If you are buying property outside of the City Of Chicago limits, then it is imperative that you understand as a buyer the requirements that many suburbs have put in place before and after a real estate closing. If the process is not clearly followed you, as the new owner, can have some large costs in the first 90 days of closing.
Point of Sale Inspection (POS)
A Point of Sale Inspection (POS) occurs when a Village visits a property prior to a seller finalizing the sale. These inspections typically require a small fee to be paid for by the seller. During the inspection, a representative from the Village will inspect the property per the local Village ordinances. Oftentimes, these inspections must be completed in order for the Village to release a transfer stamp, a requirement by the Title Company at closing.
Items that are noted during a point of sale inspection must be addressed by the seller prior to the sale being finalized. There are some Villages that will allow any outstanding issues to be inherited by the buyer, so long as the buyer signs an affidavit stating that the work will be completed in a certain amount of time after the closing. There may also be a surety bond that is required, at the buyers' expense, to be placed with the Village so that the work is guaranteed to be completed by the buyer.
In the closing process, these are documents that you want to be aware you are signing so you don't sign off on something that gives you ownership of seeing the Point Of Sale Process to completion with you bearing the costs. You want to complete as much of this as possible in advance of closing and carefully calculate any spillover costs you may have post closing.
The City of Chicago does not require Point of Sale Inspections, but it is commonplace in the surrounding suburbs. As a buyer, you want to be sure that you fully understand the requirements of each municipality so that you can avoid any future potential issues.
Annual Rental License Requirements
Many suburban areas have enacted Rental Licensing Programs that follow strict requirements. They require properly filed annual documentation, annual fees, and annual property inspections. Their intent is to provide safe housing to those purchasing or leasing property in their area.
For more information on what cities have these requirements and what type of costs that will add to your bottom line check out our City Rental License Landlord FAQ. This does add on annual costs that you as the investor wants to make sure you have these expenses figured into your planning for a particular property.
All of this can be navigated through if you know it exists and once you know it exists you must lean on your real estate broker, attorney, and your soon to be Property Manager. It is crucial that you have an investment minded Real Estate Broker that knows the process, an attorney to cover you legally, and a Property Manager that is involved early in the process.
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