An as is sales contract means the buyer accepts the property or item in its current condition, with all existing faults, and gives up the right to demand repairs or a price reduction for defects discovered after closing. Under the Uniform Commercial Code, phrases like “as is” or “with all faults” exclude the implied warranties that normally come with a sale of goods.1Legal Information Institute. UCC 2-316 – Exclusion or Modification of Warranties That is a real transfer of risk, and it is why as-is items generally sell at a discount. It is not, however, a license for the seller to hide problems, ignore federal disclosure rules, or lie about the condition. Those obligations survive the clause.
What the Clause Actually Removes
The UCC recognizes two implied warranties on sales of goods. The warranty of merchantability promises the item works for its ordinary purpose. The warranty of fitness for a particular purpose promises the item works for the specific use the buyer described to the seller. An as-is clause strips both away.1Legal Information Institute. UCC 2-316 – Exclusion or Modification of Warranties Once they are gone, a buyer who discovers a defect after the sale generally has no warranty claim against the seller.
Two limits keep this from being absolute. First, an as-is clause cannot erase an express warranty. If the seller specifically states the roof is new or the engine has 40,000 miles, that promise survives. Where express warranty language and disclaimer language conflict, the warranty prevails to the extent the disclaimer would be unreasonable.1Legal Information Institute. UCC 2-316 – Exclusion or Modification of Warranties
Second, the federal Magnuson-Moss Warranty Act bars sellers from disclaiming implied warranties on any consumer product for which the seller offers a written warranty or sells a service contract. A dealer who hands you a written warranty card cannot also enforce an “as is” disclaimer of the implied warranty of merchantability on that sale.2Federal Trade Commission. Businessperson’s Guide to Federal Warranty Law
Even where the disclaimer is otherwise valid, it has to be visible. The UCC requires that a written disclaimer of merchantability actually use the word “merchantability” and be conspicuous, and that any disclaimer of fitness be conspicuous and in writing.1Legal Information Institute. UCC 2-316 – Exclusion or Modification of Warranties Conspicuous generally means bold type, larger font, contrasting color, or capitalization: something a reasonable person would notice. An as-is line that looks identical to every other paragraph in a dense contract can be challenged.
State law adds another layer. Some states restrict or prohibit dealers from disclaiming implied warranties on consumer products, which means an “as is” label on certain used goods carries no legal weight in those jurisdictions.2Federal Trade Commission. Businessperson’s Guide to Federal Warranty Law Check your state before relying on the clause on either side of the deal.
What the Seller Still Owes You
This is where most as-is confusion lives. The clause controls warranties and repair obligations. It does not control honesty.
Known Material Defects
Sellers cannot stay silent about serious problems they know about. A majority of states require sellers of residential real estate to complete written disclosure forms listing known defects, and that obligation applies whether or not the contract says “as is.” The clause tells the buyer the seller will not fix what is wrong. It does not tell the buyer the seller will not say what is wrong. Defects a buyer could not reasonably discover on inspection, like a foundation crack hidden behind finished walls or a flooding history tied to unusual weather, are exactly what a seller must disclose.
No Fraud or Active Concealment
Lying voids the protection. If a seller paints over water stains to hide a leaking roof, or tells a buyer the furnace was replaced two years ago when it was not, the as-is clause will not save them. Courts consistently hold that fraud and active concealment override as-is language because the buyer’s consent to take the property “as is” was based on false information.
Federal Lead-Paint Disclosure
For any residential property built before 1978, federal law imposes disclosures no contract clause can waive. Before the buyer is bound under a purchase contract, the seller must disclose any known lead-based paint or lead-based paint hazards, provide any available inspection reports, give the buyer an EPA-prescribed information pamphlet, and include a Lead Warning Statement in the contract.3Office of the Law Revision Counsel. 42 USC 4852d – Disclosure of Information Concerning Lead Upon Transfer of Residential Property The seller must also give the buyer a 10-day window to conduct a lead paint inspection or risk assessment, though the parties can agree in writing to a different period, and the buyer can waive the inspection.4eCFR. 24 CFR Part 35 Subpart A – Disclosure of Known Lead-Based Paint and Lead-Based Paint Hazards Upon Sale or Lease of Residential Property Foreclosure sales are exempt; nearly all other sales of pre-1978 housing are covered.5U.S. EPA. Lead-Based Paint Disclosure Rule (Section 1018 of Title X)
One more federal wrinkle applies to used vehicles. The FTC’s Used Car Rule requires every dealer to display a Buyers Guide on each used vehicle for sale, disclosing whether the vehicle comes with a warranty or is sold without one. Failing to display the Guide or failing to disclose no-warranty status is a violation of federal trade regulation.6Federal Trade Commission. Used Car Rule7eCFR. 16 CFR Part 455 – Used Motor Vehicle Trade Regulation Rule The rule applies to dealers, not private sellers. In a private car sale, a written as-is clause in the bill of sale is the seller’s main protection and the buyer’s main risk.
Buyer Due Diligence Before You Sign
An as-is purchase trades a lower price for more homework. How much homework depends on what you are buying.
