These revised Guidelines were prepared by the Closing Procedures Subcommittee of the Chicago Bar Association Real Property Law Committee and approved by the Real Property Law Committee. They describe the custom and practice in the metropolitan Chicago area for closing sales of single-family and small multi-family dwellings. They also apply to larger residential sales and to commercial sales, but such transactions involve additional matters not covered here.


Generally, applicable laws, including ordinances and regulations, control the real estate sale transaction. Subject to applicable laws, the provisions of the parties' contract shall control the transaction. Moreover, closing procedures and requirements may vary, depending on the circumstances of the transaction, including the lender, the title, and the property, and are often subject to negotiation.

Some of the requirements listed below may vary or not apply, depending on applicable law, contract terms, and location and type of property.


Closing documents and procedures and pre-closing compliance requirements will necessitate the seller's or purchaser's actions several weeks before the closing. For example, many municipalities, including the City of Chicago, impose requirements on the transfer of real estate, such as obtaining a water department certification (which may in turn necessitate a water meter reading or a letter from a condominium association), a certificate of inspection or purchasing transfer tax stamps at the municipality's local office. Each party is responsible to initiate pre-closing work in sufficient time to close on schedule.

Buyer and Seller shall cooperate in any reasonable actions that must be taken prior to closing to comply with closing requirements.

The party responsible under the contract to provide title insurance shall order the commitment in sufficient time to furnish the commitment not less than five business days prior to the closing.

Buyer should furnish the exact name(s) of the grantee(s), any special title holding instructions, such as joint tenancy or tenancy by the entirety, and any special deed form, such as a deed-in-trust form required by a land trustee, not less than five business days prior to the closing.

The proposed closing statement or closing figures should be furnished by the Seller not less than two business days prior to the closing. Seller shall provide the closing agent with the agreed closing figures not less than one business day prior to closing.

It is suggested that Seller furnish copies of required documents to Buyer's attorney prior to closing.

Certain documents are to be furnished by Seller to Buyer and others prior to the signing of the contract. Pre-contract documents may include the following:

(i). Residential real property disclosure report, pursuant to Residential Real Property Disclosure Act (765 ILCS 77/35, effective for closing on or after October 1, 1994)

(ii) Lead paint hazard information pamphlet, furnished by the federal Environmental Protection Agency and statutory notice provision to be included in the sale contract, pursuant to 42 USCS SS 4852d (tentative effective October 28, 1995 - see 42 USCSd(d)).

Pre-closing delivery of the following documents may be required:

(i) Documents required under Illinois Condominium Act (765 ILCS 605/22 "Full Disclosure Before Sale) and (765 ILCS 605/605/22.1) if requested by Buyer and not previously provided.

(ii) Notices of violations of laws, including ordinances and building codes, received after the contract was signed.

(iii) Environmental disclosure document pursuant to the Responsible Property Transfer Act of 1988 (765 ILCS 90/1 et seq), if the residential property has an underground storage tank.

(iv) Disclosure statement, pursuant to the Residential Real Property Disclosure Act (765 ILCS 77/1) effective October 1, 1994), if not delivered prior to the closing.

Note: If Torrens property and the closing is earlier that January 1, 1997, seller should notify the Torrens Office of the closing date of the sale, enabling the Registrar to have the certificate of title available to recording.


A. In the simplest form of closing, Seller delivers a deed and Buyer simultaneously pays the purchase price; Buyer takes the risk of defects in title arising in the "gap" between the latest title commitment date and the deed's recording. However, interim risk protection against such defects, sometimes called "gap coverage," may be available from the title insurer. (Buyer also has whatever protection may be afforded by Seller's affidavit of title and any warranties in the deed.)

NOTE: If the title commitment would otherwise be more than a few weeks old at closing, a later-date commitment should be secured, in order to minimize the length of the gap.

B. In a lender's agency closing, a title insurer, acting as the lender's agent pursuant to a separate agreement, accepts Buyer's funds and mortgage and Seller's deed, disburses the net proceeds to Seller, and commits to issue a lender's title policy, dated as of the closing date and showing Buyer's mortgage of record. Buyer is responsible for the fees of the lender's agent.

NOTE: Buyer should ask the title insurer for (i) a marked-up commitment for an owner's policy, dated as of the closing, showing Buyer in title and showing which title exceptions have been waived or insured over, or (ii) other evidence of gap coverage.

