Selling As-Is Real Estate in Missouri
Owners offering to sell as-is real estate in Missouri must disclose to prospective buyers all material information about the real estate that is known to the seller. This includes defects in the property. The disclosure should be written and given to prospective buyers prior to entering into a sale contract.
What As-Is Means
As-is real estate means: first, that the owner will not be obligated to make, or pay for, any repairs to the property, and second, that the owner is providing no implied warranties. As to the second point, the owner is simply obligated to convey to the buyer whatever right and title the owner, and the heirs of the owner, possesses in the property. This conveyance is typically done through a quit claim deed. Such owner also does not provide any implied warranty as to the condition of the property, including any warranty that a house on the property is in a livable condition. This is typically referred to as an implied warranty of habitability.
Confusion about the meaning of as-is real estate typically occurs in relation to the implied warranty of habitability. Under Missouri law, although an owner does not warrant the habitability of as-is real estate, the owner must still disclose material information, including defects, known to the owner that would not be discoverable by the buyer in the ordinary course of the buyer’s due diligence.
The Missouri Supreme Court said the following in a 2007 opinion: “The presence of a clause disclaiming warranties in a contract does not negate a pre-contractual duty to [disclose].” A “real estate contract specifying the seller was making no representations regarding the condition of the property ‘did not relieve [sellers] of the duty to disclose’ known material facts that were ‘not within the fair and reasonable reach of the [buyers]”.
Disclose Material Information
The failure to provide such disclosures is a mistake. The owner selling as-is real estate is obligated to disclose the material information known to the owner that would not be discoverable by the buyer in the ordinary course of the buyer’s due diligence. By disclosing such information, sellers of as-is real estate significantly reduce the risk of a buyer later asserting a claim of fraud against the seller. Moreover, whether a condition is discoverable by a prospective buyer is not always easy to determine and in litigation is a question that the judge or jury must answer.
This article is for general informational purposes only, and it is not intended as legal advice. Sewell Law provides professional legal services in the areas of real estate and business law, including litigation. Please contact Michael Sewell, MBA, JD at (314) 942-3232 or at michael@sewelllaw.net to discuss your legal matters.
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