“As-Is” Clause in Ontario
“As-Is” Clause in Ontario
When a property in Ontario is offered for sale subject to an “as-is, where-is” clause, the Seller is indicating that the property, including its land, buildings, and any included chattels, will be conveyed in its present condition, with no warranties or guarantees, either express or implied. By accepting the Agreement of Purchase and Sale (“APS”) with this type of clause, the Buyer acknowledges that they are accepting and obtaining the property “with all faults,” and that the Seller does not undertake any obligation to repair or remedy any defects prior to closing. Nevertheless, the Seller remains legally obligated to disclose any material latent defects of which they are aware. A Buyer should therefore perform full due diligence, including obtaining a qualified professional inspection of the subject property, before removing conditions or waiving rights under the APS.
Five Short Q&A on “As-Is” Clause in Ontario
1. What does “as-is, where-is” mean in an Ontario real-estate sale?
It means the property is sold in its existing condition, and the Seller makes no warranties or promises about its current state of repair or condition; the Buyer accepts the property “as is,” with all its faults.
2. Does an “as-is” clause relieve the Seller of all responsibility for defects?
No. The Seller must still disclose any known material latent defects. If a hidden defect, one not readily discoverable on inspection, is knowingly withheld, the Buyer may have a cause of action against the Seller.
3. What are the main risks for the Buyer under an “as-is” sale?
The Buyer assumes the risk of hidden defects, structural problems, or other issues which may surface only after closing; all repairs or remedial work will be the Buyer’s sole responsibility.
4. What could be an advantage for the Seller in using an “as-is” clause?
It allows the Seller to avoid delay or expense associated with repairs or upgrades, and may help to facilitate a quicker sale, especially if the property requires significant work or is being sold by a party with limited actual knowledge about its condition (e.g., an estate, lender, or trustee).
5. Why is it important for a Buyer to review the APS carefully before signing where an “as-is” clause is included?
Because once the Agreement of Purchase and Sale is signed, and especially once typical conditions like inspection and financing are waived or removed, the Buyer will be bound to complete the purchase as set out in the APS. Conducting a thorough inspection and legal review prior to final execution of the APS helps ensure the Buyers are fully aware of what they are assuming and can be better prepared for the closing.