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No. 3--00--0283
April 02, 2001

_______________________________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

A.D., 2001

JUSTICE BRESLIN delivered the opinion of the court:

_______________________________________________________________________________________________

The plaintiff, Curtis Investment Firm, Ltd. Partnership(Curtis Investment), brought an action against the defendants,Robert and Susan Schuch, alleging failure to disclose a defectivewater supply line. The trial court entered judgment for CurtisInvestment in the amount of $1,532.50, plus costs. On appeal,the Schuches claim that Curtis Investment waived any right torecovery under the Residential Real Property Disclosure Act (Act)(765 ILCS 77/1 et seq. (West 1998)) by failing to demand adisclosure report prior to closing. The Schuches also argue thatthe judgment was erroneous because they had no actual knowledgeof the defect at the time of sale. We determine that the Act ismandatory and cannot be waived. In addition, we defer to thetrial court's finding of actual knowledge in that it was notagainst the manifest weight of the evidence.

Curtis Investment entered into a contract to purchase apiece of residential property owned by the Schuches. Approximately six weeks prior to the closing, Curtis Investmentrequested a real property disclosure report. The Schuches didnot provide the report. The closing proceeded without anywritten contingencies and Curtis Investment purchased the home.

Prior to the sale, the Schuches had the home's water supplyturned off at the curb box rather than at the interior meter. When Curtis Investment attempted to reinitiate the water supply,it discovered that the supply line between the curb box and thehouse was faulty. The interior water system needed repair aswell. Curtis Investment repaired the water supply system at itsown expense. At the time of trial, the repairs totaled $1532.50. Curtis Investment filed a small claims suit against theSchuches seeking to recover the cost to replace the water supplysystem. During the trial, Robert Schuch denied any knowledge ofa problem with the supply line or the residential system. Thetrial court held that under the Act, a buyer cannot waive itsright to receive a disclosure report. The court found that theSchuches knew the water supply line was defective and enteredjudgment for Curtis Investment for the cost to repair the system. The Schuches appeal.

On appeal, the Schuches first argue that, contrary to thetrial court's holding, a buyer can waive its right to receive areal property disclosure statement if the buyer signs a contractfor purchase without receiving a residential disclosurestatement.

The primary rule of statutory construction is to ascertainand give effect to the intent of the legislature. Miller v.Bizzell, 311 Ill. App. 3d 971, 726 N.E.2d 175 (2000). The courtshould first consider the statutory language itself. When thelanguage of the statute is clear, it should be given effectwithout resorting to other aids of construction. People ex rel.Baker v. Cowlin, 154 Ill. 2d 193, 607 N.E.2d 1251 (1992). Legislative use of the word "shall" is generally considered toexpress an intent that the provision be mandatory. HoffmanEstates Professional Firefighters Assn. v. Village of HoffmanEstates, 305 Ill. App. 3d 242, 711 N.E.2d 1109 (1999).

Section 20 of the Act provides that:

"A seller of residential real property shallcomplete all applicable items in the disclosuredocument described in Section 35 of this Act. Theseller shall deliver to the prospective buyer thewritten disclosure statement required by this Actbefore the signing of a written agreement by the sellerand prospective buyer that would, subject to thesatisfaction of any negotiated contingencies, requirethe prospective buyer to accept a transfer of theresidential real property." (Emphasis added.) 765ILCS 77/20 (West 1998).

We find the use of the word "shall" in this section requires amandatory reading of the provision. The plain language of thestatute mandates that the buyer be provided a disclosurestatement before closing on a residential sale. The statute doesnot list any exceptions. We therefore hold that a buyer cannotwaive the seller's responsibility to disclose certain defects bysigning a contract without receipt of a written disclosurestatement.

We reject the Schuches' assertion that the language ofsection 20 gives the buyer the option to waive receipt of thereport. The Schuches maintain that section 20 provides that thedisclosure report is "subject to the satisfaction of anynegotiated contingencies." They claim that one such negotiationcould be the waiver of the disclosure statement. However, areading of the entire section clearly demonstrates that the"subject to" language relates to the written agreement topurchase the property, not the seller's disclosure statement. Accordingly, the trial court's determination that a buyer cannotwaive receipt of a real property disclosure report was correct.

Other provisions of the Act require a mandatory reading ofthe statute as well. Section 55 provides that "[a] person whoknowingly violates or fails to perform any duty prescribed by anyprovision of this Act or who discloses any information on theResidential Real Property Disclosure Report that he knows to befalse shall be liable in the amount of actual damages and courtcosts." 765 ILCS 77/55 (West 1998). The language in thisprovision demonstrates that the legislature intended mandatoryliability in the event the seller fails to comply with the Act. Consequently, a seller cannot fail or refuse to provide adisclosure report with impunity.⁽¹⁾

Finally, consideration of the objective of the statutesupports our conclusion that a buyer's right to receive adisclosure statement prior to closing cannot be waived. Theprimary purpose of the statute is to provide a remedy foraggrieved buyers of residential real property. See 90^th Ill.Gen. Assem., House Proceedings, May 20, 1997, at 6. To allow aseller to ignore his obligation under the Act to avoid reportinga material defect and defeat a buyer's subsequent claim wouldonly encourage the evils the legislature sought to remedy. SeePeople v. Peters, 180 Ill. App. 3d 850, 536 N.E.2d 465 (1989)(court should consider objective of the statute and evilslegislature sought to remedy and arrive at a construction that isfounded in common sense). Since the Schuches failed to performtheir duty under the Act, they are responsible for the damagesincurred to replace the water supply system.

