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Buying a Home 'As-Is' - Should You Be Worried?

Most homes are sold 'as is'. In fact, the form Residential Purchase Agreement used by most brokers has a pre-printed 'as is' clause stating that the property is sold 'as is' without any warranty and in its present physical condition. In a recent purchase, I was asked by the seller to also sign a special lawyer-prepared document which reiterated (in a full page of legalese) that the property was being sold 'as is.' My first instinct was to ask: What is wrong with this property and am I losing all of my rights by agreeing to buy it 'as is'.

There is no clear-cut answer but a quick explanation of the law should put your mind at ease when buying a property 'as is'.

What is wrong with This Property?

As the Agreement notes, 'as is' means that the Seller is not making any warranties about the condition of the property. Selling 'as is' does not necessarily mean that anything is wrong with the property. The Buyer, however, should have a professional inspector look at the property and accompany the inspector as he examines the property. The inspector's trained eye will catch items that you may not notice.

Am I losing All of My Rights?

If it turns out that a problem arises with the property after the deal has been closed, what remedy does a Buyer have in an 'as is' sale? The 'as is' clause works in concert with other laws, most notably California Civil Code 1102. This section requires that the Seller provide the Buyer with a detailed Real Estate Transfer Disclosure Statement.

The Disclosure Statement addresses almost every conceivable defect with the property-from the presence of contaminants to lawsuits against the property. In general, the Seller is under a duty to disclose any and all facts materially affecting the value or desirability of the property which are known only to him and which he knows are not known to, or reasonably discoverable by, the Buyer. Even loud or obnoxious neighbors must be disclosed.

If the problem has been disclosed by the Seller, the Buyer has no cause to complain at a later date. He could have walked away from the deal or renegotiated. However, if the Seller knew about the problem but did not disclose it, the Buyer may have a claim against the Seller.

In a recent case, our client purchased a multi-million dollar home only to find that the winter rains brought extensive leaking. The professional inspection had noted that the roof should be maintained yearly and would have to be replaced in three years. However, it had not uncovered any leaking, and the Seller made no mention of roof leaks in the Disclosure Statement. However, the gardener and housekeeper, both of whom had worked for the Seller, remembered numerous roof leaks while the Seller lived in the house.

The Seller argued that (1) the house was being sold 'as is' and (2) the inspection put the Buyer on notice that the roof was in bad shape, thereby absolving her of any liability. In any event, she also claimed to have repaired the leaks and thought that they had been fixed.

While the inspector may have noted the limited life of the roof, the Seller was still required to disclose the leaking. The leaks were a material fact affecting the value (and habitability) of the home. In this case, neither the Buyer nor the inspector could have discovered the leaks in a visual inspection of the property. (Interestingly, because of liability issues, professional inspectors often will not allow the Buyer to follow them up to the roof, at least not on the inspector's ladder!) The Seller settled with the Buyer, and the roof was replaced.

So, rest assured, although you may be buying the house 'as is', the Seller is not excused from disclosing material problems in the Disclosure Statement. And in the event the Seller fails to make these required disclosures, the Buyer has a legal remedy, despite the 'as is' provisions of the Agreement.

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9 Comments:

Blogger Nickname unavailable said...

Hi,

I recently purchased a home in nov 08. My case is similar. The seller did not disclose anything on the roof. Comes to my knowledge that the seller hid the leaks, w/ cardboard and painting the roof.

Don't know if i can do anything. Any suggestions?

7/8/09, 5:52 AM  
Blogger Sherri said...

my daughter and son in law bought a house feb 2011 ,they have lived there almost a month now in back bedroom there ceiling started leaking its been raining here last couple of days,now when they moved in the house they noticed a spot on ceiling in back bedroom when they ask seller he said its from when workers left the cooler vent off,ok so why now is it leaking (now mind you the cooler vent is on )so now we know the leaks arent from the cooler vent being left off but our home owners warrenty says the roof was excluded from the policy because seller sold house as is but not mentioned on loan papers the house was sold as is ,cause loan Co would not approve us for a as is property they said that would be a fha loan .so my question is was this legal for him to sell us this house with a bad roof ,the house was inspected a visual inspection

3/23/11, 2:46 PM  
Blogger Galliena said...

I think there are only a few people who'd like to buy a house 'as is' and without any warranty. Of course, it's the responsibility of the seller to take care of the house and make it look even better before showing it to the market. However, it still depends on the buyer's preference and the contract that would be signed.

Galliena Gornet

8/25/11, 10:48 AM  
Blogger charlesalvarez23 said...

I agree to you ms Galliena that now a days there are only a few people who'd like to buy a house 'as is' and without any warranty, because I think that is important when buying a house. Anyways thank you for sharing.


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10/11/11, 6:35 PM  
Blogger Santo said...

There are many details to consider when buying a house, and it is important to be mindful of each one in order to avoid hassles later on. It is advised to check the quality of the house personally to see if there are repairs that need to be pointed out. Doing that can also help you assess the true value of the house.

Santo Caridine

11/22/11, 5:40 AM  
Blogger Jay Carter said...

As a rule of thumb a consumer should be weary of thing's that seem too good to be true. A home inspector does not always see everything or know everything . Actually many major issues are mist because they are hidden behind walls or in attics. A buyer should choose a home inspector very carefully insuring he or she has the experience and expertise to advise you on your possible new home. Do not be afraid of asking for more than one opinion's!

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1/26/12, 4:46 PM  
Blogger Milliscent Morgan said...

You should not be worried wit the courtesy of buying houses Calgary, you are safe and secure.

7/27/12, 4:23 PM  
Blogger Soni Arun said...

Buy home should be much better than renting as you should calculate the cost and compare which is better.
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9/17/12, 4:41 AM  
Blogger nehvabby said...

Many of us are really wanted to buy a home but there is a lot of things we may consider first. What if we buy a as-is home or properties we should encounter a lot of problems on that. Your blog is giving us a lot of information about that and I am really thankful for sharing you this information to us. Keep it up.

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9/18/12, 7:00 PM  

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