Often, there are some misunderstandings and/or misconceptions held by the general public regarding the so called “As Is” sale of real estate.
Often sellers feel that if they say they want to sell their home “As Is” that it means it absolves them from any responsibility or liability for existing defects with the property.
When a seller states that they are selling the property “As Is” this does not relieve the seller of certain responsibilities and laws relating to the sale or transfer of ownership of real estate. In an “As Is” transaction where the seller does not warrant the condition of the property, the seller is still required to disclose all known material facts to the buyer.
As of January 1, 1987, sellers are required by law to furnish prospective buyers with a complete “Real Estate Transfer Disclosure Statement” in transactions of real estate containing one to four residential units. This law requires that sellers of real estate property disclose in writing, all conditions and problems that the seller knows or should know exist.
Things that a seller needs to disclose to a buyer include: environmental hazards, encroachments and adjoining property issues, structural modifications made without permits, soil problems, flooding, zoning violations, neighborhood noise problems, CC&R’s if the property is a common interest development, just to name a few. The law requires that a transfer disclosure form (“TDS”) be filled out by the seller and provided to the buyer.
The purpose of this article is not to cite specific laws, but to explain the general obligation sellers have to disclose any and all known defects that would affect the marketability or value of a particular piece of real estate. There are some exceptions to the law, however for most buyers and sellers of real estate it is imperative to realize the importance of full disclosure.
A property being sold “As Is” is really being sold “As Is” as disclosed. A buyer should always obtain independent professional property inspections to satisfy themselves as to the condition of the various aspects of a property. A Real Estate professional is well versed in the disclosure laws and how they pertain to you.
A seller should not be concerned with pointing out problems with their property. Often sellers are relieved by how their disclosures are received by potential interested parties. What a seller should be very concerned about is not disclosing any defect, which is a material fact, which affects the value of the property.
A COUPLE OF COMMONLY ASKED QUESTIONS REGARDING THIS LAW ARE:
- Are landlords who have never lived on the property exempt from filling out the disclosure statement? NO
- Does the real estate transfer disclosure statement required apply to “For Sale By Owners”? YES
- Does a buyer have the right to cancel the transaction when the disclosure statement is furnished after the buyer has signed the offer to purchase? YES, within the time allowed.
If you have any questions regarding this or any other aspects of purchasing, exchanging, or selling real estate, give your real estate professional a call.