The “as is” real estate contract can bring many reactions. Some may see it as an opportunity for a good deal, others a deal to avoid. This case provides some valuable lessons to anyone that finds themselves in the former group.
The case, Diaz v. Kosch, begins in 2012. At that time, sellers listed their Florida property. The sellers include a “Owners Property Disclosure Statement” that also allegedly encouraged any prospective buyer to “thoroughly inspect” the property. Potential buyers, described in the case as having “substantial experience” with real estate matters, agree to purchase the property “as is” and offer $2,850,000 with a $50,000 deposit.
During inspection, the buyers contact the sellers stating the sellers misrepresented the property. These misrepresentations allegedly included a large amount of work completed without required permits as well as the presence of mold and radon. Instead of backing out of the deal, the buyers provide a “conditional tender” with a second deposit. The buyers claim this was designed to allow additional time to inspect and remediate any issues on the property, the sellers claim the buyers were just trying to get the best possible deal while keeping any other potential buyers out of the equation. The two parties took the dispute to litigation. A long legal battle results and both parties fight for the other to cover legal costs. Ultimately, the court in this case upheld the “As Is” contract when it ruled in favor of the sellers, thereby strictly interpreting the term “As Is”.
There are many lessons from this case, including:
- The courts like the language of the “as is” contract. The court states in its opinion that it supports the use of the “as is” contract used in the sale. This shows that Florida courts view well-structured real estate transaction documents favorably.
- Courts also take the inspection period seriously. The court states the buyers in this case could have extended the inspection/cancellation period. However, it is also clear the court expects both parties to follow proper protocol to enforce such an extension.
The overarching lesson in this case is a reminder of the complex nature of these transactions. Even experienced buyers are wise to seek legal counsel to mitigate the risk of similar issues.