a prior report or supplement, Section 30 requires a written supplement by an authorized delivery method. Keep the original and the correction; do not backdate or silently replace evidence.
- Separate information, repairs and guarantees. A disclosure is not a warranty, a technical diagnosis or a promise to repair. The statutory form permits as-is contracting and warns that seller unawareness does not guarantee the absence of a problem. Contract inspection rights, specialist evaluation, any repair agreement and statutory remedies each have their own conditions.
- Use the actual information exceptions. Section 15-20 protects a licensee from a cause of action for failure to disclose the specified occupant medical information, an act or occurrence without effect on the subject property’s physical condition, environment or structures, fact situations at other property, and off-site physical conditions without a substantial adverse effect on the subject property’s value. Keep those categories distinct. A physical consequence is not a no-effect occurrence, and falling outside one protection does not itself prove every element of another claim.
- Keep the two five-business-day questions separate. Section 40(a) addresses a qualifying material-defect initial report delivered, contrary to Section 20, after all parties signed; it gives the buyer the stated right within five business days after receipt. Section 40(b) sets three separate grounds concerning a material-defect supplement. Its repairable-defect branch asks whether the seller declines or fails to agree in writing to repair within five business days after delivery. That is not the same trigger or actor, and a promise to consider repairs is not the required written agreement.
- Do not merge supplied-information protections. For customer-supplied false information passed to a client, Section 15-15(d) uses knew or should have known. For client-supplied false information passed to a customer, Section 15-25 uses actual knowledge that it was false. These are scoped protections, not permission to invent information, guarantee a source’s accuracy or repeat a statement known to be wrong. The general client reasonable-care and customer honesty duties remain important.
| Facts supplied | Rule to identify | What to avoid |
|---|---|---|
| Actually known material transaction fact for this client | Section 15-15, with its qualifications | Assuming every fact must be broadcast to every party |
| Actually known hidden adverse physical fact, seller’s licensee to buyer customer | Section 15-25 and diligent-inspection condition | Treating customer status as an absence of duties |
| Covered seller’s residential report | Sections 20, 25 and 35 | A broker answering in place of the seller |
| Seller learns the earlier report is wrong before closing | Section 30 written supplement | Silently replacing or backdating the original |
| A visible broken window | Honesty and applicable report/contract duties | Saying patent means no rules apply |
| A condition the seller reasonably believes corrected | Actual form wording, knowledge and current evidence | Treating every old problem as permanently erased |
| As-is contract | Separate repair allocation and disclosure duties | Treating as-is as a warranty or concealment permission |
| Ordinary stain without established cause | Accurate observation and qualified evaluation | Guaranteeing a technical diagnosis or repair |
| Qualifying late initial material-defect report | Section 40(a): buyer’s five business days after receipt | Using an obsolete three-day rule or treating every late report as the same case |
| Repairable material defect in a supplement | Section 40(b)(iii): seller’s five-business-day written repair-agreement condition | Treating a verbal maybe or the initial-report clock as identical |
| Supplied false information | 15-15(d): knew or should; 15-25: actual knowledge, with the specified sources/recipients | Using one knowledge standard for both directions |
The distinctions that matter
| Distinction | How it works | What to notice |
|---|---|---|
| Material fact and material defect | Transaction information is broader than an adverse physical-condition definition. | A financing deadline is not a roof defect. |
| Seller report and licensee duty | The seller certifies the report; the licensee follows the applicable client and customer duties. | A completed report does not erase a licensee’s separate knowledge. |
| Actual information and an assumed diagnosis | A report, admission or observation differs from an unsupported technical conclusion. | A stain alone does not prove a failed roof. |
| Latent and patent | A hidden condition differs from one reasonably discoverable by inspection. | Visibility narrows one duty, not every honesty obligation. |
| Confidential negotiating information and material physical information | The statutory confidentiality definition does not include material property-condition information. | Do not turn a concealment instruction into confidentiality. |
| No specific seller investigation and no duties at all | The seller’s limited statutory investigation rule does not waive other law or contract duties. | A broker cannot borrow it as a blanket exemption. |
| Correction and concealment | A reasonable belief that a problem was corrected differs from knowing it has returned. | Read the new event and the earlier answer. |
| Disclosure and warranty | Information based on actual knowledge is different from an assurance that no defect exists. | Seller unawareness is not a guarantee. |
| As-is and no disclosure | Agreed condition or repair risk differs from permission to omit required facts. | Read the contract and the separate disclosure law. |
| Initial report and supplement | The original report’s timing and remedy differ from the conditions for a later supplement. | Do not apply one generic cancellation clock to both. |
| Receipt and dispatch | The Act makes report delivery effective upon receipt. | Proof of sending is not automatically proof of effective delivery. |
| Nonphysical occurrence and physical consequence | A no-physical-effect event differs from damage or contamination. | A reassuring label does not remove known physical facts. |
| Knew or should have known and actual knowledge | The two supplied-information protections have different recipients and standards. | Trace customer to client under 15-15(d), or client to customer under 15-25. |
Work through the facts
The hidden leak is expressly known and still active
The seller tells the listing licensee that recurring basement water entry remains unrepaired behind finished walls. The facts expressly establish a material adverse physical condition that a reasonably diligent buyer inspection would not reveal. The seller asks the licensee to advertise the basement as dry.
