A real estate sales agent is representing a buyer who wants to purchase a property with significant structural issues. The buyer is aware of these issues and intends to undertake major renovations. The agent advises the buyer to include an 'as-is' clause in the contract. What is the implication of an 'as-is' clause in a Texas real estate contract?
- AIt means the buyer is accepting the property in its current condition, including known and unknown defects, without seller warranty or obligation to repair, while still allowing for disclosures.
- BIt transfers all liability for future property defects from the seller to the buyer, including those intentionally concealed by the seller.
- CIt means the seller is relieved of all disclosure duties regarding the property's condition.
- DIt obligates the seller to make repairs only if the defects are discovered after closing.
Show answer & explanationAnswer & explanation
Correct answer: A. It means the buyer is accepting the property in its current condition, including known and unknown defects, without seller warranty or obligation to repair, while still allowing for disclosures.
An 'as-is' clause generally means the buyer accepts the property in its current condition with all faults, known and unknown, and the seller is not obligated to make repairs. However, it does not relieve the seller of their duty to disclose known material defects.
Why the other options are wrong
- B. An 'as-is' clause typically does not protect a seller from liability for intentionally concealed defects or fraud.
- C. An 'as-is' clause does not relieve a seller of their duty to disclose known material defects.
- D. An 'as-is' clause generally means the seller has no obligation to repair, regardless of when defects are discovered.
'As-Is' Clause (Texas)
A contractual provision where the buyer agrees to purchase the property in its current condition, without seller warranty or obligation to make repairs, though sellers must still disclose known material defects.
- Buyer accepts property with all faults.
- Seller generally not obligated to make repairs.
- Does NOT relieve seller of disclosure duty for known material defects.
Memory trick: As-Is: 'A'ccepting 'S'tatus, 'I'ncluding 'S'hortcomings (but not 'S'ecrets).