As the local real estate market continues to experience an unprecedented level of competition and lack of inventory, it is more important than ever to brush up on exactly what is and is not contained in the FAR/BAR residential contracts. The FAR/BAR “As Is” Residential Contract for Sale and Purchase (the “Contract”), which is the focus of this BLOG, has grown in popularity in recent years for several reasons; one of being the popular belief that the Contract releases the Seller from any obligation to make any repairs to the Property. While it is generally true that the Contract does provide that the Buyer is accepting the Property in its as is condition and, thus, the Seller is not obligated to make certain repairs, there is one very important exception which all parties to the Contract need to be aware of prior to entering into said Contract.
Section 12(a) of the Contract provides that Buyer has a certain number of days after the effective date within which to have such inspections as the Buyer desires performed (“Inspection Period”). Within the Inspection Period, if the Buyer determines in the Buyer’s sole discretion that the Property is not acceptable to the Buyer, then the Buyer can terminate the Contract by notifying the Seller in writing. If the Buyer does not terminate the Contract during the Inspection Period, Buyer accepts the physical condition of the Property as is, “subject to Seller’s continuing As Is Maintenance Requirement.” Whoa whoa whoa… what’s this about a Seller’s continuing maintenance requirement? The last sentence said the Buyer accepts the Property “as is”!
This brings us to the important, and sometimes surprising, exception to the provisions in the Contract that state the Seller is not obligated to make repairs. Section 11 of the Contract states that “Except for ordinary wear and tear and Casualty Loss, Seller shall maintain the Property, including, but not limited to, lawn shrubbery, and pool, in the condition existing as of the Effective Date.” What constitutes ordinary wear and tear and Casualty Loss is a subject for another BLOG; but suffice it to say that if a system, appliance, etc. is in working condition as of the Effective Date and later ceases to function as it is intended prior to the Closing Date, then the Seller is responsible for bringing said system, appliance, etc. back into working condition and the Buyer has the right to demand that Seller do so prior to closing. Right about now is when an uninformed Seller typically says, “Repairs!?! but the contract is As Is!!”
By informing Sellers exactly what the Contract states in terms of repairs prior to them signing the Contract, Realtors can avoid the potentially unpleasant, and surprising, conversation when breaking the news that the Seller is, in fact, responsible for repairing something on the Property that broke down after the Effective Date. Additionally, if making repairs of any sort under any condition is a deal-breaker for the Seller, Realtors can address this prior to the parties signing the Contract by asking a real estate attorney to draft language that would eliminate the possibility of the Seller making repairs under any circumstance, including those discussed in Section 11 of the Contract.
As always, should you have any questions on this or any other real estate topic we encourage you to reach out to your trusted local real estate attorney.
Sincerely,
Andrew Conaboy, Esq. aconaboy@berlinpatten.com
Berlin Patten Ebling, PLLC
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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