- The seller’s licensee actually knows the specified latent physical fact.
- The proposed advertisement would contradict the supplied knowledge.
Answer: Refuse the false statement and make the required timely customer disclosure. Involve the sponsoring broker and preserve the source and communication. The seller’s report remains a separate obligation.
A deadline can matter without a defect
A buyer’s licensee actually knows a material financing deadline for the client’s proposed purchase. No confidentiality or other statutory exclusion is supplied.
- The fact concerns the client’s transaction.
- It need not describe a damaged building component.
Answer: Apply the client material-transaction-fact duty. Do not require a latent roof or foundation problem before communicating it to this client.
A stain needs an accurate description
A licensee sees a ceiling stain. No test, qualified report or other facts establish whether the source is a roof leak, plumbing, an old repaired event or another cause.
- The stain is observed.
- Its cause and present activity have not been established.
Answer: Describe the actual observation without a guaranteed diagnosis and arrange appropriate qualified evaluation within the transaction. Do not invent certainty, actual knowledge of a particular hidden cause or a promise that everything is harmless.
Visible does not mean free to mislead
A buyer can plainly see a broken window. The seller’s licensee is asked to state that all windows are intact.
- The stated condition is patent.
- The proposed statement would still be false.
Answer: Do not give false information. A visibility condition in the specific latent-fact duty does not erase customer honesty, seller-report requirements or applicable contract duties.
A repair fails before closing
A covered seller reasonably believed a roof leak was corrected when completing the report. After delivery, but before closing, a new storm produces leakage and the seller becomes aware the earlier answer is inaccurate.
- The facts supply new awareness before closing.
- Section 30 addresses errors, inaccuracies and omissions in a report or supplement already delivered.
Answer: Provide the required written supplement through an authorized method. The supplement does not itself decide every repair or termination right; those conditions need a separate check.
As-is does not turn a known defect into a secret
A covered seller actually knows about a material foundation defect. The parties discuss an as-is contract, and the seller asks whether that eliminates the required report.
- The facts expressly supply a covered seller and actual knowledge.
- As-is concerns the agreed condition or repair allocation.
Answer: The as-is term does not eliminate the report duty or authorise false information. The parties may negotiate taking the property subject to disclosed defects and address any inspection or repair terms separately.
The broker and seller know different things
A covered seller’s report contains no disclosed sewer defect. The seller’s licensee independently has actual knowledge of a latent material adverse sewer condition that the buyer customer’s reasonably diligent inspection would not reveal.
- The seller’s report and the licensee’s knowledge are separate facts.
- The question expressly supplies every condition of the particular licensee physical-fact duty.
Answer: The licensee must address the required timely disclosure and inaccurate information rather than treating the seller’s form as a substitute for the licensee’s own duty. Do not complete or falsify the seller’s certification for the seller.
A no-physical-effect occurrence
A prior death at the subject home is expressly stipulated to have had no effect on the property’s physical condition, environment or structures. A prospective-buyer customer asks about it.
