Is a FAR BAR “As Is” Contract Good for a Property Owner?

In Florida, there are two main sale and purchase contracts that are widely used, the CRISP-13 and the FAR BAR AS IS contract.  Both have some similarities and each have  benefits to either party.  In today’s market, a lot of listing agents ask for an offer to written on “as is” contract in Florida.  I guess this is a function of where we are in the business cycle. Is the as is contract good for property owners?  In my opinion the answer is maybe.  In our market, it is not uncommon for investors to put offers on numerous properties without even looking at the properties.  With a typical inspection period of 15 days, this essentially ties the property up until they can look at the property.

The main difference between CRISP-13 and the FAR BAR AS IS contract is the allowances for warranted items, wood-destroying organism treatment and repairs, and costs associated with closing out open permits and obtaining required permits for unpermitted existing improvements.  The FAR BAR AS IS contract does not have allowances.  Since a FAR BAR AS IS Contact is still allowed to inspect the property, it is easily voided by the buyer for inspection issues during the inspection period.  Whereas, the CRISP-13 allows for a typical allowance of 1.5% of the purchase price for warrant items [1](i.e. non-leased major appliances; heating, cooling, mechanical, electrical, security, sprinkler, septic, and plumbing systems; seawall; dock; and pool equipment, structures (including roofs, doors, and windows). Seller does not warrant and is not required to repair cosmetic conditions, unless the cosmetic condition resulted from a defect in a warranted item. “cosmetic conditions” means aesthetic imperfections that do not affect the working condition of the item, including pitted marcite; tears, worn spots, and discoloration of floor coverings/wallpapers/window treatments; caulking in bathroom; nail holes, scratches, dents, scrapes, and chips in ceilings/walls/flooring/tile/fixtures/mirrors; cracked roof tiles; curling or worn shingles; and minor cracks in floor tiles/windows/driveways/sidewalks/pool decks/garage and patio floors[2], 1.5% of the purchase price for wood-destroying organism treatment and repairs; and 1.5% of the purchase price for costs associated with closing out open permits and obtaining required permits for unpermitted existing improvements.[3]  The seller likes the limited downside of an ”as is” contract, which limits the seller’s out of pocket costs and the seller is not contractually obligated to make any repairs that come up during inspections.

The FAR BAR AS IS contract has its place as a tool for both buyers and a sellers.  Although the seller is not contractually obligated to make any repairs that may come up during inspections, everything is negotiable. This is especially true if the inspections are completed prior to the inspection deadline.  Timing is everything!!!

[1] Lines 75-76, Florida Association of REALTORS®, CRSP-13

[2] Lines 196-201, FAR

[3] Lines 76-79, FAR

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