C. In an escrow closing (or "deed and money escrow"), Seller deposits a deed with the escrowee (a third party, usually a title insurer) and Buyer deposits the purchase price (and, if agreed, a reconveyance deed) with the escrowee, pursuant to written escrow instructions. A separate money lender's escrow will be required if a lender is involved. When all other agreed-upon deposits have been made or provided for, the escrowee records the deed (and mortgage, if applicable) and re-examines title; if title is satisfactory and all other conditions are met, the escrowee disburses the net proceeds to Seller.

D. In a New York style closing, the title insurer (for a fee and a gap undertaking indemnity agreement by or on behalf of Seller) issues a title policy (or revised commitment) to Buyer, dated as of the closing and showing Buyer in title, and the net proceeds are disbursed to Seller immediately after all deposits are made.


A. Place Of Closing: The first applicable of the following shall be the place of closing:

If Closing is in escrow, the closing place shall be as specified in the escrow instructions.

If Buyer has a lender, the closing place shall be as directed by the lender, usually at the office of the lender's agent title company.

If the title company has several offices, the office shall be selected using the following rules:

(i). if both attorneys have offices in close proximity to each other (such as in the Chicago Loop), the closing shall be held at the title office nearest the attorneys' offices;

(ii). if (i) does not apply, the closing shall be held in the title company office in reasonable proximity to the property.

If none of the above applies, the closing place shall be at the office of Seller's attorney.

B. Time Of Closing: The closing shall occur between 9 a.m. and 5 p.m., Monday through Friday.

C. Required Documents.

1. General requirements. Each document shall conform to the requirements of applicable law, of the contract and of any government agency, lender, title insurer or other entity with which the document must be filed.

2. Seller's requirements. Seller shall deliver the following at closing:

a. Seller's general requirements.

i. Deed.

ii. Closing statement.

iii. Bill of sale.

iv. Affidavit of title, covering closing date.

v. ALTA statement, with duplicate for lender.

vi. State and county transfer ("tax") declarations, and municipal declaration where required.

vii. Transfer stamps (unless to be obtained by closer).

NOTE: Seller may be entitled to reimbursement by Buyer; see F, below.

viii. Documents required by (or acceptable evidence of compliance with) municipal ordinances, e.g., presale building inspection report, Chicago heating cost disclosure.

ix. Title commitment, or other evidence of ownership and condition of title as required or permitted by the contract. (Seller should have all unpermitted title exceptions waived prior to closing, except those to be cleared by funds received at closing, and present at closing a commitment showing the waivers.)

x. Survey, if required.

xi. Copy of most recently issued real estate tax bill; proof of payment of most recently due bill (unless such payment is noted on the title commitment); estimate of cost of redemption, if applicable; and other evidence that the only lien for taxes to which Buyer's title will be subject is for taxes not yet due.

xii. Loan payoff letters and other documents necessary to remove existing liens on the property or to enable the title insurer to waive exceptions therefor.

xiii. Original leases, assignments thereof, rent roll (disclosing the names of tenants, apartments occupied, lease date, expiration of the lease term, monthly rent, security deposit and date to which tenants have been paid interest on security deposits, if applicable) and letters to tenants advising of change in ownership and, if Buyer requests, to whom rent should be paid.

xiv. Insurance policies to be assigned, evidence of payment of premiums to conform to the contract, and assignments to Buyer, evidencing the insurer's consent.

xv. Gap undertaking, if required.

xvi. IRS Form 1099-S, or Seller's tax identification number if form is to be provided by closer.

xvii. FIRPTA certificate if required by Sec. 1445 of the Internal Revenue Code.

xviii. Keys, garage door openers, etc., unless possession is delayed.

xix. If applicable, Seller's broker should provide earnest money (in excess of commission), interest on earnest money, receipt for commission, keys, etc.

xx. Broker's lien waiver, if applicable.

xxi. Disclosure statement, pursuant to the Residential Real Property Disclosure Act, if not delivered prior to the closing.

xxii. Proof of compliance with the Chicago Multiple Dwelling Registration Code for four or more apartments, if applicable.

b. Seller's condominium, town home or other association documents.

i. Copy of declaration, including all amendments, as recorded.

ii. Copy of current by-laws and rules and regulations.

iii. Copy of plat of survey showing the site plan and particular floor of building on which the unit is located, if required.

iv. Letter from association waiving right of first refusal, if applicable.