- Section 15-20 addresses failure to disclose the specified no-effect occurrence.
- The separate honesty duty still matters when communicating.
Answer: Do not invent a known physical defect or give a knowingly false answer. The stated protection is for failure to disclose under the identified provision; it is not an all-laws permission to misrepresent.
A late initial report is not the ordinary delivery rule
Assume a covered seller violates Section 20 by delivering the initial report only after all parties have signed. It discloses a qualifying material foundation defect, and the facts expressly satisfy Section 40(a). The buyer has received the report and conveyance has not occurred.
- The normal requirement was delivery before signing.
- The specified late-initial-report remedy is available within five business days after receipt, subject to the required termination notice.
Answer: The buyer may use the stated statutory route with return of the specified deposits, rather than assuming every report means automatic cancellation. Section 40(c) and Section 50 notice conditions still matter. The example does not calculate a private deadline or decide other contract remedies.
A repairable supplement needs the seller’s written agreement
A material-defect supplement concerns a defect repairable before closing. Assume neither prior-known-error ground nor the not-repairable ground applies. During the five-business-day period after delivery, the seller says only, “I may look into it,” and fails to agree in writing to repair. Conveyance has not occurred.
- The example isolates Section 40(b)(iii).
- Considering a repair is not agreeing in writing to repair.
Answer: The stated failure satisfies that repair-agreement ground for the buyer’s termination route. The actual written termination, recipient, delivery and other statutory or contract conditions still matter; the scenario does not say a supplement automatically terminates the contract.
Mistakes to avoid
- Every important transaction fact is a physical defect. Client material facts are broader than the property-condition definition.
- A customer must be unrepresented by every agent. Customer status is relative to this licensee.
- A hidden condition is automatically known. Knowledge, materiality, adversity and the actual inspection facts still matter.
- An old report always proves an unrepaired condition today. Read what the report and later evidence actually establish.
- A patent condition permits a false statement. Customer honesty remains a separate duty.
- Calling a material physical fact confidential permits concealment. The definition excludes material physical-condition information.
- The seller’s investigation rule excuses every broker obligation. It is scoped to the seller and that Act.
- An invoice guarantees a repair succeeded. A reasonable belief, recurrence and current evidence must be assessed.
- As-is erases the report. Covered sellers still have disclosure duties.
- The form is a warranty that nothing is wrong. Actual seller awareness is not a guarantee.
- Every new supplement automatically cancels a contract. Apply the separate statutory branches and contract rights.
- Sending a report always proves effective delivery. Section 50 makes report delivery effective upon receipt.
Check your understanding
These are original teaching questions, not recalled or predicted PSI questions. Answer first, then explain why the other choices fail.
1. Which distinction is accurate?
- Only a seller can know transaction facts
- A material transaction fact can be broader than a physical defect
- Every material fact must be a hidden broken component
- Materiality means the owner dislikes the paint
Show answer and explanation
Answer: B. A material transaction fact can be broader than a physical defect
A financing deadline or other actually known material transaction fact can concern the client’s decision without being a property defect. Apply the particular duty and its qualifications.
2. Which standard appears in the Illinois residential form’s material-defect definition?
- Only defects visible to a photographer
- Any difference in decorating preference
- Every event at every neighboring home
- Substantial adverse value effect or significant future-occupant health or safety impairment, unless reasonably believed corrected
Show answer and explanation
Answer: D. Substantial adverse value effect or significant future-occupant health or safety impairment, unless reasonably believed corrected
The form supplies the value, health and safety standard and reasonable-correction qualification. It does not turn every cosmetic preference into a material defect or waive the actual form questions.
3. The seller’s licensee actually knows a latent material adverse physical fact not discoverable by the prospective-buyer customer’s reasonably diligent inspection. What is required under Section 15-25?
- Guarantee the repair cost
- Wait until after conveyance
- Conceal it if the client asks
- Timely disclose it to that customer
Show answer and explanation
Answer: D. Timely disclose it to that customer
The facts expressly supply the actor, recipient, actual knowledge, physical condition, material adversity and diligent-inspection conditions. The client cannot authorise a contrary false statement or suppression of the required disclosure.
