As a seller is it legal to sell your house "As-is"?

This will be posted on the Lombardi Law Firm's website and I’m posting it here as well.

I was at a luncheon with central Iowa’s commercial real estate agents this past Wednesday and the subject of an ongoing lawsuit, residential real estate, came up. Bankers like to attend these luncheons because owners, buyers, investors and developers usually mean lending can’t be far behind. Seated at my table were some very experienced bankers from Des Moines. I consider them to be seasoned in the banking and lending business. Any banker that has made it through the crisis will be around for the long haul. But this day over the entree we discussed an ongoing lawsuit about a buyer suing over the sellers not disclosing defects in the home. The problem for these bankers was a critical misunderstanding about Iowa’s Residential Sellers’ Disclosure law.

It seems the sellers tried to sell their home “as-is”. The bankers are stymied about how the buyer can sue the sellers for defects when the buyer bought the property as-is. Everyone at the table wanted to blame the buyer for being too anxious to buy the home and the lawyers for making something out of nothing. Well, not everyone seated at our table thought this. Katrina Schaefer, Barbara (my wife) and I just smiled at those attempting to blame the sue-happy lawyers. I was quick to point out they were all incorrect in assuming that in Iowa anyone is ever allowed to sell a home as-is. There are a few exceptions, but this is certainly not one of them. You can’t do it so why even try to do it.

I start off engaging the bankers by making one simple statement that seemed to get everyone’s attention: In Iowa caveat emptor is dead.

They looked at me with bewilderment written all over their faces. Which is what I imagine is written all over your face too. This is a Latin phrase they teach in law school. 

What’s that caveat emptor stuff anyway?

Caveat emptor is a Latin phrase meaning “let the buyer beware.”

It was, but it’s no longer the law of the land in Iowa. In Iowa the legislature passed a law, requiring sellers of residential real estate to disclose material facts about their homes to potential buyers. And if you don’t you are setting yourself up to be sued – big time.

You have to make the disclosures in writing and they had better be accurate. Because if they are not accurate and the buyers experience problems, then you the seller will be required to pay to repair or to replace because you probably failed to disclose material facts about the home. While it's not a warranty, it is a duty to disclose material defects in the property for which there is a cost if you do not disclose. 

This whole as-is business is passé. You can’t sell residential real estate in Iowa without making material disclosures; PERIOD. So get that notion of caveat emptor out of your head because it will get you in trouble financially. 

And so if anyone is telling you to write ‘as-is’ into the deal don’t.

There is a case right on point where two real estate agent owners crossed out the disclosure questions with a nice big “X” and wrote on the form, ‘Seller never lived in the property’. But guess what that didn’t insulate them from being successfully sued. You can’t change the law just because you don’t like it or think you are somehow exempt. You aren’t and you can’t, so don’t try it.

You see, even professionals don’t understand what the law requires. What is required is a complete and truthful disclosure about anything material to the decision to buy.

Katrina and I have our own proprietary work-sheet and are trying to provide a valuable service to sellers and to buyers. Keep this in mind, if the sellers don’t hire us to assist them the buyers sure can after the sale when this or that doesn’t work or leaks or grows mold or whatever the defect might be.

You can read all about Iowa’s Residential Sellers’ Disclosure law at the Iowa Real Estate Lawyer, blog that Katrina and I write. You can also pick up some news from the Lombardi Law Firm website under real estate.

And if you have legal questions about the sale of your home, don’t hesitate to call Katrina or me to find out if we can help you. As many of you already know I am both a lawyer and a licensed real estate broker in Iowa and enjoy helping people solve problems. So unlike most real estate agents I can give legal advice. So call us at 515-222-1110 or send either of us an email: sdlombardi@aol.com or katrina.schaefer8@gmail.com.