What does it mean to purchase property under an â€œas isâ€ contract?
It means that the seller agrees to sell and the buyer agrees to buy the described property in the condition that it is in on the effective date of the contract. The â€œeffective dateâ€ of the contract is the date when the last one of the buyer(s) and seller(s) has signed or initialed and delivered the offer or final counter-offer to the other party. If the buyer does not exercise his/her/its right to cancel the contract, the buyer accepts the physical condition of the property as well as any open permits or code violations that may be present.
What right does the buyer have to cancel the contract?
The buyer has the right to cancel the contract within the period of time set forth in paragraph 12 of the contract known as the inspection period. During this period, the buyer has the right to inspect the property and determine whether the property is acceptable. If the buyer determines, in his/her/its sole discretion that the property is not acceptable, the buyer may terminate the contract and, so long as proper notice of cancellation is timely delivered, the buyer will receive his/her/its deposit back.
How does the buyer cancel the contract?
The buyer may terminate the contract by delivering written notice of cancellation to the seller prior to the expiration of the inspection period.
How many days should the inspection period last?
The inspection period lasts for 15 days from the effective date of the contract unless the parties agree otherwise. Any inspection period shorter than 15 days may not leave sufficient time for the completion of physical inspections and a lien search (which can take up to two weeks). If the seller will not agree to a 15+ day inspection period, the real estate agent preparing the contract should write as an additional term that, â€œSeller will close out all existing open permits and/or code violations prior to closing.â€
What are the sellerâ€™s â€œas-isâ€ contract responsibilities?
The seller has an obligation to maintain the property in the condition that it is in on the effective date of the contract. This obligation continues through the closing of the transaction. The seller is also required to cooperate in good faith with the buyerâ€™s efforts to close out open building permits or obtain needed permits. Keep in mind, open permits and code violations are not title issues but if they are not resolved, they will likely result in a lien on the property.
*This article explains some of the provisions set forth in the FAR/BAR contract
The statements made herein are for informational purposes only
and are not intended as professional legal advice.