Selling Minnesota real estate “as-is.”

Filed in Minnesota Real Estate by on October 2, 2007 0 Comments

dumpy house

Minnesota law requires that sellers of ¬†residential Minnesota real estate must disclose in writing, and before purchase agreement, any known material defects or conditions of the property that would adversely affect the home buyer (with some limited exceptions.) Sellers must disclose any physical defect, such as environmental hazards, defective roofing, leaky basements, known presence of lead paint, wells, septic systems, etc, as well as other factors that would affect the buyer’s enjoyment of the property, human remains, or that the house is adjacent to a roadway that is scheduled to be widened, or close to a proposed expansion of airport runways that would cause air traffic to flow over the property.

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Sellers of Minnesota real estate do not need to disclose:

  • that the property was occupied by a person infected with HIV or AIDS
  • that the property was site of accidental death, suicide, or paranormal activity
  • that the property is located near a community based residential facility, “half-way” house, or close to the residence of a predatory offender (provided the seller gives the buyer notice containing information about the state predatory offender registry)

Frequently sellers state that they want to sell their ¬†Minnesota home “as-is.” I do not believe it is because they are hiding some adverse condition about the home. The seller is fearful that the buyer expects the seller to warrant future condition of the home. The seller just wants to be “done” with the transaction, and does not want to revisit it in the future.

Sometimes, sellers don’t know much about a property, and do not wish to be held accountable for any conditions of which they are unaware. This is especially true in the case of estate sales, or if the seller is a lender who has taken back a ¬†Minnesota property through foreclosure.

The solution for these sellers would seem to be the “as-is” addendum for the purchase agreement. But does this document really hold sellers harmless in all cases? Just what is this addendum all about?

The “as-is” addendum actually has very restricted language that says that the buyer will be purchasing the property in the same condition it was found at the time of purhase agreement. The addendum states that “to the extent there is a material change in the condition of the property arising between the date of purchase agreement” However, the addendum clearly states that the seller will be under no obligation to “repair or replace central air conditioning, heating, plumbing (including sewage treatment systems unless otherwise required by law,) wiring systems or wells on the property” if they fail between the time the purchase agreement was written and the day of closing.

As you can see, the purpose of the addendum is only to protect the seller if the mechanical systems mentioned above should fail between the purchase agreement date and the date of closing. The addendum also states that, with limited exceptions, that sellers are “obligated to disclose to prospective buyers all material facts of which seller is aware that could adversely and significantly affect an ordinary buyer’s use or enjoyment of the property…” The addendum is not a license for the seller to avoid disclosing adverse material facts about the property.

The Minnesota Association of REALTORS does not recommend the use of this addendum because it has not been tested in court. This post is not to be construed as legal advice and is for informational purposes only. If you need advice about the use or validity of this addendum, you should contact a licensed attorney that practices Minnesota real estate law.

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