4. A prospective buyer has a separate buyer’s agent and is not represented by the seller’s licensee. Relative to the seller’s licensee, the buyer is which?
- The seller’s licensee’s employer
- Unprotected because another agent exists
- Automatically the seller’s client
- A customer
Show answer and explanation
Answer: D. A customer
Customer status is relative to the particular licensee. Having another agent does not erase the seller-licensee duties applicable to that customer.
5. Who completes and certifies the covered seller’s residential disclosure report based on the seller’s actual knowledge?
- The buyer’s appraiser instead of the seller
- The seller
- The county assessor
- The listing photographer
Show answer and explanation
Answer: B. The seller
The seller’s certification and statutory awareness are distinct from the licensee’s own knowledge and duties. The broker should not substitute invented answers or conceal a contradiction.
6. The seller’s licensee knows an obvious window is broken. Does its visibility permit the licensee to tell a customer all windows are intact?
- No; the separate customer honesty rule still applies
- Yes, patent facts cannot be false
- Yes, if no inspector has attended
- Yes, if the report is complete
Show answer and explanation
Answer: A. No; the separate customer honesty rule still applies
The specific latent-fact disclosure test is not the entire honesty rule. A visible condition does not authorise negligently or knowingly false information.
7. A client instructs a licensee to keep a known material physical defect confidential. What is the key statutory distinction?
- Material information about physical condition is excluded from confidential information
- The licensee may advertise the opposite
- All physical information is negotiating information
- Every written instruction overrides the Act
Show answer and explanation
Answer: A. Material information about physical condition is excluded from confidential information
Section 1-10 excludes material property-condition information from the confidential-information definition. Required disclosures and honest communications cannot be cancelled by this instruction.
8. A seller learns before closing, after report delivery, that the report has an error or omission. What does Section 30 require?
- Keep the error secret because a contract exists
- Backdate a replacement
- A written supplemental disclosure delivered by an authorized method
- Destroy the earlier report
Show answer and explanation
Answer: C. A written supplemental disclosure delivered by an authorized method
The section imposes the stated written supplementation duty. Preserve the record and address applicable delivery, contract and remedy conditions separately.
9. Does an as-is contract alone eliminate a covered seller’s required disclosure report?
- No
- Yes, in every transaction
- Yes, if a contractor has seen the home
- Yes, if the buyer has an agent
Show answer and explanation
Answer: A. No
The form permits as-is contracting while preserving its information function. Repair allocation and required disclosure are separate; as-is is not permission for concealment or false information.
10. Does the seller’s no-specific-investigation rule under Section 25 establish that every licensee can ignore all contract and reasonable-care duties?
- Yes, that is its entire purpose
- Yes, even after actual knowledge of falsity
- No; its actor and statutory scope are limited
- Yes, if the licensee is a contractor
Show answer and explanation
Answer: C. No; its actor and statutory scope are limited
The rule concerns a seller completing the report under that Act. Do not generalise it into an exemption from other law, contractual obligations, reasonable care or truthful communications.
11. A ceiling stain is visible, but its cause and present activity are not established. Which response fits the stated evidence?
- Guarantee the condition is harmless
- Guarantee the roof has failed
- Describe the observed stain accurately and seek appropriate qualified evaluation
- Invent a repair warranty
Show answer and explanation
Answer: C. Describe the observed stain accurately and seek appropriate qualified evaluation
Observation is different from diagnosis. The facts do not establish the particular cause, technical severity or a guarantee, and the appropriate transaction and professional duties still apply.
12. The form says the seller is unaware of a particular condition. Does that guarantee the condition does not exist?
- Yes, if the sale is as-is
- No
- Yes, if the seller signed it
- Yes, every report is a warranty
Show answer and explanation
Answer: B. No
The form expressly warns that lack of awareness is no guarantee. It is not a substitute for inspections or negotiated warranties.
