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
ยง1102. 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.
----------------------------------------------------
Laine T. Wagenseller is the founder of Wagenseller Law
Firm, a full service real estate litigation firm in
downtown Los Angeles. The firm represents real estate
developers, owners, and investors. For more information
visit http://www.wagensellerlaw.com or contact Mr.
Wagenseller at (213) 996-8338.
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
ยง1102. 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.
----------------------------------------------------
Laine T. Wagenseller is the founder of Wagenseller Law
Firm, a full service real estate litigation firm in
downtown Los Angeles. The firm represents real estate
developers, owners, and investors. For more information
visit http://www.wagensellerlaw.com or contact Mr.
Wagenseller at (213) 996-8338.
posted by Hugh Harris-Evans at 2:45 AM
1 Comments:
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