v. Letter from association as to status of assessments for Seller's unit.

vi. Certificate of insurance showing association's insurance, naming Buyer and Buyer's lender (if any) as additional insureds.

vii. Other documents required under Illinois Condominium Act (Ill. Rev. Stat. Ch. 30, Sec. 322.1) if requested by Buyer and not previously provided.

viii. Proof that compliance with the Chicago Multiple Dwelling Registration Code for four or more apartments is not applicable.

c. Seller's continuing mortgage documents (sales subject to existing mortgages).

i. Lender's consent to sale.

ii. Loan assumption agreement.

iii. Lender's statement of current loan condition and whether loan is current or in default, and description of escrow deposits held by lender.

iv. Copies of executed note and mortgage.

v. Release of Seller, if available.

3. Buyer's requirements. Buyer shall deliver the following at closing:

a. Funds necessary to close.

b. ALTA statements, with duplicate for lender.

c. Documents required by Buyer's lender (e.g. hazard insurance policy, and receipt for first year's insurance premium).

d. Any documents required by the applicable municipality.

e. Personal information affidavit, if required by the title insurer.

f. Residential real estate disclosure report, signed by the Buyer.

D. Method of Payment

1. Buyer's funds.

a. Payment may be made in the following forms:

i. Cash. It is suggested that Buyer give advance notice of intent to pay with cash.

ii. Wire transfer of funds if requested by Seller in advance.

iii. Cashier's check or certified check drawn on a bank in the Chicago metropolitan area (Cook, Lake, DuPage, Kane, Will and McHenry Counties).

iv. Savings and loan association check drawn on a savings and loan association in the Chicago metropolitan area. If Seller requires immediate funds, Buyer shall arrange to have such check certified.

b. Endorsement. Checks with intermediate endorsements are unacceptable unless drawn directly to Buyer by a bank, savings and loan association, insurance company or other financial institution and endorsed by Buyer.

2. Payment to Seller. Check from escrowee, disbursing agent or lender shall be certified if so requested in advance by Seller.

E. Execution Of Documents - Powers of Attorney. It is preferable that instruments required to convey title to real and personal property be executed by the actual parties to the conveyance.

Execution of a deed by an attorney-in-fact pursuant to a power of attorney must be approved in advance by the title insurer. The power of attorney must be recorded in the county in which the property is located.

Seller must notify Buyer in advance of the intent to use a power of attorney, comply with all legal requirements therefor and pay all costs incidental thereto, including, but not limited to, recording fees, charges for post-closing confirmation that the power has not been revoked, and charges set forth in the contract for any delay of closing or possession.

F. Transfer Taxes. Unless the contract provides otherwise, the ordinance or statute creating the taxes shall determine which party has the burden of paying the tax. Generally, Seller pays state and county taxes and Buyer pays municipal tax.

G. Prorations. In general, all prorations due to or payable by Seller, whether for items of income or expense, shall include the date of proration; Seller receives the income and pays all expenses through that date. Date of proration is generally the date of closing.

1. Utilities. If possible, Seller shall obtain final readings and pay final bills. Otherwise, proration shall be based on last ascertainable bills. If Seller maintains possession of entire premises, Seller shall be liable for utilities through the date of possession. If Seller maintains post-closing possession of one unit in a multi-unit rental building, Seller's liability for utilities is the same as that of other tenants.

2. Real estate taxes.

a. Proration of unpaid taxes shall be based upon 100% of the most recently issued tax bill unless otherwise agreed. Note: Under Lenzi v. Morkin, 103 Ill. 2nd 290 (1984), if the contract provides that the tax proration is to be based on most recent ascertainable taxes, proration cannot be calculated with only partially updated information on assessed value, tax rate, and, if applicable, equalizer rate.

b. If the parties agree to prorate taxes using a factor other than 100%, that factor is used only to prorate for any year for which the total year's tax bill has not been issued. Note: Taxes are billed and payable in two installments in the year after the year in which they accrue. In Cook County, the total tax for a year is not determined until the bill for the second installment is issued (the first installment is for one-half of the previous year's total tax). In DuPage, Kane, Lake, McHenry and Will Counties, the first installment bill is for one-half of the year's total tax.

c. Proration shall be based upon actual number of days in the year, and Buyer's credit includes the date of closing.

d. Tax payments made at or before closing are credited to Seller in the actual amount paid, regardless of agreement to prorate at a factor other than 100%.

