When you hear of a home or other piece of real estate being sold “AS IS,” you may notice that the property is offered at a lower price than comparable ones in the area that don’t have the same designation. This may raise suspicions that something is wrong with the property or that the deal is too good to be true. Buying any real estate “AS IS” means accepting a degree of uncertainty and risk. Still, the law offers the buyer some protection in the transaction. Here is what you need to know about buying or selling property “AS IS.”
What does “As Is” Really Mean?
In essence, when a property goes up for sale with the qualifier of “AS IS,” it means the seller is offering to convey the property without any guarantees as to its condition beyond what the buyer can see. Logically, if the seller doesn’t know about a material fact or defect at the time of the sale, they are not required to disclose it to the buyer. The buyer agrees to accept the property in an “AS IS” condition based on how it appears to them after their inspection and at the time of sale.
“As Is” Doesn’t Mean the Seller Can Hide Facts
Contrary to popular belief, an “AS IS” designation on a property does not relieve the seller of all obligations. In California, sellers are legally obligated to disclose any known facts that could potentially impact the property’s value or a buyer’s decision to purchase that may not be obvious from a buyer’s inspection of the real estate. For example, a buyer may inspect a home and not be able to tell that when there are heavy rains, the skylight leaks, or that there is severe water damage to a wall that is hidden from view beneath the property. If the seller is aware of these issues and fails to inform the buyer, they may be liable for actively concealing material facts. The “AS IS” provision also does not protect the seller from liability in the event that they omit disclosure of material conditions effecting the property. If there is evidence that the seller engaged in these acts then the seller will probably be subject to an action for damages and possibly other penalties. In other words, using “AS IS” does not immunize the seller from all immunity.
“AS IS” Seller’s Disclosures
Generally speaking, “AS IS” sellers have to disclose the same issues as any other seller. This may mean disclosing that a home had asbestos, lead paint, termite damage, mold, foundation damage, roofing issues, or any other problems within the seller’s knowledge. This list is not exhaustive. The seller’s disclosures depend on the seller’s familiarity with the property and its specific details and history.
The “AS IS” Buyer
Buyers are entitled to know the condition of what they are purchasing during any real estate transaction. While it is true that the seller is legally obligated to disclose known and observable defects during an “AS IS” transaction, the buyer also bears some responsibility for protecting their own interests. Part of the process includes the buyer conducting their own due diligence inspection of the property and researching its history. Buyers are deemed to have notice of matter of public record, such as liens, holders of title, etc. When a home or any other property comes “AS IS,” the buyer is put on notice that the seller is not going to warranty anything beyond what is presented. Buyers must still inspect carefully. If the buyer finds a defect after looking into the property, they can ask the seller to repair it before closing. If the seller refuses, the buyer can always walk away from the sale.
Contact the Law Office of Raffy Boulgourjian
Attorney Raffy Boulgourjian is a California real estate attorney with over twenty years of experience representing clients in residential and commercial real estate matters. He has the knowledge and expertise to protect your real estate interests during an “AS IS” transaction. Contact Mr. Boulgourjian today to schedule a free legal consultation to discuss your California real estate legal needs.