The As-Is Clause And The Seller’s Disclosures Obligations
By: Christopher J. Charles
Provident Law®
Many real estate transactions today include an “as-is” clause, especially in regard to commercial transactions. Indeed, virtually all commercial transactions are negotiated “as-is,” and most residential real estate transactions, including those involving the standard form AAR Purchase Contract, carry a standard “as-is” clause. Real estate that is listed “as is” may not be in perfect condition or may require some repairs. Alternatively, the seller simply may not want to have any obligation to fix major problems with the real estate, such as heating and cooling systems, plumbing, roofing, or electrical work.
Purchasing a property “as is” has important consequences that buyers should be aware of before agreeing to complete the transaction.
Defining “As Is” in Real Estate Transactions
When a seller offers to sell real estate “as is,” the seller is offering it without any guarantees about its condition beyond what the buyer can observe before purchasing the property. This means that the property is being conveyed in its current condition, without any express or implied representations or warranties from the seller concerning the property’s condition. The “as-is, where-is” provision also implies that the seller does not intend to make any repairs or improvements before closing, nor does the seller intend to negotiate with the buyer for any credits to address potential issues raised during the buyer’s inspections.
The seller is not making any warranties as to the condition of the real estate after completing the sale, agreeing to make any repairs, or promising the buyer that any part of the real estate is in a certain condition. In other words, when the buyer and the seller close on the real estate transaction, the buyer accepts the real estate in its current condition, no matter what that condition may be.
However, using an “as is” clause is not quite as expansive as it might initially seem, at least when it comes to real estate transactions. Arizona courts have placed some limits on the “as is” clause that might otherwise seem to exonerate a seller of all responsibility for real estate.
Seller’s Duty of Disclosure
Although sellers can sell real estate “as is,” Arizona courts have made it clear that sellers and their brokers still have a common law duty to disclose material facts about the property they are selling. They have a legal obligation to be honest and forthcoming about major material defects in the property or needed repairs, to the extent that they are aware of them. The “as is” clause in no way relieves them of their legal obligation to disclose known defects that are material to the purchase. A broker’s and seller’s failure to disclose such defects could still expose the seller and broker to liability if the buyer later discovers material defects known to the seller and their broker. Indeed, even when the parties contractually agree that the seller is not providing any disclosures and that the property is being conveyed in its current condition, as discussed above, the seller and their broker are still subject to common law requirements to disclose all known latent defects that materially impact the property’s value.[1]
Where a contract contains an “as is” clause, the only way for a seller and their broker to avoid liability for a known material defect is to engage in fair dealing with the buyer. This legal duty requires the seller and broker to disclose the defect in writing to the buyer and allow the buyer the opportunity for a pre-purchase inspection.
Buyer’s Duty of Due Diligence
In any real estate transaction, particularly when the property is being sold “as is,” the buyer has a duty to perform due diligence concerning the real estate. The buyer should be thorough in their inquiries about the condition of the property and any known defects that might exist. The purchase agreement typically gives the buyer an inspection period during which the buyer has the right to obtain independent inspections by qualified inspectors of the property to determine the presence of any defects. The buyer may need to obtain various types of inspections, which may require more than one inspector to complete.
After completing all inspections, if the buyer discovers any problems, they are free to renegotiate the terms of the transaction or ask the seller to make repairs or otherwise resolve the problem. If the buyer cannot reach a reasonable solution to the problem, most purchase and sale agreement provide the buyer with the option to terminate the contract prior to the expiration of the due diligence period with no penalty.
If you or someone you know needs legal advice or representation concerning due diligence or a seller or broker’s disclosure obligations concerning a real estate purchase transaction, or help resolving any real estate related dispute, call, email, or visit us online today to schedule a consultation with Mr. Charles or one of our other real estate attorneys.
Christopher J. Charles is the Founder and Managing Partner of Provident Law ®. He is a State Bar Certified Real Estate Specialist and a former “Broker Hotline Attorney” for the Arizona Association of REALTORS ® (the “AAR”). Mr. Charles recently authored the Arizona Real Estate Law Manual to be published by Lexis Nexis in late 2025. And Mr. Charles serves on the State Bar Real Estate Advisory Commission. In 2017, Mr. Charles obtained one of the Top Ten Civil Verdicts for his client in a real estate dispute. Mr. Charles holds the AV ® Preeminent Rating by the Martindale-Hubbell Peer Review Ratings system which connotes the highest possible rating in both legal ability and ethical standards. He serves as an Arbitrator and Mediator for the AAR regarding real estate disputes; and he served on the State Bar of Arizona’s Civil Jury Instructions Committee where he helped draft the Agency Instructions and the Residential Landlord/Tenant Eviction Jury Instructions. He has taught continuing education classes at the Arizona School of Real Estate and Business, and he can be reached at Chris@ProvidentLawyers.com or at 480-388-3343.
[1] S Dev. Co. v. Pima Capital Mgmt. Co., 201 Ariz. 10, 18, 31 P.3d 123, 131 (App. 2001).