10 things to know about a sale without legal warranty

You’ve found the home of your dreams, but the seller wants a sale without legal warranty. Should you accept? Think about these ten things before you say yes.

Unless otherwise specified in a contract, every consumer is entitled by law to a minimal warranty for all goods purchased or rented.

The warranty of ownership, or title, protects a buyer’s property rights after the sale. The warrantee of quality is also known as the warranty against hidden defects; buyers are protected if a major fault is discovered after the purchase.

If a contract specifies the sale is made at the buyer’s “own risk and peril,” it means that the buyer has no later claim regarding hidden defects.

Not everybody is eligible to make a sale without warranty. This possibility is available to individuals who sell their own properties or to intermediaries dealing with inherited properties, including real estate agents. It is also a standard condition of a power-of-sale transaction, where a mortgage lender sells a property as a result of repossession.

In many cases the inheritors of a property haven’t lived in it or on it and therefore cannot guarantee its condition; they can protect themselves against lawsuits by adding the sale without warranty statement to the contract. An “at your own risk” sale may also be a legitimate option for elderly people leaving their homes for smaller dwellings and who want to be free from worry in their last years.

A professional real estate agent doesn’t have the right to sell his or her own property without warranty. A professional is considered to be an individual who derives most of their revenue from property sales or a builder who develops properties. A real estate broker is not considered to be a professional seller when acting as an intermediary between the seller and the buyer.

With or without legal warranty, the seller must still disclose all known problems about the property in question, including the possibility of latent defects. If it turns out that they failed to disclose any material problems they may be sued for hiding known defects.

However, in some cases a defect is found after the purchase and the seller claims to be unaware of its existence; if you bought the property “at your own risk,” the seller won’t be held liable.

A sale without legal warranty is all about acquiring property cheaply. The advantages depend on the timing of the sale; if the market favours demand over supply, then the price difference will be minimal.

Anyone preparing to buy a property under “at your own risk” conditions should get a thorough professional inspection done. This may help guard against unpleasant, costly surprises and it might encourage the seller to lower their price.