Using an ‘As-Is’ Clause when selling your home can protect you from liability if a buyer claims you misrepresented the property’s condition.
One of the clause’s primary uses is to avoid the need to make repairs as a seller, but it also provides robust (if used correctly) protection from lawsuits if the buyer encounters a problem.
Please Note: The information here is for reference purposes and should not be used in replacement for legal advice regarding your sale, contract or property defects.
What is An As-Is Clause?
An ‘As-Is’ clause is a type of contact clause used in a real estate agreement. It’s effectively a disclaimer that tells the buyer they are purchasing a real estate property under their own judgment, and not based on the representation or statement of the seller.
‘As-Is’ clauses are used to protect the seller from liability if the buyer finds problems with the property. The seller won’t be expected to make repairs and fixes to these defects. But the seller still has to uphold their own duties (read below).
What Does ‘As-Is’ Mean in Real Estate?
‘As-Is’ means the property is being sold in its current condition, including all and any defects. The property will typically be sold without warranty except for the warranties of title and any other warranties listed in the real estate contract.
Read Related: The Closing Process Explained in Florida
Key Points and Obligations of an ‘As-Is’ Clause:
‘As-Is’ sellers have a duty to reveal known defects. But the clause will protect them from any unknown property defects, or defects that can be expected to be easily found by the buyer.
‘As-Is’ clauses do not excuse the seller from disclosing property defects if:
- The seller prevents the buyer from discovering property defects (such as hiding them).
- The seller lies about the condition of the property (such as “Yes, all the windows are in perfect condition”).
- The seller doesn’t reveal a known defect that the buyer wouldn’t be easily able to discover.
Sellers can best protect themselves from liability for misrepresentation by taking the following steps:
- Using an “as is” clause in the real estate purchase contract;
- Granting broad inspection rights to the buyer; and
- Disclosing any defects known to the seller that are not readily discoverable by the buyer.
Buyers typically make their own appraisal of the property, performing their own property inspection for defects. They accept the risk, knowing that they’ll often get a lower price than they would for a property that may require the seller to make the repairs.
Put simply, a seller can best protect themselves by:
- Using an ‘As-Is’ clause in a real estate purchase agreement.
- Providing inspection rights to the buyer to review the property in detail.
- Disclose any known defects to the buyer that are not easy for them to discover. This is best done in writing, (with a dated receipt, signed by the buyer) as you have proof of it
Issues That an ‘As-Is’ Clause May Protect a Seller From:
As-Is clauses can potentially protect a seller from various legal problems. The below are examples, but should not be considered bullet-proof.
Breach of Duty
Sellers have a legal duty to act in the best interest of the client. Any lying, or failure to uphold this duty can result in a Breach of Duty legal claim. For example, they must:
- Disclose Land Disputes
- Disclose known property risks.
Breach of Contract
A Breach of Contract is one of the most common types of lawsuits. It’s made if the buyer believes their contract hasn’t been fulfilled.
Without an ‘As-Is’ clause, the buyer can often claim that repairs should have been made.
Negligence and Gross Negligence Claims
Negligence and Gross Negligence claims are made when the buyer believes the seller caused harm through a lack of care or action.
There is no intent to cause harm in these cases, but instead, the seller is believed to have been at fault for not doing enough.
An As-Is clause can protect a seller in these cases, as the buyer knew they were purchasing property in an ‘As-Is’ condition (so long as the seller had revealed known defects).
Wilful Concealment or Misleading Clients
These lawsuits are made if a seller is believed to have intentionally hidden property defects.
Areas That As-Is Clauses Don’t Protect Sellers From:
As-is clauses don’t protect sellers from everything. While they offer good protection, the seller can still find themselves in hot water if:
- The seller hides the defects or restricts the buyer from discovering them.
- They lie or provide an intentional misrepresentation of the property.
- They know of a defect that the buyer is not reasonably capable of discovering, and don’t disclose it.
- As-Is clauses provide the ability to sell a property while only revealing ‘known’ defects.
- The clauses can protect the seller from lawsuits, so long as they fulfilled their own duties.
- The seller must reveal all known defects, and cannot hide or lie about any other defects.
- The buyer knows they’re purchasing a property, with the potential of other defects being discovered.
Contact a Real Estate Attorney Today in Riverview and St. Petersburg, FL
If you’re looking to sell an ‘As-Is’ property, then our Florida real estate attorneys can help. We can help draft a purchase agreement that protects you from liability if property defects are later found by the buyer. Doing so can allow you to sell in peace, without the fear of needing to make repairs or get blamed for problems that the buyer encounters.
Our St Petersburg and Riverview real estate attorneys at Battaglia, Ross, Dicus & McQuaid, P.A. will review your circumstances and ensure your transaction goes smoothly.