BUT I’M SELLING MY HOUSE “AS IS”
I am an elder care lawyer. Elder law encompasses the entirety of my practice. (Sometimes, I think it encompasses the entirety of my life.) By elder law, I mean Medicaid planning, Wills & Trusts, guardianships, and probate work.
However, because many of my clients are selling their homes – because they’re moving in with a family member or to an assisted living residence or nursing home, or because a family member has passed away – I also represent many people in real estate sales. In this column, I wanted to discuss the mean of an “as is” sale. The phrase “as is” seems to be universally misunderstood, and although real estate sales are not inherently the domain of elder law attorneys – in fact, some of my clients have hired other lawyers to represent them in the sale of their house because they didn’t think I represented clients in such transactions – I think this is an issue in which many elderly individuals have an interest.
“As is” means that after title to your property closes, none of the seller’s representations made before closing survive and that the buyer has no (or very limited) rights of recourse against the seller. “As is” does not mean that once the buyer signs the contract, he must buy the home no matter what the condition. “As is” does not mean that the seller doesn’t have to fix any of the problems with the house or give the seller a credit, so he can fix those problems after the closing.
I’ll explain what I mean through a hypothetical:
Joe, age 80, is selling his home; he’s decided to live in an assisted living residence down the street. Mary wants to buy Joe’s house. Mary agrees to buy the home for $250,000 with a closing to take place in two months. Mary is getting a mortgage for $200,000.
After attorney review ends – in other words, after Joe’s and Mary’s attorneys agree on the terms of the contract of sale – Mary hires a home inspector. After inspecting the home, the home inspector finds numerous defects with the house, some of which are of significant concern to Mary. Let’s assume that the roof leaks and there is an abandoned underground oil storage tank on the property.
Mary’s attorney may call Joe’s attorney and say, “Mary wants Joe to fix the roof and remove the underground storage tank.” Inevitably, Joe’s lawyer will pass this request on to Joe.
Now, if Joe’s like many of my clients, Joe might say, “I’m selling this property as is. I don’t need to fix the roof or remove the tank. They signed the contract for a sale as is.”
But, as explained above, “as is” does not mean that Joe can refuse to fix problems that the house may have. Joe doesn’t have to fix the problems with the house, but in most cases, if he doesn’t, Mary doesn’t have to buy the house.
In most cases, Joe will either repair the property himself (fix the roof, remove the tank) or will give the buyer a credit to have the work done herself. Mary will probably accept Joe’s offer, and the closing will eventually take place.
After the closing – called “closing of title” – Mary will own the home. Let’s assume that after she’s lived in the home for one month, she discovers that the windows leak. Angry, she breaks out her home inspection report and sees that the report says nothing about leaky windows.
Mary calls Joe and asks him to fix the windows or give her a credit for the windows. Joe says, “I sold you the house as is. I’m not fixing the windows.”
Now, Joe is correct. Since he sold the house “as is,” Mary has no recourse against Joe after closing of title. Mary had the right to have the home inspected, which she did. She had the right to ask Joe to fix any problems the report showed or to give a credit, which she did. And, Joe had the right to refuse or to make the repairs. Joe chose to make the repairs, which is good because Mary probably would have cancelled the contract if he didn’t.
Now that the closing has occurred, however, the “as is” provision prevents Mary from asking Joe to do anything else to the property, and in most cases, it prevents Mary from suing Joe for any problems with the house.