Posted today on the California Association of REALTORS® blog is a discussion on what “as is” means in California.
A lot of REALTORS® have seller clients who want to sell a property “as- is.” In the current market where there are a lot of REO sales, most agents are familiar with REO addendums that state in some fashion that the property is sold “as-is” with no warranties. Some REALTORS® wonder why C.A.R. does not have an “as-is” addendum.
In a state like Alabama, saying a property is sold “as-is” has real meaning. If a seller sells a property “as-is ” it is like saying “buyer beware” and the seller then has very limited disclosure duties. This is NOT the way it is in California.
A property sold “as is” in California basically means that a seller will not be performing any repairs or improvements to the property being sold. “As-is” does not relieve the seller of having to perform his many disclosure duties under California law including the general duty to disclose in all real property transactions (not just residential 1-4) all known facts which materially affect the value or desirability of the property. This provision applies to all sellers including REOs.
A potential buyer of real estate in California should make an offer on the property in “as is” condition. Of course if something new happens to the property since the date of offer and the close of escrow, the seller would be obligated to repair the damage. The Residential Purchase Agreement is written with a paragraph that states the property is sold “in as” condition – or present condition.
This does not relieve the seller from making full disclosures on the Real Estate Transfer Disclosure Statement and hopefully the Seller Property Questionnaire of the properties condition. Non-disclosed items that are not apparent almost always result in some re-negotiation of the purchase price.
The buyer will also have a right to present a Buyer’s Request for Repair during the inspection contingency period. The Seller is not obligated to accept the requests or may choose to counter them. The buyer will then have cancellation rights, accept the new terms, or can decide to move forward with the purchase.
Photo courtesy of Tom Hodgkinson via Flickr