"As Is" Sales
Occasionally, a seller asks a real estate licensee to offer a property for sale in "As Is" condition. Sometimes that request simply reflects the seller's desire not to have to repaint a structure or to accomplish other basically cosmetic repairs. However, sometimes that request reflects the seller's desire not to be responsible for known material defects in the property.
Using such language as "This property is sold as is" in a sales contract will probably not relieve the seller and the licensee from responsibility for material defects. If such language relieves liability at all, it is likely to be only for those defects which the buyer already knows about or which are so obvious that a quick visual inspection of the property would make them apparent to the buyer.
Do not expect such "As Is" language to cover less obvious material defects or those which the seller or licensee have not specifically identified for the buyer. If litigation later arises over unknown defects, the courts are not likely to allow such "As Is" language to relieve the seller and/or the agent of liability.
What is the best way of handling such problems? A licensee would be wise to take at least two actions. First, the licensee should have the seller prepare a thorough Property Disclosure Statement disclosing all known material defects in the property. The licensee should give a copy of that statement to each prospective buyer at the time of showing the property and obtain a written receipt for it.
Second, the licensee should include language in the sales contract specifically disclosing all known material defects. For example:
The purchaser is aware of the following defects in the property and hereby releases the seller and the seller's agents from any liability on account of them:
- Rear wall of basement leaks when it rains;
- Electrical wiring in den does not comply with county electrical code;
- Fencing at rear of property encroaches on bordering property.
Such specific language is more likely to protect all properties than a general "As Is" provision. A licensee should actively seek information on known material defects, put the information about those defects in writing, make the language clear and specific, and be sure all purchasers or tenants acknowledge receipt of the information.
The information contained in this article is believed to be current and accurate. The GREC staff reviews the contents periodically and updates it when appropriate. If you have questions or comments about this article, you may contact us at firstname.lastname@example.org . Last reviewed August, 2006.