No need to be an industry veteran like Isaac Toussie to know that different jurisdictions can handle real estate matters differently. This is part of what makes real estate law so very interesting, after all – and often so challenging! Take Alabama for an example. There, property buyers cannot rescind their purchases even in cases of demonstrable seller fraud – when that property has been bought on a strictly “as-is” basis. Yes, it’s true: Alabama case law believes in the ancient law of caveat emptor even more than any other on the books!!
A recent case determined that an as-is clause in the sales contract not superseded by another provision will be interpreted literally, or “as-is.” In this particular case, a pre-sale misrepresentation was made that was only found out (that is, proven false) post-sale. Most anywhere else that’s just fraud and will probably lead to some jail time, but an Alabama court has ruled that as the as-is clause in the sales contract was not superseded by any other provision signed onto by both parties, the as-is clause shall be interpreted literally!
That was an ambiguous situation in the eyes of Alabama law, but the law itself in Alabama is actually not quite as simplistically draconian as the quick snapshot of the case provided here would suggest. Such strict interpretations of an as-is clause only apply to used property in the state, and not to new developments. Such as-is clauses are also superseded in cases where the misrepresentation is not obvious and potentially harmful to health and safety.
Alas for the plaintiff in Teer v. Johnston, however, while the misrepresentation was not something obvious it was not deemed harmful to health or safety, constituting an inconvenient nuisance instead. What the complainant needed to have done was to provide either in the sales contract or the deed that pre-sale disclosures should survive the execution of the deed!
