Selling Manhattan "AS IS" Caveat Emptor (let the buyer beware)

Real Estate Agent with Compass

I usually preface my blog posts and comments with the statement: "Real Estate is Local." Laws vary from state to state. Real estate practices vary from state to state. Real estate practices vary within a state. New York City has many of it's own laws and regulations and Manhattan is a unique place in the real estate Universe. New York is a *Title state many other states are **Escrow states.

In Manhattan we sell properties "AS IS." What does  "AS IS" Condition Mean?

Contract contains "as is" language - "official notice" of the property's condition. The purchaser must rely upon its own investigation, rather than upon the Seller's representations, with respect to the condition of the property.

"Seller makes no representation as to the physical condition or state of repair of the Unit, the personality, the included interests or the premises. Purchaser has inspected or waived inspection of the unit, the personality and included interest and shall take the same "as is", as of the date of this contract, except for reasonable wear and tear. However at the time of the closing, the appliances shall be in working order and required smoke detector(s) shall be installed and operable". 

Caveat Emptor (let the buyer beware).

The basic theory in New York real property law is "caveat emptor," meaning, "let the buyer beware." This theory is supported by the well-settled principal that a seller has no duty to speak when the parties deal at arms length; the mere silence on the part of a seller without some act or conduct that amounts to concealment is not actionable. Therefore, unless a seller takes affirmative action that prevents a buyer from determining the existence of an adverse condition (i.e., painting over a wall that is the subject of constant leaks), a buyer has no recourse against a seller on account of that condition.

Don’t Look to the Broker

Leaking Water Tower, UWS Coop

After the seller, the next likely person that a buyer would look to for representation as to the condition of a given building or apartment is the broker. Unfortunately, for several reasons, the broker is not always the best person to rely upon.

In many cases the broker will not have enough information about a particular building or apartment to be in a position to make any representation as to potential problems that may exist. This is particularly the case in New York City, where it would be virtually impossible for brokers to keep abreast of the changing conditions of buildings, let alone the thousands of apartments in any given neighborhood. Furthermore, much of the information circulated by brokers is second-hand or anecdotal, and should not be considered absolutely reliable for such a large investment.

Bottom line: "Due Diligence"

How is a buyer protected? There is a  due diligence window between Accepted Offer and Contract signing. Do not sign a contract until you and your attorney have done their home work. Inspect the premises, the building financials, read board meeting minutes, talk to neighbors, the condition should be factored into the offer or request that repairs be performed prior to closing. Avoid disputes about inclusions and exclusions of Personal Property. Appliances and fixtures must be in "working condition" 

"AS IS" Condition of the Property.

The seller must deliver the premises vacant and broom clean at closing.

*Title states: Only allow lawyers to write contracts, prepare title documents, hold deposit money and close deals.

**Escrow states: Allow real estate brokers and escrow title companies to prepare contracts, legal documents, hold moneys and close deals.



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Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy


When we were selling buildings in Los Angeles, we had an instance of "as is" drafted by attorneiys for the seller and agreed upon by the attorneys on the buyers' side.  We even had our attorneys bless the addendum.  After all that as the buyers took occupancy, they found something to start a lawsuit. (Incidentally, the same thing happened to a friend when they sold their home "as is")  It was thrown out of court, of course.  Does anyone sue in New York after the "as is"? A

Mar 25, 2011 06:43 AM #1
Hannah Williams
Re/Max Eastern inc. - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-953-8818

Mitchell. It is so interesting how laws vary from State to State .. In Pennsylvania an attorney is not required to complete a Real Estate transaction. Agents are the norm..we have contracts signed and review ..we also have a sellers disclosure form.The sale takes place at a Title agency ..


Mar 25, 2011 06:55 AM #2
Mitchell J Hall
Compass - Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn

Hi Alexandra, NY real property laws favor sellers. I recall a lawsuit about a year ago. The seller and broker told buyer there was no water damage to the home. Buyer moves in and house floods. Turns out the Mamaroneck River runs through the property. Buyer sued seller and broker.

The court ruled "Broker had no duty to disclose home's flooding; Buyer had warning and did not perform due diligence". Apparently the flooding was public record. It was in the local paper, the neighbors all knew about it. There was a paper trail of documents regarding flooding history, flood insurance, state easements through the property to access the river.  

The case reaffirmed NY states longstanding tradition of caveat emptor and places the burden on the purchaser to complete extensive due diligence prior to signing a contract.

Mar 25, 2011 07:23 AM #3
Mitchell J Hall
Compass - Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn

Hi Hannah, Everything is different here. For single family houses there is a NY seller disclosure form. it became law in 2002. However for a $500 buyer credit seller's can have it waived. 

Mar 25, 2011 07:40 AM #4
Peggy Hughes/pha logistix, inc.
pha logistix inc - San Francisco, CA

Hi Mitchell - great post and as always, very informative.  I now understand why NY & CA real estate is handled so differently. Thank you!

Mar 25, 2011 02:27 PM #5
Steve Shatsky
Dallas, TX

Hi Mitchell... this is such a difference from how we do things in Texas that when I bought my co-op in Chelsea I really wondered if this was true when my agent explained it to me!

Mar 25, 2011 04:54 PM #6
Mitchell J Hall
Compass - Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn

Hi Peggy, In CA the contract is signed first then you have all kinds of contingency's that you can get out. Here you don't sign until you've done due diligence. Once signed it's pretty clad.

Hey Steve, It's true. Love the new photo. 

Mar 25, 2011 05:17 PM #7
Kathy Toth
Ann Arbor Market Center Keller Williams - Ann Arbor, MI
Ann Arbor Real Estate Experts - Kathy Toth Team

Mitchell, now I understand why NY buyers are so finicky here in Ann Arbor, MI and most often have attorneys.  In Michigan, we don't normally have attorneys for every buyer deal.  Clearly, based on local eperience they would want to have someone look over the deal.  Thanks for sharing.

Mar 25, 2011 11:38 PM #8
Ellie McIntire
Ellicott City Clarksville Howard County Maryland Real Estate - Ellicott City, MD
Luxury service in Central Maryland

All properties are "as is" in Manhattan? Tough market.

Mar 27, 2011 02:07 PM #9
Mitchell J Hall
Compass - Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn

Hi kathy, yes here the buyer's attorney does due diligence and will try to change things in contract to protect the buyer.

Hi Ellie, Resales are "as is" In new construction or a new conversion the buyer makes a punch-list at the walk through, submits it to the seller's attorney at the closing and the builder/sponsor has 30 - 60 days to fix everything on the list.

Mar 27, 2011 05:18 PM #10
Doug Bullwinkel
Envoy Mortgage,NMLS ID 6666 - Roseville, CA
Mortgage Loan Originator NMLS #281609

It sounds like a tough place to do business.

Mar 27, 2011 07:32 PM #11
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Mitchell J Hall

Lic Associate RE Broker - Manhattan & Brooklyn
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