If you are buying (or even thinking about it) in today’s real estate market, you have probably heard it is very competitive to find a home. The seller’s market experienced during the Pandemic continues due to low inventory further exacerbated by high-interest rates, with 30-year fixed mortgage rates near 8% incentivizing property owners to stay put. Ongoing high demand has kept sellers in the driver’s seat and buyers sometimes desperate to get their offer accepted.
Today, most real estate purchase and sale agreements include language specifying that the home is being sold in “as is” condition, subject to any permitted repair requests made by buyers. However, buyers who are already waiving contingencies typical in a more balanced market (such as for appraisals, inspections, financing and existing home sales) will make their offers more attractive by agreeing to buy a property in its current condition and waive the option to demand repair requests. Sounds great but sellers beware…
Sellers often believe that listing their home “as is” means they have no obligations to the buyers. However, that is not the case, as it will not relieve them of two key matters:
(i) the need to disclose any known material latent defects to buyers, and
(ii) the implied warranty of habitability that applies when selling a home.
Latent defects are those not readily visible or discoverable from reasonable observation or inspection. While sellers do not have to proactively look or inspect for such defects, they must disclose those which are known. In order to facilitate this process, most New Jersey real estate agents ask sellers to complete a Seller’s Property Condition Disclosure Statement (“Disclosure Statement”) to be shared with potential buyers. Although not required to be completed under New Jersey law, the Disclosure Statement, when completed truthfully and in its entirety, is helpful to ensure that sellers are providing buyers with appropriate disclosures. Failing to disclose (or worse deliberately concealing) material latent defects could result in the contract being canceled or rescinded and/or sellers being on the hook for the buyers’ damages.