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Conveying Title To Real Estate: As-Is V. Repair Limit Contract

Conveying Title To Real Estate: As-Is V. Repair Limit Contract
By Shawn Yesner of Yesner Law posted in Title on Wednesday, March 15, 2017.

Most sellers (and importantly some Realtors and attorneys) believe the As-Is Residential Real Estate contract is better for them to convey title to their property, because they’re selling the house As-Is with no guarantees or warranties. I believe this is false and the As-Is Contract is actually better for buyers.

The two versions of the Real Estate Contract currently in use by most Florida realtors and attorneys are:

  • As-Is: which basically provides that the Buyer can cancel the Contract within the inspection period; or

  • “Repair Limit:” which provides, among other things, that the Seller must pay to make repairs up to the limits contained in the contract (normally 1.5% of the purchase price).

Most people believe that an As-Is is better for the seller, because the seller would not have to pay any money to make repairs if the Buyer finds something that needs repair. Similarly most people believe that Repair Limit Contract is better for the buyer because then the seller is forced to pay for some repairs that the Buyer finds in the inspection. Actually, the reverse is true …

Under an As-Is Contract, the buyer can get out for any reason, in the buyer’s sole discretion, as long as the decision to cancel is within the inspection period – for example, the buyer can cancel because he wants a house that faces north and the particular house under contract faces east. Therefore, an As-Is Contract allows the buyer an easier exit, thus the As-Is Contract is better for the buyer in most instances.

Conversely, in a contract with repair limits, the buyer is locked into buying that house, as long as the repairs needed are less than the repairs needed limits. When my wife and I were looking at houses, we saw some where the sellers were in the process of a divorce. As newlyweds that created bad “mojo” for us – which would have been a valid cancellation in an As-Is, but not in a Repair Limit Contract. Therefore, the sellers have the buyers locked in, or at least have the buyer’s deposit locked down in the event of a cancellation.

Obviously, the type of contract you offer or accept is going to depend on whether you’re a buyer or seller, and your personal preferences, after discussion with your Realtor and/or attorney.

For more information on Florida Real Estate Law, please subscribe to the Crushing Debt Podcast, on iTunes, Stitcher and GooglePlay. If you prefer, please contact us to schedule a free initial consultation to discuss your options at 813-774-5737 or email me directly at shawn@yesnerlaw.com.

Shawn M. Yesner, Esq., is the founder of Yesner Law, P.L., a Tampa-based boutique real estate and consumer law firm that helps clients eliminate the financial bullies in their lives. We assist clients with asset protection, the sale and purchase of real property, Chapter 7 liquidation, Chapter 13 reorganization, bankruptcy, foreclosure defense, debt settlement, landlord/tenant issues, short sales, and loan modifications in Tampa, Westchase, Odessa, Oldsmar, Palm Harbor, Clearwater, Pinellas Park, Largo, St. Petersburg, and throughout the greater Tampa Bay area.

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