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Category: Real Estate Law
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Experience:  Licensed attorney helping individuals and businesses
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What argument would you use to sever an "as is" clause from

Customer Question

What argument would you use to sever an "as is" clause from a TREC sales contract? How could I get the "as is" severed or declared invalid?
Submitted: 7 months ago.
Category: Real Estate Law
Expert:  Ray replied 7 months ago.

Hi and welcome to JA. Ray here to help you today.Please bear with me a few moments while I review your question, conduct and prepare your response.

Expert:  Ray replied 7 months ago.

Is this a signed contract or one you are wanting to amend?

Expert:  Ray replied 7 months ago.

Are you the seller or buyer?

Customer: replied 7 months ago.
I am the buyer. It is one already signed. Issues have come up and the buyer is stating the contract is "as is". I have read Prudential and the elements of exception to an "as is" clause. Since Prudential works both ways, depending on the case law referenced, as well as others, when can the "as is" clause be severed or declared invalid as a matter of law?
Expert:  Ray replied 7 months ago.

They have to disclose it here

There is usually a dollar limited amount for repairs, if it is over that seller can either pay, or you negotiate or seller can kill the deal.The problem is once they are disclosed the reality is seller will have to disclose these to another buyer.You get your money back if seller doesn't do the repairs because they are over the dollar limits.There is no negotiation usually because seller will have to do them for the next buyer.

Expert:  Ray replied 7 months ago.

Reference to what should have been done

The buyer should only choose Paragraph 7D(2) if he knows of specific repairs that he wants the seller to complete at the seller’s expense. Otherwise, the buyer should check Paragraph 7D(1).

Most buyers in this situation will also choose to pay a termination-option fee pursuant to Paragraph 23 in exchange for the right to terminate the contract for any reason within a negotiated number of days. During this termination-option period, an inspection can be performed, and if specific repairs are identified, the parties can negotiate to amend the contract to address these items, or the buyer can terminate the contract.

Expert:  Ray replied 7 months ago.

I appreciate the chance to help you today.Thanks again.

You can try to negotiate or walk away if the repairs here exceed what seller is obligated to fix and get your earnest money back.

I appreciate the chance to help you today.Thanks again.

If you can psoitive rate 5 stars it is much appreciated.

Customer: replied 7 months ago.
The "as is" clause has provisions based on prudential that has to be met. 1) sophistication of the parties, 2) as is being a boiler plate provision 3) there was no fraudulent or misrepresentation of fact inducing the sale and/or signing of the contract. When the contract is signed, if your realtor is present at that time, does this then meet item 1, sophistication of the parties, or does this exception relate to the buyer himself/herself?
Expert:  Ray replied 7 months ago.

Arguably it relates to the buyer yourself.You would argue lack of sophistication, it was your first purchase. etc.

Customer: replied 7 months ago.
Does being represented by a realtor at the time the contract was signed facilitate the condition that the sophistication of the parties are now equal? If so, any case law that exemplifies or contradicts this?
Customer: replied 7 months ago.
Neither of the articles address the question I asked. When you are represented by a realtor during the signing of the sales contract, does that representation meet the standard for the sophistication of the parties?
Expert:  Ray replied 7 months ago.

I will opt out and let others pick this up.I don't think there are any cases on this issue.Good luck to you please don't respond or rate

Expert:  INFOLAWYER replied 7 months ago.

Different expert. You asked about arguments: Here are a few that may apple:

1. fraud

2. fraud in the indcucement

3. unconscionability of the provision.

4. unjust enrichment

5. other side did not act in good faith

6. other side concealed the condition.

Customer: replied 7 months ago.
I hate to say this,,, but all of the questions within this thread everyone is wrong.....
The Texas Court of Appeals as well as the Texas Supreme Court has ruled in many cases the following....
An "as is" clause is upheld as to that the buyer has had the opportunity to inspect the property. Once the property is inspected and the "as is" does not become unique, in that the buyer or seller has not amended the "as is" to make it a non-boiler plate provision, the purchase of the property becomes "buyer beware". There is the condition of puffing, in that the statement made outside the disclosure or inspection is an embellish and the buyer should not heed those comments.
The 3 conditions of the "as is", sophistication of the parties, non-boiler plate as is provision, misrepresentation, are based on and if an inspection report has been made. The main ingredient that solidifies the "as is" is what did the buyer rely on? Is it the Disclosure Statement or was it an Inspection Report. In all cases, the inclusion of an Inspection Report negates the Disclosure Statement, and the "As Is" becomes buyer beware once the inspection report has been done. However, the very narrow exception is, "IF" the inspection report does not cover items found after purchase "that" only the seller would have known, as the inspection report did not check for those items. Only in that instance does the Texas Supreme Court allow the "As Is" not to be "buyer beware". The other very narrow exception to an "As Is" clause and therefore allowed to be severed, if proof of mis-representation of material fact, "BUT" only in either the absence of an Inspection Report, or the Inspection Report did not cover those items only the seller would have known. The key, based on all case law I have read, all appeals I have read, premise on the inspection report and what it states, even if, the disclosure statement clearly misrepresents material fact.
In the hearing for Summary Judgment, the Judge ruled, "...not knowing when or if the Inspection Report was received by the Buyers Realtor, and the Inspection Report not covering the material defects in question, and the Inspection Report not being stated within the Disclosure or Sales Contract creates an ambiguity that a trial should consider... The Motion for Summary Judgment is denied..."
Note that in his decision, it centered around the "Inspection Report", even though this was the seller's inspection report, the statements within the disclosure which pictures clearly showed were contrary to the disclosure, the disclosure other than not stating the inspection report, was the only thing considered.
Last note, when the judge made his decision he took 5 minutes of silence before he stated denied. It could have gone either way, but the Inspection Report was the key.
Thoughts and then I will end this thread.
Expert:  INFOLAWYER replied 7 months ago.
The as is sale is often controlling but not where you can show a misrepresentation. To that end You want to prepare your case by creating a time line starting from the earliest event. For each event, write down key details and witnesses and if there is a document that relates to it, save it and refer to it. This timeline can be very valuable in narrating your case and presenting it later in a concrete and specific way.Please let me know if that is acceptable and feel free to reply back and follow and are both excellent lookup directories. Both highly rated. Both used by lawyers. Easy to search and find local options.Kindly rate me five stars.