A real estate listing will use the term “as is” to indicate that the buyer is willing to accept the property exactly how it is. Let’s see how we might encounter “as if” in a property transaction.
The Whole Property Is Being Sold “As Is.”
The whole property will be listed and sold “as it is”. The seller will make no repairs nor offer credit for any possible defects.
These are just a few examples of major defects that a seller may not be required to correct.
- Structural and structural problems
- Failure or leakage of the roof
- Chinese drywall
- Active termite infestations or damage
- Non-functioning systems (HVAC, septic system, etc.)
- Problems with mold and mildew
- Presence of asbestos or any other harmful material
In practice, buyers can agree to an “as is” sale and sellers may agree that sell your house as is. However, a home inspection is still possible and allows the buyer the option to unilaterally cancel the contract after inspections. Even though this technically doesn’t conform to the legal definition of “as is”, it’s permissible so long as the parties have reached an agreement.
Specific Components In A Property Sold “As It Is”
There are sellers who may point out specific features of a house being sold “as Is”. Common examples include:
- Fireplaces. Chimneys. Flues.
- Detached structures (sheds, garages, etc.)
- Household appliances (washer, dryer, refrigerator, etc.)
- Hot tubs, spas, and swimming pools
In real estate terms “where’s” means that the seller is ignoring any potential problems with its current location. Some examples include:
- The property lies in a flood zone
- The property is not currently zoned.
- The government has the right to or could be scheduled for the acquisition of the property through easement, right-of-way, or eminent domain.
- The presence or non-existence of restrictive covenants on deeds restricting what an owner may do to the property
- Inclusion, or not-inclusion in a designated historic region
- The property is located within an airport flyover zones
- The existence of a geological defect (inability/inability to perc a sewer system, elevated levels of Radon, shrink-swelled dirt, etc.
Here Are The Best Practices For Sellers
Sellers must make it clear that the property being sold is being done so “as-is”. The more emphasis that is placed on quotations, capitalized, bolded, and so on, the better. The stronger your sentence, the better. While this may sound like an excessive amount of work, it is actually a time saver for everyone.
But, the most important thing is that all “as-is” language must appear in writing on the contract. Whatever terms are contained in the contract will determine and govern the transaction.
Buyers’ Best Practices
Buyers need to understand the significance of “as found” terms and contracts. You lose out on the huge opportunity to inspect common real estate transactions. This is why it is essential to conduct due diligence before signing an “as Is” contract. Below are some examples to illustrate due diligence
- Consult an attorney
- A title search
- To identify potential red flags in the deed or land records, it is worth reviewing them
- Before you sign a contract, make sure to inspect the property
- Insisting in a clause within the contract that allows for inspections or cancellation of contract due to inspection findings
- Inspecting a Wood Destroying Insect (“Termite”) in Advance
- A licensed contractor should examine all the major structural components in the dwelling.