13. For a covered transaction, when does Section 20 require the report to be delivered?
- Only when the buyer sues
- Before signing the contract
- Only after closing
- Any time the seller prefers
Show answer and explanation
Answer: B. Before signing the contract
Section 20 requires completion of all report items and delivery before signing the contract. Late delivery and supplementation have distinct statutory consequences; do not assume either is the ordinary required timing.
14. Under Section 50, when is report delivery effective?
- Always when the sender clicks send
- Only after conveyance
- Upon receipt by the prospective buyer
- Only after a physical paper signature in every case
Show answer and explanation
Answer: C. Upon receipt by the prospective buyer
The Act uses receipt and allows it to be shown in specified or other verifiable ways. Electronic methods can qualify when the statutory delivery conditions are met; dispatch alone is not automatically receipt.
15. A covered seller reasonably believed a leak was corrected, but later becomes aware before closing that the delivered report is inaccurate because the leak returned. Which answer fits?
- The invoice prevents all later disclosure
- The broker should silently change the signed original
- The new awareness requires the written supplement under the stated Section 30 conditions
- No correction can ever be made
Show answer and explanation
Answer: C. The new awareness requires the written supplement under the stated Section 30 conditions
A reasonable prior belief does not erase later awareness of an inaccurate delivered report. The written supplement is distinct from any particular repair promise or termination right.
16. A death is expressly stipulated to have had no effect on the subject property’s physical condition, environment or structures. What does Section 15-20 most directly address?
- A right to advertise knowingly false facts
- A guaranteed cancellation right
- Automatic proof of contamination
- Protection from a cause of action for failing to disclose that specified occurrence
Show answer and explanation
Answer: D. Protection from a cause of action for failing to disclose that specified occurrence
The provision concerns failure to disclose the specified information. Do not extend it to known physical consequences or an affirmative misrepresentation, and do not infer every other legal or contract outcome.
17. A qualifying initial material-defect report is delivered in violation of Section 20 after all parties signed. The facts satisfy Section 40(a), and conveyance has not occurred. Which stated buyer period applies?
- Three calendar days after dispatch in every case
- Five years after closing
- Five business days after receipt of the report
- No statutory right can ever arise
Show answer and explanation
Answer: C. Five business days after receipt of the report
Section 40(a) uses five business days after receipt for the stated qualifying late initial report. Its required notice and other conditions still matter; do not use an obsolete three-day rule or assume every late report discloses a qualifying material defect.
18. Only the repairable-defect supplement branch in Section 40(b)(iii) is at issue. What does its five-business-day condition examine?
- Whether every supplement automatically cancels the contract
- Whether the seller declines or fails to agree in writing to repair within five business days after delivery
- Whether the buyer signs a new listing agreement
- Whether the broker promises a warranty by phone
Show answer and explanation
Answer: B. Whether the seller declines or fails to agree in writing to repair within five business days after delivery
That branch concerns the seller’s written repair agreement after delivery of the supplement. It is different from the buyer’s receipt-based initial-report period, and the other grounds and actual termination procedure are separate.
19. A licensee passes customer-supplied false information to the licensee’s client. Which knowledge standard appears in the Section 15-15(d) protection?
- Whether the report was printed in color
- Only whether the customer owns the property
- Whether the buyer orders an inspection
- Whether the licensee knew or should have known the information was false
Show answer and explanation
Answer: D. Whether the licensee knew or should have known the information was false
The client-protection provision uses knew or should have known for the specified customer-supplied information. Do not substitute the actual-knowledge wording of the different client-to-customer provision.
20. A licensee passes information supplied by the licensee’s client to a customer. Which knowledge condition appears in the specific Section 15-25 false-information protection?
- The licensee did not have actual knowledge that the information was false
- Only whether a tax bill was paid
- The licensee can knowingly repeat any falsehood
- Only whether the customer asks twice
Show answer and explanation
Answer: A. The licensee did not have actual knowledge that the information was false
This specified client-supplied-information protection uses actual knowledge. It does not erase the general honesty rule, protect invented information or authorise repeating a statement the licensee knows is wrong.
Common questions
What is a material fact in an Illinois real estate transaction?
