Monday, March 12, 2012

What does the as is - where is term mean when you purchase a Power of Sale property

I was recently asked about the term 'as is - where is' when it pertains to a
Power of Sale property.

The question was:

Hi Mark,

I am enjoying your newsletter, and want to thank you for the vast amount of useful information on your web site.

I have a couple questions for you. Could you provide details regarding listings that I have found recently that post properties as being sold under "As-Is, Where-Is" conditions. Is it safe to assume that an "As-Is" sale is typically a power of sale situation (where the seller is a bank, who in turn is offering no warranties whatsoever? And what about the "Where-Is" stipulation??

The term suggests to me that there is perhaps some issue of encroachment on property lines or set-backs, or that there is some other non-conforming aspect to the property.

Your help in this matter would be greatly appreciated.


Hi John,

Thank you for your kind comment, glad you are finding my newsletters it useful.

I can't really give legal advice regarding 'as is - where is' this is a legal term used in contracts. Suffice it to say, as you have pointed out, that yes when you see this on a listing it is used most often in Power of Sale situations. It's also used in estate sales and other situations too.

Since the onus of disclosure is on the seller to disclose "material facts" that may affect market value, this is why the banks and others) use the as is where is clause. When a bank is selling, they don't know anything about the property and really have 'no knowledge' about the property and don't want to spend time or money investigating the condition of the property to give proper disclosure, thus again, the as is where is.

We agents interpret the "as is, where is" to mean that you are purchasing the property in as is condition, no warranties whatsoever for anything. The "where is" is likely as you say, plus you are accepting chattels and fixtures 'where is' and where they are located and no express or implied warranty as to working condition or meeting any building code, electrical or plumbing codes or guidelines etc. Encroachments, easements, rights of way and any other outside influences and affect on market value are also assumed by the purchaser

Theoretically, when you purchase as is where is, you are literally buying the property in it's current state. This is also part of the reason that the banks usually insert a clause into the offer that you the buyer are NOT allowed back into the property once the agreement is finalized. They don't want anything happening to the property between agreement date and closing.

So what does this mean to you as a buyer? You need to have full inspections and I even recommend knocking on neighbors doors to see if they know of any current of past problems related to the property. Many times the properties are grow houses or meth labs and are in need of major renovations and improvements. Neighbours can be helpful with this too.

How big is your risk buying one of these properties? It depends. If you are buying a home in a typical subdivision and you get good information on similar homes and such, I think the risk is minimal. If you are buying a unique home or property and you skimp on inspections or due diligence, your risk could be significant. After all, with an "as is - where is" property, whatever problems you discover after you close on the property become your issues to rectify and most important is that you will have no recourse against the seller after the closing.

In a nut shell, you must do your due diligence ahead of time. Such as home inspection, legal investigations, by law inquiries, etc, before you submit your offer, or at the very least make your offer conditional upon these inquires. The practical problem with this is that typically in power of sale situations there are multiple offers, and the offers with conditions are often not accepted. With that said, the banks also realize that purchasers must do their due diligence and will often accept conditional offers as long as the conditions and time periods of the conditions are reasonable.

Great question and no short answer! This is why in all POS situations I insist that the buyer consults their lawyer ahead of time, it's very complicated and presents many obstacles and potential issues. Please let me know if you have any other questions or require further

Thank you,



  1. I will try to keep everything in mind. All your articles are so interesting. I am thinking about to create a blog urgently.
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  2. I am wondering as is where is, but what if it was the bank that readied the home for re-sale and hid the issues with the home.
    ie coat of fresh paint, new roof? you as the purchaser would have no way of seeing these issues even with a inspection. Until of course the walls were opened up and the damage was visible?

  3. Typically the bank does not perform any remedial work to improve the property, they sell it as is, where is, to reduce their liability. If the bank hid deficiences that would affect the value of the property then you may have recourse with the bank after the fact. It's highly unlikely they would hid a large problem, maybe minor fixups. I hope this helps, your lawyer could outline all the possibilites on this question. Thank you, Mark