Understanding the As Is Real Estate Contract

Key Takeaways

• An “as is real estate contract” protects sellers by limiting liability for defects after the sale.
• These contracts are common in real estate and usually include an inspection contingency.
• Buyers retain the right to cancel if major issues are uncovered during inspections.
• California law still requires sellers to disclose known material defects, even in “as is” sales.
• Standard contracts may obligate sellers to make repairs, unlike “as is” contracts.

An as is sales contract is preferable to sellers because the buyer agrees to buy an item in its current condition and cannot hold the seller responsible for any defects found with the item after the completion of the sale.

Basics for Creating a Bill of Sale

A bill of sale is a record of a transaction between a buyer and a seller. A sales receipt for a piece of property can function as a bill of sale as it provides evidence that a private transaction has taken place.

When writing a bill of sale, you should include the following information:

• When the purchase took place.
• The location of the property.
• Contact information for all parties involved in the sale.
• A description of the item sold, including information about its condition.
• The price at which the item sold and the method of payment.
• Any loans or liens involved in the transaction.

A bill of sale can be used for transactions selling a variety of items, like:

• Vehicles.
• Animals.
• Electronics.
• Firearms.

Sellers benefit from bills of sale because they demonstrate that the sale actually took place and that the buyer received the item. Bills of sale can also protect the seller from liability if it indicates the item was sold as is. By the same token, bills of sale are advantageous to buyers because they show that the buyer paid for the item and that they now own the item. A bill of sale may also allow the buyer to insure the item.

You should be sure to use a bill of sale when full-payment is made at the time of exchange or if you are selling someone your personal property as is. If there is a defect with the piece of property, the bill of sale will prove the buyer purchased the item as is, and the buyer will not be able to hold you liable for the defect.

Using an As Is Sales Contract

As is sales contracts can be beneficial for almost every type of sale, but are particularly advantageous when you are selling real estate. For instance, if you are selling your home to another person, an as is contract means that you will not have to cover any repairs to the property after making the sale. The buyer is purchasing the home in its current condition, and they cannot hold you liable for any defects in the property.

Most as is contracts, however, will include an inspection clause. Basically, this means that the buyer can back out of the sale if the home inspection reveals big problems with the property and the buyer no longer wants to complete the purchase.

In an as is sales contract for real estate, there will typically be a section that absolves the seller of liability related to the state of the property. For instance, this section of the contract could include a statement that the seller does not know anything about the property that they have not revealed to the seller. The contract could also include a statement that the seller has not received any government notifications related to the property.

Buyers should insist that they receive a Property Disclosure statement. In this statement, the seller will outline everything that they know about the home, including the age of important components such as the roof or the furnace.

As is contracts are very common in real estate sales. If you are the buyer, agreeing to one of these contracts means that you are buying the property in its current state and that the seller does not have to pay for any repairs to the property. You should make sure that your as is contract includes an inspection contingency, which allows you to schedule a home inspection before completing the purchase. If the inspection reveals a large amount of issues, and you don't want to cover the costs of repairing these issues, you can back out of the sale.

As is sales contracts are slightly different from residential for sale contracts. With an as is sales contract, the buyer is basically reserving the option to purchase a piece of property if they're happy with the results of the inspection. With a residential for sale contract, an inspection will also take place, but any needed repairs are the seller's responsibility. Essentially, as is contracts benefit the seller and residential for sale contracts benefit the buyer.

Legal Limitations of As Is Real Estate Contracts

While an as is real estate contract protects sellers from post-sale repair obligations, it does not exempt them from all liability. State laws—especially in California—still require sellers to disclose known material defects. Failing to provide accurate disclosures, even in an as is sale, can lead to lawsuits for fraud or misrepresentation.

Buyers may still have legal recourse if they can prove the seller intentionally concealed defects or failed to meet disclosure requirements. This is particularly relevant when a property has hidden hazards like mold, structural issues, or unpermitted renovations that were not disclosed but known by the seller.

Key Elements in an As Is Real Estate Contract

well-drafted as is real estate contract should clearly define the parties’ responsibilities and outline all relevant terms. Key elements include:

• Property Description: Accurate legal address and parcel number.
• As Is Clause: States that the buyer accepts the property in its current condition, with no obligations for repairs by the seller.
• Inspection Contingency: Allows the buyer to back out if the inspection reveals major problems.
• Disclosure Acknowledgement: Confirms the buyer received all required disclosures (e.g., California’s Transfer Disclosure Statement).
• Contingencies and Deadlines: Specifies timeframes for inspections, financing approval, and closing.
• Earnest Money Deposit: Amount held in escrow as a good faith commitment to purchase.

These elements help ensure transparency and reduce legal risks for both parties.

Inspection Contingency and Buyer Protections

The inspection contingency is one of the most critical protections for buyers in an as is real estate contract. This clause gives buyers the right to conduct a thorough property inspection—typically by a licensed home inspector—and walk away from the deal without penalty if significant defects are discovered.

Some contracts may allow the buyer to request repairs or a price reduction instead of canceling the transaction. However, sellers are not obligated to agree to these requests in an as is sale.

Buyers should also consider ordering additional inspections, such as:

• Termite and pest inspections
• Sewer and septic system evaluations
• Mold and radon testing
• Roof and foundation assessments

These evaluations help buyers make informed decisions before waiving their right to cancel.

Differences Between As Is and Standard Residential Contracts

A standard residential purchase agreement differs from an as is real estate contract in one key area: the seller’s responsibility for repairs. In standard contracts, sellers are often required to fix or credit the cost of issues found during inspection. In contrast, as is contracts make clear that no such obligation exists.

Here’s a quick comparison:

Both types of contracts must comply with state disclosure laws, so even in an “as is” sale, honesty and transparency are legally required.

Common Misconceptions About As Is Sales

Many sellers and buyers misunderstand the implications of an as is real estate contract. Here are a few common misconceptions:

• Myth: Sellers don’t have to disclose anything.
  Fact: Sellers must still disclose known material defects under California law.
• Myth: Buyers cannot back out after signing.
  Fact: Most as is contracts include inspection contingencies that allow cancellation.
• Myth: Buyers waive all legal rights.
  Fact: Buyers can still pursue legal action if the seller commits fraud or concealment.

Understanding these myths can prevent disputes and protect both parties in the transaction.

Frequently Asked Questions

What is an “as is real estate contract”? It’s a contract where the buyer agrees to purchase a property in its current condition, with no obligation for the seller to make repairs.

Do sellers still have to disclose problems in an as is sale? Yes. In California and many other states, sellers must disclose known material defects, regardless of the contract type.

Can a buyer cancel after signing an as is contract? Yes, if the contract includes an inspection contingency, the buyer can cancel based on inspection results.

Are as is contracts only used in real estate? No. They’re also used in private sales of vehicles, electronics, or other personal property.

Should I have a lawyer review an as is real estate contract? Yes. To ensure your rights are protected and the contract complies with state laws, legal review is highly recommended. You can find an experienced attorney on UpCounsel.

If you need help with an as is sales contract, you can post your legal needs on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.