It is broader than a physical defect. For the client-duty question, Section 15-15 requires disclosure of actually known material facts concerning the transaction, subject to its confidentiality and specified off-site qualifications. A material financing deadline can matter without a broken component. Do not assume every personally interesting fact has the same significance or must be broadcast to every party.
What is a material defect on the Illinois seller report?
The form defines it by a substantial adverse effect on residential property value or significant impairment of future occupants’ health or safety, unless the seller reasonably believes the condition has been corrected. Apply the actual report prompts and current-condition language too. This definition does not make the form a guarantee, excuse a knowingly false answer or decide whether a private repair belief was reasonable.
What makes a defect latent rather than patent?
Latent refers to the hidden or not reasonably discoverable condition; patent refers to one open to reasonable observation or inspection. The particular Section 15-25 duty also requires the seller-client relationship, prospective-buyer customer, actual knowledge, material adversity and a physical fact not discoverable by that customer’s reasonably diligent inspection. A hidden condition is not automatically known, and a visible condition does not erase honesty duties.
Does the seller’s licensee owe duties to a buyer who has another agent?
Yes. A customer is not represented by this particular licensee; the person may have a different representative. Section 15-25 requires customer honesty and the specified timely disclosure of actually known latent material adverse physical facts. Do not assume that another agent’s involvement removes those duties or that a missing form determines every relationship.
Can a seller insist that a material physical defect remain confidential?
A material fact about the property’s physical condition is excluded from the License Act’s confidential-information definition. Qualifying negotiating information has different protection and its own exceptions. A client instruction cannot authorise required disclosures to be suppressed or a false statement to be made. Identify the actual physical fact and duty rather than labelling every uncomfortable fact confidential.
Who fills out the Illinois residential disclosure report?
The covered seller completes and certifies it based on the seller’s actual notice or knowledge under the Act. The broker may help with the process within the brokerage role but should not substitute the broker’s own invented answers for the seller’s certification. The licensee’s separate knowledge and duties still matter even when the seller’s form is complete.
Is every Illinois property sale covered by the report Act?
No. The Act defines the residential property and transfers it covers, including specified one-to-four-unit property and condominium or cooperative interests, and Section 15 lists particular exemptions. The exact capacity, transfer and property facts matter. Do not treat every investor, trust, estate, recently renovated home or seller who has never lived there as automatically exempt. The detailed seller-disclosure guide covers the individual branches.
Does Illinois require a seller to investigate every hidden space before completing the report?
Section 25 does not, under that Act, require a specific investigation or inquiry to complete the report. The seller must disclose actually known material defects, and the stated liability protections have conditions. Other legal and contract duties remain separate. This is not a blanket inspection exemption for a broker, a permission to ignore known contrary information or a guarantee that an undiscovered condition cannot exist.
Does an as-is sale waive disclosure or inspections?
An as-is agreement can allocate property-condition and repair risk under its terms, but it does not by itself eliminate a covered seller’s report or authorise false information and concealment. The form recognises as-is contracting and says it does not substitute for inspections or warranties the parties may obtain or negotiate. Read actual inspection rights and waivers rather than assuming every as-is contract has identical terms.
Must a repaired problem always be reported as an active defect?
Use the actual form wording, current facts and the seller’s reasonable belief. The form addresses current condition and problems reasonably believed corrected; it is not a direction to describe every historical problem as currently active. It is also not permission to ignore recurrence, a known inaccurate answer or a prompt asking for a particular history. A repair receipt alone does not establish that every correction succeeded.
What happens if a seller discovers an error after delivering the report?
If the seller becomes aware before closing of an error, inaccuracy or omission in the delivered report or supplement, Section 30 requires a written supplemental disclosure delivered through a Section 50 method. Preserve the original and the supplement. Whether the buyer has a statutory or contractual remedy is a separate question; a supplement does not always mean automatic cancellation.
Can the report be delivered electronically?
Section 50 permits specified personal, fax, email and other electronic methods using the provided or contract contact information, as well as its stated prepaid delivery methods. Delivery to one buyer, or an authorized individual acting for a buyer, has the stated all-buyers effect. Report delivery is effective upon receipt, which may be acknowledged on the report, in the conveyance agreement or in another verifiable manner. Do not assume sending alone or one particular signature is always decisive.
