Q: We have signed a contract to sell our house, and one of the specific provisions which we added indicated that the house was to be sold in an "as is" condition. Settlement is scheduled next month. The real estate broker has advised us that the purchaser is concerned about some potential housing code violations, and called to our attention the language in the form contract indicating that it is our obligation to correct all housing code violations before settlement. Do we have to do so in light of the "as is" provisions in the contract?
A: Fortunately, the District of Columbia Court of Appeals has quite recently ruled on this very subject.
In a case entitled Craven v. Elmo, decided on March 12, 1982 by the highest court for the District of Columbia, the court ruled that where there is a conflict between a printed clause in a contract and a provision inserted by the parties especially for the particular transaction, the insertion has priority over the printed clause. According to the court, "the printed clause must yield to the insertion."
In the Craven case, the parties to the contract specifically typed into the form contract a provision that the property was to be sold in "as is" condition. The standard "boiler plate" provision in the pre-printed form contract provided that:
All notices of violations of municipal orders or requirements noted or issued by any department of the District of Columbia or prosecution in any of the courts of the District of Columbia on account thereof against or affecting the property at the date of settlement of this contract shall be compiled with by the seller and the property conveyed free thereof, . . .
The District of Columbia Court of Appeals ruled "that the clause of the contract which expressly provided that the property was to be sold 'as is' was controlling and that (the purchaser) breeched the contract of sale by refusing to go to settlement until (the seller) remedied any alleged housing code violations."
Thus, it is clear that if the parties to the contract mutually agree to certain conditions, and if these conditions are added to the pre-printed language of the form contract, the additional language is controlling where there may be a discrepancy between the two provisions.
But, this highlights a major problem in writing contracts. All too often, neither the parties to the transaction, i.e., the buyer and the seller, nor the real estate agents involved, spend the time to carefully read each and every provision in the contract. It is strongly recommended that where you add language to the pre-printed form, make sure that any inconsistencies in the pre-printed form are crossed off.
Additionally, if there are any additions or deletions to the pre-printed contract, make absolutely sure that all of the parties to the transaction initial those changes.
And, if you are buying or selling a property in an "as is" condition, keep in mind that the case law in the District of Columbia defines that phrase to mean that "real property is to be conveyed in the physical condition in which (it) exists on the date of contracting and the date of settlement, and that the seller makes no warranty or representation as to the physical condition of the property or its fitness for habitation. Because of the "as is" clause, the risk of loss and the risk of change in the physical condition is placed upon the buyer."