FACTS: The buyer submitted an offer on the AAR Residential Resale Real Estate Purchase Contract (Contract) stating that the buyer would purchase the property “AS IS.”  After the inspection, the buyer discovered numerous property defects and submitted a Buyer Inspection Notice and Seller Response form (BINSR) identifying the items disapproved and electing to cancel the contract.  The seller’s agent insists that the insertion of “AS IS” in the contract obligates the buyer to close escrow or forfeit the buyer’s earnest money. 

ISSUE: Does the insertion of “AS IS” in the AAR Contract obligate the buyer to perform by closing or forfeit the buyer’s earnest money? 

ANSWER: Probably not. 

DISCUSSION:

The insertion of “AS IS’ in the AAR Contract is unnecessary and may cause ambiguity.  The AAR Contract already provides under Section 5(a) that “BUYER AND SELLER AGREE THE PREMISES ARE BEING SOLD IN ITS PRESENT PHYSICAL CONDITION AS OF THE DATE OF THE CONTRACT ACCEPTANCE” – which is essentially “as is.”  Provided that Section 6(j) has not been omitted from the contract, the buyer should be entitled to provide the seller with notice of items disapproved, cancel the contract and receive a return of the buyer’s earnest money.