Tennessee law regarding 'as-is' sales:
Audio Lesson
Duration: 2:42
Question & Answer
Review the question and all answer choices
Eliminates all seller obligations
A is incorrect because 'as-is' does not eliminate all seller obligations. The most important remaining obligation is the duty to disclose known material defects, which is a fundamental protection for buyers in real estate transactions.
Does not eliminate duty to disclose known material defects
Is prohibited
C is incorrect because 'as-is' sales are not prohibited in Tennessee. They are a common marketing approach, but they still operate within the legal framework that requires disclosure of known material defects.
Only applies to commercial property
D is incorrect because the disclosure requirement for 'as-is' sales applies to both residential and commercial property in Tennessee. The duty to disclose known material defects is not limited by property type.
Why is this correct?
Answer B is correct because Tennessee law requires sellers to disclose known material defects even in 'as-is' sales. 'As-is' primarily affects the buyer's ability to seek repairs after closing, not the seller's duty to disclose known issues.
Deep Analysis
AI-powered in-depth explanation of this concept
This question addresses a critical concept in Tennessee real estate transactions regarding 'as-is' sales. Understanding this distinction is vital for protecting both buyers and sellers and preventing legal disputes. The core concept is that 'as-is' does not mean sellers can hide known problems. The question tests whether students recognize that disclosure obligations remain regardless of how property is marketed. The reasoning process involves eliminating incorrect options: A is wrong because disclosure duties persist; C is incorrect as 'as-is' sales are permitted; D is false because the rule applies to residential properties too. The challenge lies in understanding that 'as-is' primarily relates to the buyer's waiver of inspection contingencies, not disclosure requirements. This connects to broader principles of agency law, contract formation, and consumer protection in real estate.
Knowledge Background
Essential context and foundational knowledge
The concept of 'as-is' sales exists in most real estate markets, including Tennessee. These sales typically mean the seller makes no warranties about the condition of the property and the buyer accepts the property in its current condition. However, this concept exists alongside disclosure laws that require sellers to reveal known material defects. This balance protects sellers from liability for undiscovered issues while ensuring buyers have information about problems the seller was aware of. Tennessee's position reflects the majority approach in the United States, where disclosure duties generally supersede contractual 'as-is' language when it comes to known defects.
Think of 'as-is' sales like selling a used car with 'as-is' in the window. The seller can still tell you about the known engine problem (disclosure), but they're not promising to fix it (waiver of repairs).
When you see 'as-is' on an exam, immediately think 'disclosure still applies' but 'repair waivers might apply'. This mental connection will help you eliminate wrong options quickly.
When you see 'as-is' in a question, immediately recognize that disclosure requirements still apply. This is a common trick where test takers confuse 'as-is' marketing language with the fundamental duty to disclose known defects.
Real World Application
How this concept applies in actual real estate practice
A Tennessee real estate agent is listing a 20-year-old home where the sellers know the roof has a leak but plan to market it 'as-is'. During buyer showings, several agents ask about the roof. The sellers want to say nothing about it because of the 'as-is' designation. However, the agent must explain Tennessee law requires disclosure of this known material defect. The agent should document the disclosure in writing, even though the property is marketed as-is, to protect both the buyers and the sellers from future legal claims.
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