Ask Kathy: What Is — “As Is”?
A WORD ON THE MYSTERY OF PROPERTY CONDITION ACCORDING THE CALIFORNIA RESIDENTIAL PURCHASE AGREEMENT…INQUIRING MINDS WANT TO KNOW!
Q. I often see seller Counter Offers say: Property Sold “AS IS.” I’ve even seen language that says “AS IS / WHERE IS.” I thought the California Residential Purchase Agreement was written in such a way that the parties agreed the property is sold “AS IS?”
A. You are correct; PARAGRAPH 11. CONDITION OF PROPERTY not only establishes an agreement between the parties that the property is to be sold “AS IS” but it goes further insofar as defining exactly what that means.
“Unless otherwise agreed in writing: (i) the Property is sold (a) “AS-IS” in its PRESENT physical condition as of the date of Acceptance and (b) subject to Buyer’s Investigation rights……………”
This language is very clear, and there really isn’t a reason to repeat it in a Counter Offer or Addendum. For the most part adding additional “AS-IS” language often causes confusion as to what it actually means.
If a Seller leans toward repeating this term, I recommend determining exactly what the he/she hopes to accomplish by doing so. We learn so much by asking direct clarifying questions.
For example; a seller may simply wish to make it clear to the buyer (i) no repairs will be made by seller (ii) no financial credits will be issued to buyer and (iii) no price concessions will be made. If this is the case, it’s a good idea just to say what is meant rather than add vague language that re-hashes what is already in the purchase agreement.
I liken it to the great Dr. Seuss who so often said — “Say what you mean………….”
It is important to note that the language in paragraph 11 also addresses the responsibility of the seller to maintain the property: “…….(ii) the Property, including pool, spa, landscaping and grounds, is to be maintained in substantially the same condition as on the date of Acceptance….”
The reason I am calling attention to this provision is that a seller may mistakenly believe that should damage occur, or systems fail during escrow, it becomes the buyer’s problem and that is not the case!
When a vague “AS IS” is added to a counter offer or addendum, a seller may e under the impression that disclosure duties are mitigated — and/or buyer’s investigatory rights are somehow minimized. Neither of which are true!
A final thought; in some cases buyers who receive a seller counter offer with the term “AS IS” or “AS IS-WHERE IS” become concerned that the seller knows something that is being hidden from them. Just another consideration when consulting with sellers.
As always; asking questions, clear and direct communication, setting and managing expectations are just a few best practices for REALTORS.
Questions? Email them to: Kathy@Compass.com
The foregoing is not to be construed as legal advice. It is for the purposes of real estate brokerage education only.
Kathy Mehringer SFR, CDPE, CRB
Regional Director of Risk Management
Broker of Record
CalBRE # 00625769
9454 Wilshire Blvd. 4th Floor
Beverly Hills, CA 90212