Selling a house or a multi-family property as-is requires much consideration. The process involves not only finding the right buyer at the right price point; you must also ensure that you cover your legal bases. Otherwise, the deal could end up costing you.
What does ‘as-is’ mean?
When you hear the term “as-is,” you might think of the sale of a house or multi-family property in its current state, with no changes, upgrades or fixes. While that is partly accurate, there is a catch — you need legal knowledge to do it correctly and guard against potential liabilities. Even if you and the buyer agree verbally or in writing that the property will change hands “as-is,” you need the right legal language in your purchase-sale agreement to protect yourself against unwanted consequences.
Purchase-sale agreement
First, you need a well-drafted purchase-sale agreement, which is a document that will have legal terms and be the basis for the sale of the property. It is the contract that makes the sale official.
You, the seller, and the buyer must agree on the terms and conditions of the sale and purchase, and everyone signs the document.
This document is critical because it holds the terms of the sale, but also because the agreement must be specific and detailed for it to be an enforceable document. In other words, you need a lawyer to draft and review the document. Don’t rely on the clarity and straightforwardness of your own language. That language may not hold up in court, but a good lawyer’s language will.
Contract review
Before you sign anything, a real estate law attorney should review the contract to ensure that everything is in order and works to guard against liabilities. After all, just because the sale is as-is does not mean that you and the buyer are giving up your respective rights, and you certainly do not want surprises down the road.
‘As-is’ does not necessarily excuse failure to disclose
You may be familiar with the term “disclosure” with regard to real estate sales. Disclosure involves telling the buyer what is known about the property: for example, if the foundation is weak or if the property has a mold problem or an electrical problem. Failure to disclose problems with a property in an as-is sale could have disastrous consequences for the buyer and seller. If you have concerns about disclosure in a real estate sale, be sure to talk to a real estate attorney as soon as possible.