In every real estate transaction by way of a general warranty deed, there are implied warranties that the seller guarantees. "As Is" specifies that the buyer is buying the property in the condition as it exists and cannot look to the seller for any problems that arise. In essence, the seller is disclaiming any of the implied warranties.

Caveat Emptor, "Let the Buyer Beware"

If you are a buyer, this is the time to "beware" and hire the appropriate inspectors so you can be sure of the condition the property is in which you are about to purchase. Sellers have been known to use the "as is" addendum during a property transaction to prevent any express warranties from being given. Particularly where the seller/owner never lived on the property (e.g. investment properties, flips). With the housing market picking up, once again Arizona is seeing an increase in flips. Because the "as is" sale does not disclaim any of the express warranties made by the seller, this becomes a tempting quick way to drop a problematic piece of real estate on an unsuspecting buyer.

No Safe Harbor In Selling Real Estate "As Is"

Recently the Arizona Court of Appeals held, that despite the existence of an as-is clause in a contract, a seller is subject to liability if he fails to disclose to a buyer defects in the property that are known to the seller, or if the buyer is prevented by the seller from discovering these defects (considered "facts basic to the transaction"). This is a form of fraud and with so many homes being "flipped," that new paint on the walls could be concealing a greater problem.

Sellers and brokers can take the following steps to help protect themselves:

  • Before contracting to sell commercial property, sellers should check with their property managers, maintenance personnel, and other insiders to determine if there are latent (a defect that is present or potential, dormant or hidden) defects.
  • Disclose to the buyer defects and facts basic to the transaction, whether patent or latent.
  • If there is any doubt about whether a property defect is patent or latent, it may be advisable to disclose the defect to the buyer.
  • In drafting as-is clauses, both contract and tort liability should be expressly disclaimed (although Arizona courts have indicated they will not enforce a disclaimer of the seller’s fraudulent acts).
  • In preparing and administering free-look or inspection-contingency clauses, the buyer should be given the right to examine all aspects and areas of the property, including those areas that ordinarily might be considered inaccessible.

Consult With A Real Estate Lawyer

To protect yourself when selling or buying a property "as is," contact our law office at Platt & Westby, P.C., or call 602-277-4441 to speak with one of our experienced real estate attorneys. No matter which side of the deal you are on, it is best to educate yourself and feel confident that you are making the most appropriate decision for your circumstances. Our attorneys are able to provide you with the knowledge and guidance you need. Contact us today.

Looking For More Information on Selling Property "As Is?"

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Phoenix, AZ 85013
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Glendale, AZ 85308
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Avondale, AZ 85393
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