Just to make sure we are all on the same page, please understand that I am not offering you legal advice here. If you have questions regarding your legal rights, you must address those questions with an attorney.
What exactly is an “as-is” sale?
In an “as-is” sale, the seller is declaring up-front that they do not intend to do anything to address defects. They are not fixing or repairing anything even if a subsequent home inspection reveals one or more material defects. Essentially they are stating that they are not going to put any money into the property: they are selling it as is or the condition in which the buyer finds it.
It may be helpful to understand what as-is does not mean.
From the Buyer’s perspective:
- It does not mean the Buyer can’t have a home inspection if it’s in the contract.
- It does not mean the Buyer can’t ask the Seller to fix something anyway.
- It does not mean the Buyer can not ask for a credit to offset any particular defect they believe to be material or otherwise unsatisfactory.
From the Seller’s perspective:
- It does not mean the Seller is relieved from their obligation to provide a Real Estate Condition Report (RECR) unless they are otherwise legally exempt.
Why is an RECR still necessary if the Seller is selling “as-is?”
That’s a good question and many real estate agents are confused about this and may even pass that confusion on to their clients. The simple answer is this: The obligation to provide a condition report (RECR) and the declaration that the sale is going to be “as is” are two separate issues. They kind of seem like they are related, granted, but in reality one is a declaration of what the seller is aware with respect to the home and the other is a condition of sale. For example, the Seller may be fully aware that the roof leaks like a sieve when it rains. This is something most Sellers would acknowledge in their condition report. What the “as-is” stipulation says is: “We are not going to repair the roof.”
Misinformation is out there
Sometimes a Seller believes or has been led to believe that an “as-is” sale is a “Buyer beware” (caveat emptor) offering. But real estate transactions are still based on “disclosure” whether a Seller wants to fix anything or not. The underlying concept of disclosure is that the seller has an obligation to let the buyer know what they are buying…warts and all. And disclosure is the concept behind a real estate condition report.
Typically, the only people who are not required to fill out a RECR are court appointed individuals who have never lived in the house (personal representatives, trustees, conservators, fiduciaries, etc.); sellers of new construction that has never been inhabited; and transfers exempt from the transfer fee like a husband quit claiming a deed to his wife.
Chapter 709 does not exempt sellers who have never lived in the property. This includes landlords, banks and others. Unless specifically listed as exempt in Chapter 709, all sellers must comply with Chapter 709 disclosure obligations.
If you are not exempt by law, you have an obligation to fill out an RECR. Note that there is no exemption for “as-is” sales. And, just in case you are interested, a property doesn’t have to be listed for sale with a real estate broker…FSBOs have to to comply with the obligation too.
What happens if a Seller who is obligated to fill out an RECR still refuses to do so?
The Seller has 10 days from acceptance to provide a condition or disclosure report to the Buyer. If the Seller fails to do this, the Buyer has a two business day right to rescind the offer. Of course if this stand-off turns mano-a-mano it is time to get your attorney involved to get it sorted out. In fact, it would be a good idea to ask your attorney for advice once you are informed that the Seller does not believe he must or will not otherwise provide a condition report. Could save you a bunch of time.
Advice from your Real Estate Broker
If you are required by law to complete a condition report, whether you want to sell a home “as-is” or not, it’s probably a good idea to complete the RECR. Keep in mind that a Buyer’s right to rescind will depend on whether the Buyer already had knowledge of the defect. A well-thought-out RECR provides Buyers with this knowledge. I always request my clients fill out their RECR and I put it on the MLS so that agents who write offers have access to it before they write the offer. If you have questions about your specific rescission rights, you should definitely consult with an attorney.
Oh and by-the-way
I am not offering you legal advice here and nothing I have said should be construed as legal advice. Anytime you have a question regarding your rights in a transaction, you should consult an attorney. That’s the best advice I can offer you.
Nelson & Associates Realtors is ready to help you with buying or selling an As-Is property.
If you have a property that you want to sell as-is, then we can help you navigate the proper disclosures as well as market the home to potential buyers. If you are considering buying a property in as-is condition, having a buyer’s agent in your corner is a good idea. Contact us today and we can go to work for you right away!