In the alternative, the Schuches argue that even if adisclosure report must be provided, they should not be heldliable for the damage sustained. Under section 25 of the Act, aseller is not liable for any error, inaccuracy, or omission ofinformation if the seller had no knowledge of the error,inaccuracy, or omission. 765 ILCS 77/25(a) (West 1998). TheSchuches claim that the trial court's finding that they knew thewater supply line was faulty was against the manifest weight ofthe evidence.

Whether the Schuches knew the line was leaking prior to theclosing is a question of fact to be determined by the trialcourt. See Woods v. Pence, 303 Ill. App. 3d 573, 708 N.E.2d 563(1999) (whether seller knew of material defect is a question offact). A trier of fact need not accept a party's testimony thathe had no knowledge of a particular fact in question if theevidence shows to the contrary. Erickson v. Muskin Corp., 180Ill. App. 3d 117, 535 N.E.2d 475 (1989), rev'd on other grounds,143 Ill.2d 188, 572 N.E.2d 920 (1991). When reviewing a questionof fact, we defer to the trial court's finding unless it isagainst the manifest weight of the evidence. King v. Ashbrook,313 Ill. App. 3d 1040, 732 N.E.2d 621 (2000). A trial court'sjudgment is against the manifest weight of the evidence only ifan opposite conclusion is clearly evident. Fletcher v. Marshall,260 Ill. App. 3d 673, 632 N.E.2d 1105 (1994).

The record in the present case is scant. Robert Schuchdenied any knowledge that the water supply line to the residenceor the interior system was faulty. However, he admitted that hehad the residential water supply turned off at the curb box,rather than the meter inside the house. We recognize that theevidence that the Schuches knew a problem existed is less thanoverwhelming. However, we cannot say that an opposite conclusionto that reached by the trial court is clearly evident. Wetherefore affirm the trial court's finding that the Schuches hadknowledge of the defect at the time of the sale.

For the foregoing reasons, the judgment of the circuit courtof Rock Island County is affirmed.

Affirmed.

LYTTON, J., concurring.

HOLDRIDGE, J., dissenting.

No. 3--00--0283 - Curtis Investment v. Schuch

JUSTICE HOLDRIDGE, dissenting:

I respectfully dissent. While the majority is correct infinding that the seller must provide the real property disclosurereport to the buyer, I believe they err in finding that thisobligation to the buyer cannot be waived by the buyer. "Waiver"is defined as "the intentional relinquishment of a known right."Illinois Valley Electric Co-Operative, Inc. v. City of Princeton,229 Ill. App. 3d 631, 638 (1992). A waiver may be made by expressagreement or implied from the conduct of the party who allegedlywaived the right. Ryder v. Bank of Hickory Hills, 146 Ill. 2d 98,105 (1991). Waiver will be implied when a party's conduct isinconsistent with an intention to assert the right. A waiver maybe made by express agreement or implied from the conduct of theparty who allegedly waived the right. Ryder, 146 Ill. 2d at 105.

Here, the buyers requested the real property disclosurereport approximately six weeks prior to the anticipated closingdate. The sellers did not provide the report, yet the sellerselected to proceed with the closing despite the lack of thereport. The statutory remedy available to a buyer who has notreceived a disclosure report is clear: "If the seller fails orrefuses to provide the disclosure document prior to theconveyance of the residential real property, the buyer shall havethe right to terminate the contract. (Emphasis added.)" (765 ILCS77/55 (1998)).

It is clear that the buyers had a right to terminate thecontract due to the sellers' failure to provide the disclosurereport. Yet they elected not to terminate and proceed with thetransaction. This conduct clearly indicated an intention towaive the right to receive the report.

I would find that the buyers waived the right to recoveryunder the Act and I would reverse the judgment of the circuitcourt and remand for entry of judgment for the defendants.

1. The dissent claims that Curtis Investment waived itsright to receive the report because it proceeded to purchase thehome rather than terminate the contract. Section 55 provides, inpart, that "the buyer shall have the right to terminate thecontract." 765 ILCS 77/55 (West 1998). It does not state thattermination is the buyer's only right or remedy if the sellerfails to produce a disclosure report. Indeed, in addition totermination, section 55 allows the buyer to sue the seller torecover actual damages and costs--the remedy sought by CurtisInvestment. 765 ILCS 77/55 (West 1998).