The term “as is where is” is often found in the Sale and Purchase Agreement executed between the seller, who agrees to sell his house, and the purchaser, who agrees to purchase said house. This type of transaction is classified as a sub sale. As such, this agreement is not governed under the Housing Development Act (HDA). Therefore, the parties to the agreement can either add or remove clauses that will protect their interests, as long as both parties agree.
Furthermore, one of the main terms that is always added in the sale and purchase agreement of sub sale property is “as is where is”. This term is generally ignored by the parties to the agreement and is even considered non-material when the agreement is executed. Throughout our practice of conveyancing, the buyer will regularly complain about the conditions of the house at the time of the delivery of vacant possession taking place. The main reason is that the buyer is not satisfied with the condition of the house since there are many repair work that must be carried out by them. Subsequently, they will ask us, the lawyers, whether they can instruct the seller to repair said defects?
Therefore, it is essential for the purchaser to first understand the meaning of “as is where is” and the responsibility that lies in that term. Simply put, the term “as is where is “ means that the property is sold in its present state. This term put a great burden on the purchaser. The buyer must exercise due diligence in carefully inspecting the property prior to signing the Sale and Purchase Agreement. Once the agreement has been concluded, the buyer cannot demand the seller to repair the defects of the property unless it has been agreed otherwise.
It is true that some people will see this term as an inconvenience in purchasing a sub-sale house. This is because, sub-sale home has no warranty, in contrast to buying houses directly from the developers who give their buyers a 24-months warranty to claim repair work for any defect on the property. The warranty period begins when the buyer collects the keys for their new home. This type of warranty is known as a defect liability period.
However, if the purchaser understands how to utilize it properly, this clause can be regarded as a warranty. Let us walk you through the process of how to use this term and turn it into a warranty for your future home!
(a) Conduct a thorough inspection of the property
When you learn that a property is being sold “as is where is,” the first thing you should do is inspect it. If you can do the inspection with your seller, it would be ideal. This will assist you greatly during the negotiating stage, as the seller is well aware of the flaws in his home. If you are a first-time home buyer and are unsure about inspecting the property on your own, you may always engage a consultant to do it on your behalf.
(b) You should ask as many inquiries as possible
It is a good idea to ask a lot of questions about the house’s state and condition during your viewing session with the seller. This is because if the house is being sold “as is where is,” the seller is not obligated to reveal all of the house’s faults and defects.
(c) Take pictures of the house’s current state
Remember to take pictures during the inspection! During the inspection, you can take pictures of the house’s condition. For instance, if you are unhappy with the cracks in the tile floor, you can photograph them and include a condition in your Sale and Purchase Agreement requiring the seller to repair them before delivering the house to you. If you buy a completely furnished house, the pictures are also significant in the selling and purchase transaction. In your Sale and Purchase Agreement, said pictures will be attached along with a list of inventories. It won’t hurt if your phone’s memory card is full with pictures of your ideal home’s current state, right?
(d) The stage of negotiations
If you discovered a few faults on the property during the inspection, you can negotiate with the seller to get the defects repaired before the house is delivered to you. If the seller agrees to remedy them, you can tell your lawyer to include a clause in the contract’s “Specific Conditions” stating that the seller will repair any flaws before handing over the keys.
If the seller refuses to remedy the faults, you may be able to negotiate a lower purchase price because there will be repairs to be done after you move in. However, if the seller continues to refuse to do anything about the house’s faults or to tolerate any reduction in the purchase price, the decision to engage in such a transaction is then yours to make. It is recommended that you only engage in Sale and Purchase transactions in which you are comfortable dealing with.
(e) Consult your lawyer
After you have negotiated with the seller, you can talk to your lawyer about any oral agreements you have made with the seller and advise your lawyer to include those requirements in the “Specific Conditions.”
(f) Read your contract carefully
Make sure you read your agreement thoroughly before signing it. As a result, both parties are familiar with the obligations and terms of the Sale and Purchase Agreement.
Overall, the phrase “as is where is” imposes a burden and an unknown risk on the buyer. It will, however, function as a warranty to the buyer if the negotiation with the seller is successful and the seller agrees to fix the house’s problems before the handover. As a result, read your Offer to Purchase and Sale and Purchase Agreement thoroughly before signing the deal so that you can do your due diligence.
Prepared by,
Nurhidayah binti Rahim
Messrs. Misyail Othman & Co
