Property Disclosure Statement and “As Is” Sales

Q: I’ve seen several N.C. Residential Property Disclosure Statements lately where the sellers have struck through the form with a big “X” and written “as is” at the bottom of  them under “Other.” Does that mean that the house is being sold “as is”?

A: No. While an “as is” sale might be the seller’s intent here, simply making such a notation on the Statement does not create an “as is” sale between the buyer and the seller. The contract between the buyer and the seller controls in what condition the property will be sold and delivered to the buyer, not the Statement. Therefore, the seller should  seek the advice of an attorney regarding his obligations and liabilities when selling a house in “as is” condition and the assistance of an attorney to modify any offer from the  buyer accordingly. The N.C. Residential Property Disclosure Act imposes a duty upon the agents involved in the transaction to inform their clients of the clients’ rights and  duties under the Act. The Statement itself provides “Instructions to Property Owners” on how to properly complete the form. Sellers must check one of the boxes for each item on the form. Striking through the form with a big “X” and writing “as is” at the bottom of it under “Other” is arguably the equivalent of not providing a Statement at all. If a seller  client refuses to fill out the Statement or persists in marking through the form and noting “as is” at the bottom, inform the seller not only that this does not achieve an “as is”  sale, but also that he or she is not meeting his or her obligations under the Act and therefore, the buyer may, under certain conditions (see the “Note to Purchaser” on the  Statement), cancel any resulting real estate contract and be entitled to a return of deposit monies. The Act provides that where the owner’s agent performs his or her duty in  this regard, the owner’s agent will not be responsible for the owner’s willful refusal to provide a buyer with a Statement.

Q: I’ve also seen relocation companies that have bought houses strike through the N.C. Residential Property Disclosure Statement with a big “X,” writing “See attached” under “Other” and then attaching their own disclosure statement or some disclaimer in place of the Statement. Should they be doing that?

A: No, at least not if they want to meet their obligations as owners under the N.C. Residential Property Disclosure Act. The Act gives the North Carolina Real Estate  Commission the authority to develop and require the use of a standard disclosure statement to comply with the requirements of the Act. Therefore, the N.C. Residential  Property Disclosure Statement promulgated by the North Carolina Real Estate Commission is the only form approved in North Carolina for this purpose. The same principles  apply to striking through the form and attaching a different form or some disclaimer as those discussed in the answer to the previous question — it is arguably the equivalent  of not providing a Statement at all.

Q: If a seller checks “Yes” for any question on the N.C. Residential Property Disclosure Statement and the buyer receives a copy of the Statement prior to making an offer,  does that mean that the seller need not repair those items for which the seller checked “yes,” because the buyer knew about the problems before making an offer?

A: No. As stated earlier, the contract between the buyer and the seller controls in what condition the property will be sold and delivered to the buyer, not the Statement. The  contract should address the buyer’s and seller’s rights and obligations relating to inspections and repairs.