The “AS IS” Real Estate Contract is not the legal equivalent of a magical charm or incantation. A recent Florida appellate court decision reminds everyone in the real estate industry that a lawful “AS IS” real estate contract does not relieve a seller and the seller’s real estate agent from duties to disclose imposed under Florida law. The conservative view, and a view I encourage sellers and their real estate agents to embrace, is to disclose in writing when in doubt. If a seller or their real estate agent is in doubt as to whether to disclose – do it; disclose in writing all that you know and provide any documentation that may enhance the disclosure.
The case that prompted this post involved an action resulting from a buyer’s cancellation of the parties’ purchase agreement. The cancellation was based on buyer’s discovery that the real estate had suffered flood damage, which was not disclosed to buyer, and it was not readily observable to buyer. The Court decided not to enter summary judgment because there were genuine issues of material fact as to whether the flood damage was readily observable or discoverable through exercising an inspection of the building, and whether the flood event affected the market value of the real estate. The seller argued buyer knew of the prior water intrusion. The Court concluded there were possible issues of material fact that may exist. Some questions included whether the prior flood event was readily observable? Was the flood event discoverable by an examination of the building? Did the flood event affect the real estate’s market value? Did seller know the representations about the real estate were false? Did seller intend the representations to act as an inducement to buyer to enter into the purchase agreement?
The Court also remarked the responsibility to disclose extends to seller’s real estate agent. Courts reason that a seller’s real estate agent has a specific duty to disclose any fact, which may materially affect the real estate’s value.
And last but important, for Florida residential real estate, adding an “AS IS” clause in a contract for the sale of residential real estate does not waive the duty imposed upon the seller, and the real estate agents involved in the sale, to disclose hidden defects. When you are unsure whether to disclose, do yourself a big favor and give the buyer a written disclosure; obtaining a dated receipt or acknowledgement signed by the buyer stating they received the disclosure would be ideal, along with providing in the contract a reasonable amount of time for buyer to inspect the real estate’s improvements, soil conditions, and appropriate environmental examination.
The real estate contract is the most important document in your real estate sale or purchase. Before you sign a real estate contract, residential or commercial, carefully review it with your real estate attorney. The real estate lawyers at Stross Law Firm, P.A. handle a wide variety of closing and title services for sale or transfer of property in Florida, including commercial and residential transactions. Contact us at 813-852-6500 to arrange a discussion with one of our real estate attorneys before you sign any document or if you need title insurance services for your closing, but especially before you sign an “AS IS” or another type of purchase and sale contract.