No Safe Harbor In Selling Real Estate "AS IS"

Recently the Arizona Court of Appeals held, that despite the existence of an as-is clause in a contract, a seller is subject to liability if he fails to disclose to a buyer defects in the property that are known to the seller, or if the buyer is prevented by the seller from discovering these defects (considered "facts basic to the transaction").

Sellers and brokers can take the following steps to help protect themselves:

Before contracting to sell commercial property, sellers should check with their property managers, maintenance personnel, and other insiders to determine if there are latent (a defect that is present or potential, dormant or hidden) defects.

Disclose to the buyer defects and facts basic to the transaction, whether patent or latent.

If there is any doubt about whether a property defect is patent or latent, it may be advisable to disclose the defect to the buyer.

In drafting as-is clauses, both contract and tort liability should be expressly disclaimed (although Arizona courts have indicated they will not enforce a disclaimer of the seller’s fraudulent acts).

In preparing and administering free-look or inspection-contingency clauses, the buyer should be given the right to examine all aspects and areas of the property, including those areas that ordinarily might be considered inaccessible.

To protect yourself when selling a property “as is,” contact the law office of Platt & Westby or call 623-239-4422 to speak with an experienced Arizona real estate attorney.