What Does "As Is" Really Mean In A Real Estate Contract?

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Millionaire Now! by Larry Nusbaum

This blog is based on the organizational principles found in my new book, "Millionaire Now! - A Financial Toolbox with Seven Steps to Wealth".

What Does "As Is" Really Mean In A Real Estate Contract?

Posted on 07/10/2007 13:46:06 | Link | Post Comment

The short answer is Nothing. You could actually ignore it.

When I lived in California, most sellers in the Bay Area sold their houses in "As Is" condition at the suggestion of their agents (of course). But, it doesn't mean that they don't have to disclose every single defect in the house. In fact, they must list everything that they are aware of, in writing, that may be material to the buyer. What is "material"? Better to list everything than to find out what that meant in a lawsuit.

Here is the implication by an "As Is" listing - I am not willing or able to fix anything wrong with this house, whether known in advance or yet to be discovered.

But, make no mistake about it that when you view a property, make an offer and do a final walk through before closing, everything that was in working order when your contract was ratified must be in the same (working) condition the day you close, regardless of the fact that the seller is selling in "As Is" condition.

So when sellers sell homes "As Is," that doesn’t give them the right to foist hidden problems on you, which is why the law in California, and most other states, requires sellers to give you a Real Estate Transfer Disclosure Statement. In Arizona we use a Property Disclosure form. Anything wrong with a house that you couldn’t easily discover on your own, including work done without permits, must be listed on this form -- so take a look at it now. If the sellers disclosed the illegal garage conversion and patio, you’re out of luck -- you were properly forewarned. But if they didn’t, you may be able to sue them to recover the costs of the repairs.

Now, in Arizona, on the newest state contract, there is a list of appliances and items that come with a warranty of operation that would have to be individually scratched off and signed if being transferred in "unwarranted" condition.

Remember, when in doubt disclose.

Housing Bubble and Real Estate Market Tracker from SA for 7/9

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