New York Real Estate Salesperson ExaminationContractsHard
A real estate broker drafts a purchase agreement for a client. The contract states that the buyer will purchase the property 'as is' and includes a specific clause waiving the buyer's right to a property inspection. If the buyer later discovers latent defects, what is the most likely legal standing of the 'as is' clause regarding these defects?
- AIt is generally enforceable for visible defects but may not protect against undisclosed latent defects.
- BIt obligates the buyer to pay for all repairs, regardless of disclosure.
- CIt fully protects the seller from all liability for latent defects.
- DIt renders the entire contract voidable by the buyer due to fraud.
Show answer & explanationAnswer & explanation
Correct answer: A. It is generally enforceable for visible defects but may not protect against undisclosed latent defects.
An 'as is' clause generally means the buyer accepts the property in its current condition, including visible defects. However, it typically does not relieve the seller of the duty to disclose known latent (hidden) defects that materially affect the value or safety of the property, especially if such defects are not readily discoverable by a reasonable inspection.
Why the other options are wrong
- B. The 'as is' clause implies the buyer accepts current condition, but it doesn't automatically shift responsibility for all repairs of *undisclosed* latent defects if the seller had a duty to disclose.
- C. An 'as is' clause does not typically protect a seller from liability for known, undisclosed latent defects.
- D. While non-disclosure of known latent defects could be grounds for fraud, an 'as is' clause itself doesn't automatically void the contract; rather, it's the seller's obligation to disclose that remains paramount.
'As Is' Clause (Real Estate)
A provision in a real estate contract stating the buyer accepts the property in its current condition, relieving the seller of responsibility for most defects.
- Applies to observable defects.
- Does NOT typically cover known, undisclosed latent defects.
- Does NOT relieve seller of disclosure obligations for material defects.
Memory trick: 'As is' means 'as seen', not 'as hidden'.