It seems like an easy thing to do when selling a property: just hand over the keys and include an “as-is” clause in the contract. After all, caveat emptor – “buyer beware.” But do you really know what an as-is clause means?
It’s more complex than it seems, and it doesn’t mean the buyer can’t back out of the sale or that the seller has no responsibilities. There are laws and codes in D.C. governing what must be disclosed to buyers before they sign a contract, even with an as-is clause included.
In Washington, D.C., sellers must adhere to the DC Code’s Seller Disclosure Requirements or they risk facing legal penalties. The code requires they disclose – in writing – any known facts or issues pertaining to the property in question. Sellers must disclose issues with plumbing, electrical systems, appliances, pest infestations, structural systems, and more.
What Is An As-Is Clause in Real Estate?
If a seller has to disclose so much, you may wonder what as-is clauses mean and what their purpose is.
Put simply, an as-is clause is a statement that the buyer acknowledges and accepts that they are purchasing the property in its current condition and without any guarantees or warranties from the seller. The buyer can perform a property inspection (and should!), but they agree that the seller is not responsible for resolving issues that the inspection uncovers.
What Is An Example of an As-Is Clause?
When creating an as-is statement, it should be clear and specific. It should include language stating that the buyer understands they’re purchasing the property in its current state. It also needs to say that the seller is not offering any guarantees or warranties about the property’s condition.
Here’s an example:
“The Seller is selling the Property in “As-Is” condition, with all faults. The Buyer acknowledges and accepts that Buyer is purchasing the Property in its current condition and without any representations, guarantees, or warranties from Seller, either expressed or implied, as to suitability or condition.”
Is An As-Is Clause Enforceable?
In most cases, an as-is clause is legally enforceable in Washington, D.C. and elsewhere in the DMV. But there are some instances where a buyer can pursue legal action against the seller, even if the buyer signed a contract with an as-is clause.
When is an As-Is Clause Not Enforceable?
For an as-is clause to be legally binding and enforceable, the seller must abide by specific requirements. First and foremost, all known defects must be disclosed in writing and presented to the buyer before the sale of the property. Otherwise, a buyer may be able to pursue legal action against the seller.
Other instances in which an as-is clause may not be enforceable include when the seller:
- Prevents the buyer from discovering defects by, for example, intentionally hiding them or obscuring information
- Lies or misrepresents the condition of the property to the buyer
- Fails to disclose known issues with the property that the buyer couldn’t reasonably discover on their own
As a real estate buyer or seller, it’s essential to understand the importance of an as-is clause and your rights and responsibilities under the law. If you have questions about your rights as a buyer or seller or need help navigating the complexities of real estate law in Washington, D.C., contact the experienced legal professionals at McMillan Metro to ensure your rights are protected.