For real estate, hire qualified inspectors for the structure, roof, foundation, plumbing, electrical systems, and HVAC. Older homes may warrant specialized inspections for mold, radon, or termites. Read every document available: past repair records, permits for renovations, insurance claim history, and the seller’s disclosure form. Treat the disclosure form as substance, not a formality, and ask follow-up questions about anything vague or incomplete.
For vehicles, a pre-purchase inspection by an independent mechanic, typically $125 to $300, is the single most valuable step a buyer can take. Ask the mechanic to check for signs of collision damage, frame straightening, and flood exposure alongside current mechanical condition. Pull a vehicle history report for title issues, reported accidents, and odometer discrepancies. A seller who resists inspection is telling you something.
For any as-is deal of significant size, have an attorney review the contract before you sign. State disclosure laws interact with as-is language in ways that are not always obvious from the contract itself.
“As Is” Is Not the Same as No Inspection Contingency
These two things get confused constantly, and the confusion is expensive. An as-is clause means the seller will not make repairs. An inspection contingency means the buyer can walk away and recover the earnest money if the inspection reveals problems the buyer cannot accept. A single contract can have both. With an inspection contingency in an as-is deal, the buyer cannot force repairs but can still cancel. Without one, a buyer who discovers serious problems after going under contract has to close anyway or forfeit the deposit.
In competitive markets, some buyers waive inspection contingencies to strengthen an offer. If you are considering that on an as-is property, at minimum get a pre-offer inspection so you know what you are agreeing to accept.
Financing an As-Is Property
A cash buyer can accept a property in any condition. A financed buyer cannot, because the lender has its own opinion of the property, and the as-is clause does not bind the bank.
FHA-insured loans have the strictest requirements. HUD requires FHA-financed properties to meet minimum standards for safety, security, and structural soundness: functioning electrical, plumbing, and heating; a roof that prevents moisture entry and has reasonable remaining life; a foundation adequate for normal loads with no evidence of continuing settlement; and no hazards affecting occupant health, including lead paint, mold, or contaminated soil. An appraiser who identifies defective conditions like excessive dampness, decay, or termite damage will render the property unacceptable for FHA financing until those conditions are corrected.8U.S. Department of Housing and Urban Development. HUD 4150.2 – Valuation Analysis for Single Family One-to-Four Unit Dwellings, Chapter 3 A seller offering property as-is usually does not want to make repairs, and that conflict kills deals. Sometimes the parties can negotiate a fix for FHA-required items only, or escrow repair costs at closing, but neither workaround is guaranteed.
Conventional lenders are more flexible but not indifferent. Appraisers can flag health, safety, and structural issues that make the property unacceptable as collateral: exposed wiring, major roof damage, foundation problems, or missing safety features like handrails. Appraiser discretion varies. If a conventional lender rejects the property in its current state, options include a different lender, an escrow holdback for post-closing repairs, or walking away.
What the Discount Looks Like
Sellers typically net less on an as-is sale than they would after making repairs and selling conventionally. Discounts of 5% to 30% below repaired value are common, depending on condition and local market. Buyers usually price in not just estimated repair costs but a 10% to 15% cushion for surprises. The whole reason as-is deals exist is that discount. The question for a buyer is whether it adequately compensates you for the risk of what you did not find. A thorough inspection narrows that uncertainty, which is why skipping inspection to save a few hundred dollars is almost always a false economy.
What Belongs in the Written Contract
A well-drafted as-is contract goes beyond a single line. The elements worth including:
- Conspicuous, unambiguous as-is language in a dedicated section, not buried in boilerplate. Bold or capital letters are the norm.
- A signed buyer acknowledgment confirming the opportunity to inspect and acceptance of the property in its current condition, with all faults.
- The state-required seller disclosure form. The as-is clause does not replace it.
- Explicit contingency terms, spelling out whether the buyer keeps an inspection contingency, a financing contingency, or has waived them. Ambiguity here favors no one.
- Earnest money provisions defining what happens to the deposit if the buyer terminates under a contingency versus without one.
- For pre-1978 residential property, the Lead Warning Statement, acknowledgment of the information pamphlet, and documentation of the 10-day inspection opportunity.3Office of the Law Revision Counsel. 42 USC 4852d – Disclosure of Information Concerning Lead Upon Transfer of Residential Property
Purchase price, payment terms, closing date, and legal descriptions are standard elements of any purchase contract. Attorney review is worth the cost on real estate, where the stakes are high and the interaction between the as-is clause and state disclosure law is not always visible in the contract itself.
If You Discover the Seller Lied
If you buy as-is and later learn the seller actively concealed defects or misrepresented the condition, the as-is clause does not shield them. Remedies vary by state but generally include rescission, which unwinds the transaction and restores both parties to their prior positions; monetary damages for repair costs or the difference between what you paid and what the property was actually worth; punitive damages in some states for intentional fraud; and attorney’s fees where the contract or state law provides for them.
The hard part is proving what the seller knew and when. A seller who genuinely did not know about a defect has not committed fraud, however expensive the defect turns out to be. Documentation is everything: repair invoices in the seller’s name, prior insurance claims for the same issue, neighbor testimony about recurring problems, permit records showing incomplete work. If you suspect fraud after an as-is purchase, consult a real estate attorney quickly. Statutes of limitation on these claims can be short.