Have you ever scrolled through real estate listings and wondered exactly what is meant when it says the property is to be sold “as is”?
The language is pretty obvious, but what are the implications for your legal protection should you wish to purchase?
Should this phrase raise a red flag? Should you assume properties marketed in this way are money traps, full of hidden flaws for which the seller refuses to take responsibility?
Buying a home without a legal warranty can be a little confronting. After all, if the seller has purposefully misled you on the condition of the property, you would have no legal recourse.
Here are a couple of examples of why you might want a warranty: If the upstairs bathroom has a leaking pipe that was not detected during your building inspection – and it’s clear the seller hid the problem – you’d have recourse for compensation.
A similar and more common issue involves swimming pools that leak and would cost thousands of dollars to reseal.
Of course, going down the path of legal compensation may end up being more expensive than fixing the problem. (But that’s another matter!).
So, let’s be clear on what a legal warranty provides: it’s a protection against hidden defects that are so significant that a buyer would reasonably have decided against purchasing the property, or they’d have negotiated a lower price.
The issue has to be serious. Cosmetic problems are not part of legal warranty coverage.
Here are some observations about buying a property without legal warranty:
Read documents – Carefully review all paperwork provided by the seller before the sale, especially the declarations by the seller and the pre-purchase inspection report.
Warranty exclusions – Be aware the Warranty of Quality does not cover defects the seller has disclosed, or issues that a prudent and diligent buyer would have noticed.
Automatic inclusion – Both the Warranty of Quality and the Warranty of Ownership are automatically included by law, and no special clause is needed for them to apply.
Exclusion requirement – To exclude either or both warranties, a specific clause must be added to the contract.
Scope of exclusion – The seller may exclude the legal warranty fully or partially. Commonly, exclusions apply only to the Warranty of Quality. These may cover specific features, such as a swimming pool or fireplace.
Common exclusion clause – The brokerage contract may include the clause: “This sale is made without legal warranty of quality, at the buyer’s own risk.”