What it means to purchase a property ‘as-is’

By: Ahwatukee Foothills News 

If you’ve ever purchased a property, whether commercial or residential, you’ve probably come across a listing or a contract that included the words “as-is” in the text of the listing or the contract.

While some may view these words as a red flag or something to avoid, some understanding of what “as-is” really means may help to avoid some confusion or apprehension.

An “as-is” property is a property that is being listed and sold in its current state.

In other words, any issues or problems disclosed by a seller or discovered by a buyer will not be addressed by the seller during the escrow period.

In a traditional purchase and sale arrangement, if the buyer discovers something wrong with a property, the buyer can request that the seller pay to have the issue fixed prior to closing.

In this scenario, the purchase is contingent upon the repairs being made prior to closing. In an “as-is” sale, the words “as-is” suggest that the seller will not entertain any requests to repair an issue. That’s all “as-is” means.

Note that a buyer is not precluded from requesting repairs, even when a seller is selling “as-is.”

An ”as-is” sale or “as-is” property actually makes sales easier and smoother. Unless the parties specifically agree that certain items must be repaired prior to closing, an “as-is” sale avoids any confusion about whether repairs will be provided.

Importantly, an “as-is” sale is not an invitation to misrepresent the condition of a property.

Many sellers are under the misbelief that selling a home “as-is” relieves them of their obligations to disclose issues with the property.

Again, “as-is” just means that the seller is not going to make any repairs, unless the parties specifically negotiate for the repairs to be completed. “As-is” really has nothing to do with disclosure law.

In other words, a seller can choose to make repairs or not make repairs, but they cannot withhold information about the property and must truthfully answer questions about a property.

In short, when purchasing property in Arizona, whether commercial or residential, buyers will run into sellers wanting to sell their properties “as-is” and “as-is” provisions are common in most “form” contracts.

Because most properties are sold this way, it is critical to have a property inspection completed prior to close of escrow and to complete all of the other due diligence items allowed by your contract.

If you have any questions about purchasing “as-is” properties, disclosure laws, or anything else, email pmacqueen@medalistlegal.com or call 602-767-0050.

Ahwatukee Attorney Patrick R. MacQueen is founder of Medalist Legal, PLC. He graduated with honors from the Eli Broad College of Business at Michigan State University with a bachelor’s degree in finance. He then moved on to the University of Detroit Mercy School of Law, where he ranked top in his class. His work is primarily in the areas of real estate transactional law and real estate litigation.