When is “As Is” Really “As Is” When Buying Property

Pictured home: 15-1882 21st Ave. Keaau

Truth is, probably not as often as you think. Funny thing, during a Seller’s market, Sellers are not always accommodating about repair requests. They often insist that buyers take the property “as is.” In fact, during the current seller’s market, sellers with unpermitted additions are jumping in even though “as is” sales are common. Sellers are hoping to rely on a blanket addendum in an attempt to convey property without proper disclosure or warranty in “as is” condition.

A Closer Look at “As Is” Property

Buyers may wish to do a little analysis regarding what this really means. When it comes to residential property, sellers are always obligated to make full and complete disclosure. Adding an “as is” provision does not relieve them of this requirement.

Used Poorly…

Where tested, Courts have not been inclined to release sellers from liability for defects they should have disclosed. Facts a Seller knew, or had a duty to inspect, require disclosure. There is no “caveat emptor” when it comes to residential property.

Worse yet, should a dispute arise, the inclusion of universal “as is” language may inadvertently give the appearance that a seller is attempting to conceal a pertinent fact. Besides, when a loan is involved, “as is” language may actually bring unwarranted scrutiny from the buyer’s lender.

Used Correctly…

Properly used, “as is” language outlines specific problems or defects related to the property. For instance, a seller who is an absentee landlord may not be able to verify that a roof repair was done adequately. The Sellers may wish to shift the duty to make further investigation to the buyer. An “as is” addendum would accomplish this.

 The “J1”

Another common reason that sellers like to include “as is” language is to avoid future repair requests. Paragraph J1 of our standard sales contract affords the buyer an opportunity to inspect the property. As written, buyers dissatisfied with inspection results have two choices:

1. Accept the property
2. Cancel the transaction

That’s it.

No Harm in Asking?

They often still ask the Seller to make repairs and/or concessions. Sellers are not obligated to oblige. While including “as is” language may deter some requests, nothing bars a Buyer from making them. The rule of thumb most REALTORS® use is “as is as to what”?

While I’m sure we’ll continue to see general “as is” addenda used frequently, truth is, unless it’s fairly specific, it’s probably going to have more impact on the window of a used car than it will have in a real estate transaction. Sellers should always disclose, disclose, disclose! (Stay tuned for a related discussion regarding “as built” permits. I’ll attempt to outline general steps to take to correct permitting issues.)