As-is or as-is

For years, the idea of a simpler home sale was one attraction to selling a home “as is.” However, “as is” is not always what you think it implies. Local Realtor® contracts and associated addendums have several meanings for “as is.” If you’re already confused, don’t feel bad, many real estate agents are often confused too. An “as is” home sale is one of those situations that may merit an attorney consultation to help you understand your obligations as a home seller or home buyer.

Home sellers decide to sell their home in “as is” condition for various reasons, besides attempting to circumvent property condition clauses within the local Realtor® contracts of sale, which require electric, heating, air-conditioning, plumbing, and appliances be in working condition at time of sale. Some reasons a home owner may not want to guarantee the condition of their home may be that they are not entirely aware of the property’s condition, such as when owned for a very long time, or selling a rental property. Estate and trustee sales are often sold “as is” because the sellers also do not typically have knowledge of the home’s condition. And of course distressed properties (such as foreclosures and short sales) are mostly sold in “as is” condition.

Prior to the “as is” clause we have today, many agents and sellers often signed the Maryland Residential Property Disclaimer to convey the home is “as is” condition thinking that they were relieved of their obligations under property condition clauses within the contract of sale. However, savvy agents went further to strike various clauses from the contract of sale to further reinforce the seller’s “as is” claim.

The Maryland Residential Property Disclaimer currently indicates that the home conveys with all defects without making any representation of the condition and without warranties. However, the Disclaimer also states “except as otherwise provided in the real estate contract of sale,” which without further clarification can and has resulted in disagreement and confusion.

To further clarify the meaning of “as is,” the “as is” condition clause was introduced. The “as is” condition clause not only specifies that the seller makes no warranties or representations of the property condition or the systems and equipment in the home, but it also specifies which clauses are deleted from the contract of sale. The clause also indicates the time at which the home is conveyed “as is.” Lenders selling foreclosures require a specific “as is” clause to be signed by buyers.

Buying a home “as is” does not usually preclude you from conducting a home inspection. However, sellers often allow an inspection where the buyer can “walk away” in case they find the property condition unacceptable.

Additionally, “as is” sellers are not relieved from disclosing known latent defects, unless the sale is exempt from Maryland’s Single Family Residential Property Condition Disclosure Law (which defines latent defects as material defects or an improvement to real property that: “a buyer would not reasonably be expected to ascertain or observe by a careful visual inspection,” and “would pose a threat to the health or safety of the buyer or an occupant of the property, including a tenant or invitee of the buyer.”).

Are you still confused about “as is?” Always consult an attorney to interpret your contract and help you understand your contractual obligations.

By Dan Krell
Copyright © 2011

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