Buying or Selling real estate in Utah? What does “As is” mean?
I was speaking with a friend who is selling a property in another state, and the home is currently under contract with a buyer. My friend told me that the home is part of an estate sale, and they sold the property in “As – is “condition. Despite this, the buyer is asking a dollar credit, or reduction in price to address items in the home found during the inspection. My friend was frustrated – she thought “As Is” meant “That’s it…we're done, take it or leave it.”
While my friend’s sale is occurring in another state, I was able to explain that in Utah, approximately 10 years ago, the standard Real Estate Purchase Contract (REPC) was changed to include “As – Is” language. This means, if you’re using the Utah State approved REPC, the property is sold in “As – Is” condition, and sellers have no obligation to fix, replace or provide a credit to the buyer for any defective items in the property. Sellers do have an obligation to disclose defects that they’re aware of – in writing to buyers.
For sellers, this is good news! Of course, sellers want to circle, underline and highlight that “As-Is” language in the contract. Hang on though, there is a trade-off. Along with those changes to the REPC ten years ago, clear language was also added to ensure that buyers could cancel the sale prior to the Due Diligence Deadline and receive a refund of their Earnest Money Deposit. This means that a buyer can walk away, potentially weeks into the transaction, without penalty.
So…sellers in Utah are protected by this “As is” language, and buyers have the right to cancel, without penalty, prior to the Due Diligence Deadline. How does this play out in a practical way during a real estate sale? During the due diligence period, if the buyer (usually through an inspection) finds issues with the home, the “As – Is” language does not actually prevent buyers from asking the sellers to either fix the item(s), or provide a credit at Closing to the buyer. Per the language in the REPC, there is no obligation on the seller’s part to do either but understanding that the buyers can cancel the transaction may provide an incentive to work something out. Much depends on the nature of the issue, age of the home, overall interest in the home, market conditions, so on. It’s a complicated world. “As- Is” protects sellers but does not prevent buyers from asking sellers to remedy issues.