What does ‘as is’ mean?

Q: I recently purchased a home. When the previous owners moved out, they left the pipes open in the garage. When I turned on the water, it gushed out and flooded the garage before we could shut the water off. The real estate company representing the sellers and my own agent said the home was sold "as is" and the damage is my responsibility. What about an inspection in a home being sold "as is?" What does the term mean?

A: Many years ago, the Nevada legislature passed the seller's real property disclosure act. This law was designed to assist the buyer in purchasing a home by requiring the seller to complete a real property disclosure form that identifies any potential defect of the property or the community.  NRS 113.130 states that at least 10 days before the conveyance of the residential property, the seller or seller's agent is to deliver the completed disclosure form.  If there was a defect, the buyer could rescind the contract without penalty or close escrow and accept the property with the defect(s).

If the seller failed to provide the disclosure form or if the seller failed to disclose the defect(s), the seller would be liable for damages.

What sales are exempt? Property that is being sold as a foreclosure sale per NRS 107.

In your case, you have the absolute right to inspect the home prior to purchase. The proper inspection will identify problems from termites (yes, we can have them in the desert), mold, plumbing, irrigation problems, etc.  In a sale where you agree to buy "as is," you can place a contingency in the offer and acceptance that you do want the option to inspect the property.  Once you review the inspection report, you can make a final decision as to whether you want to close the transaction in the "as is" condition.

Even purchasing a home in "as is" condition, there are additional state laws that could protect a residential purchaser if the seller intentionally hid a defect in the home, for example, painting over mold. 

But once again, a lender who is selling a foreclosed home is protected based on the concept that the lender has not information about the history of the physical condition of the house.

In your case, you can have an attorney review the paperwork but there is a good chance that there is no legal remedy.

Barbara Holland, CPM, and Supervisory CAM, is president of H&L Realty and Management Co. To ask her a question, e-mail support@hlrealty.com.