Are sellers’ reports warranties or substitutes for inspections?
No. The statutory form says its disclosures are not warranties and warns that lack of seller awareness does not guarantee that a problem is absent. A qualified inspection, technical opinion, negotiated warranty and seller disclosure perform different functions. An inspection’s stated scope and limitations also matter; none should be advertised as a universal guarantee.
Are these official PSI questions or a readiness score?
These are original teaching scenarios based on the public outline and identified Illinois provisions. They are not recalled or predicted PSI questions. Your percentage on this short set is not a validated readiness score. Explain the actor, recipient, knowledge, physical condition, visibility, rule and timing before checking an answer.
What if the initial Illinois report arrives after the contract is signed?
Section 20 requires the report before signing. Under Section 40(a), a qualifying material defect disclosed in the initial report delivered in violation of that timing after all parties signed gives the buyer the stated termination right within five business days after receipt, with return of the specified deposits. The provision includes yes answers other than items 1 and 2; do not call all 24 form statements physical defects. This is not automatic cancellation for every late form. Required written termination and delivery rules apply, and the Act’s termination right no longer exists after conveyance.
Does a new material-defect supplement always let the buyer cancel?
No. Section 40(b) identifies three grounds: a material defect arising from a prior error, inaccuracy or omission actually known by the seller when the earlier disclosure was completed and signed; a defect not repairable before closing; or a repairable defect where the seller declines or fails to agree in writing to repair within five business days after delivery of the supplement. Do not describe that last period as the same buyer receipt-based clock in Section 40(a). Section 40(c) requires the stated written notice to at least one seller through an authorized method and ends this statutory termination right after conveyance. Other preserved remedies need their own analysis.
Can a broker rely on information supplied by someone else?
Trace the source and recipient. Section 15-15(d) concerns customer-supplied false information communicated to a client and uses knew or should have known. Section 15-25 concerns client-supplied false information communicated to a customer and uses actual knowledge that it was false. Neither is a permission to invent facts or knowingly repeat a false statement. Keep actual observations, reports and contradictions clear, use appropriate verification and reasonable care, and avoid guarantees beyond what the evidence supports.
Must every death, medical fact or neighboring condition be disclosed?
Section 15-20 has four specified failure-to-disclose protections: occupant medical information; a no-effect act or occurrence at the subject property; fact situations at other property; and physical conditions at other property without a substantial adverse value effect on the subject property. The no-effect category includes the environment and structures, not just visible interiors. Section 15-15 also specifies off-site limits in the client material-fact rule. Do not turn these categories into permission for affirmative false statements, concealment of known physical consequences or a guarantee about every other law. Being outside one protection does not automatically establish another duty or claim.
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Put property disclosure into practice
Identify the person, property, knowledge and timing that trigger the duty.
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Official sources and scope
The page separates the License Act’s client, customer and information rules from the residential seller-report Act. General examples do not decide a particular defect, inspection, repair, report answer, delivery dispute or contract remedy. A review date is not a new effective date.
- PSI June 24, 2026: national VI.B and VII.A/C duties and disclosures
- 225 ILCS 454/1-10: client, customer and confidential information
- 225 ILCS 454/15-15: client duties
- 225 ILCS 454/15-25: the specific seller-licensee customer duty
- 225 ILCS 454/15-20: specified nonphysical and off-site nondisclosure categories
- 765 ILCS 77/5: covered property and seller definitions
- 765 ILCS 77/10: covered transaction types
- 765 ILCS 77/15: nine seller-transfer exemptions
- 765 ILCS 77/20: complete report before contract signing
- 765 ILCS 77/25: actual knowledge and qualified seller protection
- 765 ILCS 77/30: written preclosing supplement
- 765 ILCS 77/35: current report, definitions and 24 statements
- 765 ILCS 77/40: initial report and supplemental defect remedies
- 765 ILCS 77/45: other law and remedies preserved
- 765 ILCS 77/50: delivery methods, receipt and multiple buyers
This is exam preparation, not advice for a specific transaction. State law and the applicable facts control. Our editorial and corrections process explains how to report an issue.