e. Examples: The closing date is July 14, 1992, the 196th day of a 366 day year, and the parties have agreed to a 110% proration factor. The first installment bill for the 1991 tax has been issued and paid, but the second installment bill has not been issued (or, in counties other than Cook, it is not yet due).

i. In Cook County: The total bill for the 1990 tax was for $1,000, and the bill for the first 1991 installment was for one-half that amount ($500), so Buyer's credit for the 1991 tax is 110% of $1,000, minus $500 ($1,100-$500), or $600.

ii. In other counties: The bill for the first installment of the 1991 tax was for $500, or one-half of the total 1991 tax of $1,000, so Buyer's credit for the 1991 tax is $500, the second half of the total 1991 tax.

iii. In all counties: Buyer's credit for 1992 taxes is 196/366 of 110% of $1,000 (196/366 x $1,100), or $589.07.

iv. Note in Cook County: If the second installment bill for the 1991 tax had been issued but not paid at closing, Buyer's credit for 1991 would be in the amount of that bill.

v. Note in all counties: If the second installment bill for the 1991 tax had been issued and paid, Buyer would receive no credit for 1991.

f. If Buyer is assuming or taking subject to an existing mortgage that includes a tax escrow held by the mortgagee, Seller shall receive credit for the escrow and assign all Seller's interest therein to Buyer at closing.

g. Note: IRS rules on deductibility may differ from these Guidelines. See Internal Revenue Code Sec. 164(d).

3. Condominium, townhouse, and planned unit development association assessments and reserves. The regular monthly assessment shall be prorated between the parties through the date of tender of possession. Unless the parties agree otherwise, Buyer takes subject to any installments of special assessments which are not due as of the proration date. Seller receives no credit for association reserves.

4. Cable TV, home security and other service contracts.

a. Buyer may decline to assume any or all such contracts between Seller and provider.

b. If Buyer assumes a contract, charges due under the terms of the contract shall be prorated through the date of tender of possession, and transferrable deposits shall be credited to Seller.

5. Rents.

a. If rent has been collected, it shall be prorated based on the number of days in the month of the date of proration.

b. There is no uniform custom and practice regarding the application of rent collected after closing to pre-closing rental periods for which rent has not been collected as of closing.

6. Tenant security deposits. The amount of all tenant security deposits and interest accrued thereon if required by statute or ordinance shall be credited to Buyer.

7. Insurance. If Seller's insurance is assignable and Buyer has agreed to accept an assignment thereof, the policy must be prepaid (or, if financed, payments must be current) and in full force and effect at the time of closing. The proration of the unearned premium shall be based on the premium set forth in the policy or as amended by the appropriate endorsement or invoice. Note: Endorsement of assignment and assumption may be required. Note: Homeowners' insurance is not ordinarily assignable.

8. Scavenger service. The bill covering the date of the tender of possession shall be prorated.

9. Oil in tank. Seller shall receive a credit to date of tender of possession for the amount of oil in the tank at the time of the reading at the price including sales tax based on Seller's last paid invoice.

H. Special Notes.

The following substantive items should be negotiated between the parties prior to execution of the contract:

1. Title condition and insurance.

2. Plat of survey.

3. Notices of parties.

4. Escrow.

5. Personal property to be included.

6. Condition of real and personal property at date of possession; remedy for breach.

7. Physical inspection of the property prior to closing ("walk-through").

8. Real estate tax proration factor (e.g., 100%, 110%) and/or reproration (including years to be reprorated).

9. Special assessments for local improvements, whether confirmed and/or completed before or after the closing date.

10. Special condominium assessments.

11. Special taxes.

12. Possession date and escrow.

13. Due on sale provisions in underlying debt.

14. Tenant-related matters, including the application of rent collected after closing to pre-closing rental periods for which rent has not been collected as of closing, and the sharing of expenses of collection of such rent.

15. Third-party warranties.

16. Environmental assurances by seller or testing by buyer.

The Chicago Landlord-Tenant ordinance and the Title Insurance Act, 215 ILCS 155/1 et seq., and regulations thereunder are not taken into consideration in these Guidelines.


Effective January 1, 1992, no additional property may be registered under the Torrens system. Sale of registered property will result in the property being deregistered. As of January 1, 1997, all remaining registered properties will be deregistered. See 765 ILCS 40/1 et seq.