What an “as-is” clause really means.
NRS 113 requires the seller to complete the Seller’s Real Property Disclosure Form. Many buyers (and maybe even some agents) seem to think that by selling the property “as is,” they are not obligated to disclose any material adverse conditions of the property since they mistakenly believe the clause shifts the responsibility for the condition of the property to the buyer. While the statute requiring disclosure does not prohibit a seller from selling the property “as is,” the seller is still required to accurately complete the disclosure. Agents should also review the disclosure form.
State court decisions. Numerous state courts have upheld this analysis. In Syvrud v. Today Real Estate, Inc., 858 So. 2d 1125, 1130 (Fla. 2d DCA 2003), the Florida court concluded that “the fact that this house was sold ‘as is’ does not make summary judgment appropriate. The duty to disclose known defects … continues to exist for a home sold as is.” In The S Development Co. v. Pima Capital Management Co., 201 Ariz. 10, 16, 31 P.3d 123, 129 (Ariz. App. 2001), the Court held that a vendor must disclose latent defects in property that are known to the vendor, notwithstanding the existence of a burden-shifting “as is” clause or disclaimer of warranties. In addition, in Richey v. Patrick, 904 P.2d 798, 803 (Wyo. 1995), the court stated that “in the case of an actual misrepresentation or fraud, an ‘as is’ clause will not relieve the seller of liability.”
“As is” doesn’t let agents off the hook. NRS 645.252 requires agents to disclose “any material and relevant facts, data, or information which the licensee knows, or which by the exercise of reasonable care and diligence should have known, relating to the property which is the subject of the transaction.” These disclosure obligations of licensees are not dependent upon what the Seller does or does not disclose. More importantly, “as is” language cannot be used in any way to alter this obligation, and a licensee should never rely on an “as is” clause to shield him or her from nondisclosure liability. Nevada Law and Reference Guide, Fourth Edition, 2014, Section IV.
Legal effect. So, what is the legal effect of “as is” disclaimers? When a seller lists a home “as is,” it means he can’t or won’t negotiate with the buyer over any fixes or credits. The buyer can get an inspection and make an effort to know what problems there might be, but she’s agreeing to take it without repairs. Nevertheless, sellers may not ‘contract’ out of their duty, and buyers have a right to rely on the disclosure statement.
Advice to Sellers. Even though a seller includes an “as is” clause, he/she must complete the disclosure form thoroughly and honestly. Known defects—even if you think they’re obvious—must be disclosed, and sellers should avoid casual statements minimizing issues.
Buyer’s inspection rights. An “as is” sale does not eliminate the buyer’s right to conduct inspections, cancel within contingency periods, or renegotiate based on inspection findings. In fact, the inspection contingency often becomes even more important in an “as is” deal.
Drizin Law is providing this information for educational purposes only. It should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. This information is based on general principles of Nevada law at the time it was created, and you should be aware laws frequently change. Moreover, the laws affecting you may differ depending on the circumstances. You should consult with a qualified attorney in your own state or jurisdiction concerning your particular situation. Review of this information does not create an attorney-client relationship.
