Did You Know Selling Your Property 'As Is' Can Get You Sued?

You might think selling your property “as is” means you're covered if something goes wrong. The reality is that selling a property "as-is" can get you sued. A property with undeclared flaws can land you in hot water for a variety of reasons, including:

  • Fraudulent inducement
  • Willful concealment
  • Breach of contract
  • Gross negligence

Why the As-Is Clause Alone Doesn't Truly Protect You

It doesn’t matter if you were unaware of the defect(s) that later become issues. The buyer decides whether or not to bring a claim, and if they do, you’ll need to defend yourself in court. The mere allegation of fraud can be enough to warrant a trial by jury.

Don’t assume you can automatically settle out of court. Due to the courts' stance on property fraud, litigators incentivize the plaintiff to drag you through litigation.

The True Cost Of 'As Is Property' Fraud

When it comes to lawsuits, the losers pay for everything. The first expense is your attorney’s fees (~$10,000), followed by the plaintiff’s legal fees (~$10,000). Finally, there are the damages, which tend to range between $5,000 – $15,000 based on average claim costs.

In other words, a run-of-the-mill lawsuit costs up to $35,000. However, a few states allow plaintiffs to take triple damages.

Protect Yourself By Beefing Up Your 'As Is' Contracts

This is why a professional asset protection plan makes economic sense. Attorney’s fees from a single lawsuit can offset the cost of your plan.

If you want to take your chances without a plan, then you need to upgrade your “as is” clause. I add the following text to my contracts. It provides several additional layers of protection against claims of property fraud.

My Bulletproof Protection Clause

THE PROPERTY IS CONVEYED AND ACCEPTED “AS IS,” IN ITS PRESENT PHYSICAL CONDITION, WITH ALL FAULTS AND DEFECTS OF WHATEVER KIND, LATENT OR PATENT, KNOWN OR UNKNOWN, AND WITHOUT REPRESENTATION OR WARRANTIES, EXPRESS OR IMPLIED, EXCEPT FOR WARRANTIES OF TITLE AS MAY BE SET FORTH AND LIMITED HEREIN.

GRANTOR MAKES NO REPRESENTATIONS AS TO THE PRESENT OR FUTURE VALUE OF THE PROPERTY OR ITS PRESENT OR FUTURE SUITABILITY FOR ANY PARTICULAR PURPOSE. FURTHER, GRANTOR HAS NOT MADE, DOES NOT MAKE, AND SPECIFICALLY DISCLAIMS ANY REPRESENTATIONS REGARDING THE ENVIRONMENTAL CONDITION OF THE PROPERTY OR ITS COMPLIANCE WITH ANY ENVIRONMENTAL, POLLUTION, OR LAND USE LAWS AND REGULATIONS, WHETHER FEDERAL, STATE, OR LOCAL. ANY AND ALL PRIOR ORAL OR WRITTEN STATEMENTS CONCERNING THE CONDITION OF THE PROPERTY, WHETHER MADE BY GRANTOR, GRANTOR’S AGENTS, OR THIRD PARTIES, ARE EXPRESSLY DISCLAIMED.

GRANTEE ACCEPTS THIS CONVEYANCE SOLELY ON THE BASIS OF GRANTEE’S DUE DILIGENCE AND EXAMINATION OF THE PROPERTY. THE CONSIDERATION PAID FOR THE PROPERTY REFLECTS THE “AS IS” NATURE OF THIS CONVEYANCE. THIS “AS IS” PROVISION IS A MATERIAL TERM THAT HAS RESULTED FROM SPECIFIC NEGOTIATIONS BETWEEN THE PARTIES. GRANTOR WOULD NOT HAVE BEEN WILLING TO SELL AND CONVEY THE PROPERTY TO GRANTEE UNLESS THE DEED CONTAINED THIS “AS IS” PROVISION. PROVISIONS OF THIS “AS IS” CLAUSE SHALL INDEFINITELY SURVIVE CLOSING AND SHALL NOT MERGE.

IF GRANTEE IS UNCERTAIN ABOUT THE MEANING AND EFFECT OF THIS “AS IS” CLAUSE, THEN GRANTEE SHOULD CONSULT AN ATTORNEY. BUYER’S INITIALS AS TO THIS “AS IS” PROVISION_______

Using this type of language may destroy good will with your buyer, but the alternative is far worse. You shouldn't leave yourself open to a devastating lawsuit just to close a deal. The risk simply isn't worth it.

One of the reasons you want to have an attorney on your side is because you can send tough contract terms and blame it on a third party, leaving your relationship with the buyer in the clear. Don't put your reputation on the line unnecessarily: take action today. Contact us and set up your consultation before you sell your property as-is.

Interested in learning more? Check out our articles, Selling Property? Protect Yourself With A Robust ‘As-Is’ Clause and Selling Real Estate ‘As Is’: Guide For Investors.


Last Updated: 
January 29, 2021

Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.

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