“As is, where is” Basis

As-is-where-is Basis describes a sales transaction clause under which the seller offers goods in their
present or existing condition to the prospective buyer. In this definition present condition is very
important; this means all the risk is transferred to the buyer.

This concept is very popular in foreclosed properties, as all foreclosed properties are for sale on an
“As-is-where-is” basis. Ex:- A property of Rs 50 lakhs was brought by Mr. A for which he took a loan
of Rs 40 lakhs from bank ‘B’ and he was not able to pay back Rs. 35 lakhs to bank ‘B’. Bank B will
have recourse available as bank can sell the property by conducting a public auction. Bank ’B’ will
first issue a notice to Mr. A that he can pay in 90 days otherwise bank will sell the property. Even if
after 90 days Mr. A does not pay Rs35 lakhs then he becomes a defaulter of the loan, now bank will
put the property in foreclosure. Now in public auction bank will advertise the property in newspaper
asking for bids and will put the clause “as-is-where-is” basis and whoever becomes the buyer, the
property will be transferred to the new buyer with all the risk. As-is-what-is Basis here means that
the new buyer will inherent all the legal and physical condition of the property in the present form at
his own cost.

The definition of “as is where is” can be summarized as, buyer get everything that comes with a
property, at its present condition, good or bad, when he/she buys it.

For example, if a property badly needs repairs, or if it has illegal occupants, or if the title of a
foreclosed property has a problem, or if it is located beside a garbage dump or cemetery, etc, the
buyer expressly agrees to buy the property in such condition. Any costs related to fixing any of these
problems will be for the account of the buyer.

The “as is where is” clause stems from an English legal doctrine known as the “caveat emptor” rule.
In Latin, “caveat emptor” means “let the buyer beware”. This principle puts the risks and burden of a
transaction on the buyer, and it is the buyer’s duty to do his due diligence and checks, when deciding
whether to go ahead with the transaction.

This includes implied warranties for an item being sold. Certain types of implied warranties must be
specifically disclaimed, such as the implied warranty of title. "As-is-where-is" denotes that the seller
is selling, and the buyer is buying an item in whatever condition it presently exists, and that the
buyer is accepting the item "with all faults", whether or not immediately apparent.

On the other hand, the phrase "as-is-where-is" does not disclaim express warranties, such as those
created by the seller's description of an item. In other words, the item may be sold "as is," but if the
item does not conform to the seller's description, the buyer has a right to reject it.

It is not an exclusive term for property transactions though it is probably more prevalent for the sale
of property because the seller lets the purchaser decide on the purchase after inspecting the
property. The purchaser must accept the property, with warts and all. The purchaser cannot use the
condition of the property at the time of purchase as an excuse to cancel or rescind the purchase
after the sale is concluded.

“As is where is” is usually seen in advertisements for completed properties in the secondary market
and auctioned property.