Real Estate Fact or Fiction

No Seller Disclosures Are Required in an “As Is” Residential Contract

With the current increased use of “As Is” residential real estate contracts, the question has been posed several times as to whether the seller must give any disclosures when the seller is selling residential real property “As Is, Where Is.” After all, the seller is not making any representations, warranties, or guarantees, and the buyer is usually given the right to inspect, along with the right to cancel the contract and receive the deposit back if the buyer is for any reason not satisfied with the property. Right?

Well, let’s look at the two standard “As Is” contracts: the Residential Sale and Purchase Contract with an As Is Right to Inspect Addendum (the FAR As Is Contract), and the FAR/BAR “As Is” Residential Contract (the FAR/BAR As Is Contract).

Under Florida law, the seller has a legal duty and obligation to disclose to the buyer all facts materially affecting the value of residential property which are not readily observable. Is such a provision in both of these contracts? Yes, it is. In the FAR As Is Contract, it is located at the beginning of Paragraph 7 (and note that Paragraph 7 is not deleted or replaced in the As Is Addendum). In the FAR/BAR As Is Contract, it is in Paragraph 10(j).

What happens if the seller fails to disclose a problem that is not readily observable? The buyer can sue the seller for misrepresentation and will probably also blame both Realtors for not telling or asking about the problems and sue them also.

Remember, as a transactional broker, you must also disclose all facts known to you that materially affect the value of residential real property and are not readily observable to the buyer. This is a separate and additional duty from the seller’s obligation to disclose. This is your duty, and your license is at stake.

Therefore, both Realtors should insist that the Seller’s Disclosure form be completed fully by the seller in order to assist the seller in complying with Florida law and to protect the buyer and themselves. The Realtors should then ensure that the form is signed and dated by both the seller and the buyer.

Even if the seller lies in the disclosure, as long as you do not know about it, you, as a Realtor, cannot be held liable for the lies of another.

The statement: “No disclosures are required in an ‘As Is’ residential real estate contract,” is fiction.

Two notable exceptions to the disclosure requirement, however, are:

1. Non-residential property, including ranch, farm, and grove lands, and commercial property such as rental homes which are currently being and in the future will be rented, stores, office buildings, strip centers, warehouses, and similar properties.
2. When the seller of residential property has not lived on the property and therefore has no knowledge of any problems or defects, such as individuals who inherit another’s property or mortgage lenders who are selling properties upon which they have foreclosed.

If you have any questions, please do not hesitate to call us or email us.

Source: Barnes Walker Educational Series