ContractsIntermediateCalifornia Exam

What is an 'as-is' clause in a real estate contract?

AA clause requiring the seller to make all repairs, under standard California purchase contract terms, as typically drafted in a residential purchase agreement

BA clause indicating the buyer accepts the property in its current condition, but does not eliminate the seller's duty to disclose known defectsCorrect

CA clause that voids the inspection contingency, as typically drafted in a residential purchase agreement, under standard California purchase contract terms

DA clause requiring a cash purchase, consistent with common contract law principles, under standard California purchase contract terms, as typically drafted in a residential purchase agreement

Why A clause indicating the buyer accepts the property in its current condition, but does not eliminate the seller's duty to disclose known defects Is Correct

Answer B: A clause indicating the buyer accepts the property in its current condition, but does not eliminate the seller's duty to disclose known defects

An 'as-is' clause means the buyer agrees to accept the property in its present condition and waives the right to request repairs. However, it does NOT eliminate the seller's or agent's legal duty to disclose known material defects.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

Key Contracts Terms in This Question

Contingency

A condition in a purchase contract that must be satisfied before the sale can proceed to closing.

Purchase Agreement

A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.

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Key Terms to Know

Contingency

A condition in a purchase contract that must be satisfied before the sale can proceed to closing.

Earnest Money

A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.

Purchase Agreement

A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.

Option Contract

A contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.

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