The Ontario “As Is” Clause: What It Covers, What It Doesn’t
Arthur Zhao · AZ Real Estate Partners
KEY TAKEAWAY
AZ
AZ Real Estate Partners
Buying Guide · Contract Clauses
AZ
AZ Real Estate Partners
Buying Guide · Contract Clauses
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The Ontario “As Is” ClauseWhat It Covers — and What It Doesn’t
Seeing “As Is, Where Is” in a contract doesn’t mean a seller can hide known problems. Here’s what every buyer needs to understand before signing — and what sellers can and cannot get away with. (For the short answer to what does as is where is mean in an Ontario contract, see the companion explainer; this article goes clause by clause.)
⚖️ Legal Limits of As Is
🔍 Latent vs Patent Defects
🏦 Power of Sale Properties
🛡️ Buyer Protection Strategies
What does “As Is, Where Is” actually mean in an Ontario real estate contract?
An “As Is, Where Is” clause in an Ontario Agreement of Purchase and Sale (APS) means the buyer agrees to purchase the property in its existing condition, with no warranties from the seller regarding the state of any structure, system, or appliance. According to RE/MAX Canada, approximately 25% of estate sales and nearly all power of sale properties carry this designation. However — and this is critical — Ontario courts have consistently held that an As Is clause does not eliminate a seller’s obligation to disclose known latent defects (hidden defects a buyer could not discover through reasonable inspection). Sellers who use As Is language to conceal material problems they are aware of remain legally exposed.
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Step 1: Patent vs Latent Defects — The Legal Distinction
Hidden defect not discoverable through reasonable inspection — foundation cracks, chronic flooding, concealed mould, hidden electrical issues
❌ No (seller must still disclose)
Dangerous Defect
Any condition posing a risk to health or safety — asbestos, lead pipes, structural hazards
❌ No (must proactively disclose)
⚠️ The Legal Reality:
If a seller is aware that the basement floods every spring but writes “As Is” and says nothing, they can still be successfully sued for misrepresentation under Ontario law. Courts have repeatedly found that As Is language cannot be used as a shield for deliberate concealment of known material defects. The RECO Bulletin 7.4 also confirms sellers have a legal duty to disclose facts that significantly affect the property’s value or enjoyment.
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Step 2: When Is As Is Most Common?
1 Power of Sale: The lender (bank) sells the property with no knowledge of its condition. Nearly 100% As Is. Buyers must conduct full due diligence — inspection, title search, permit history, outstanding liens.
2 Estate Sales: The executor has limited knowledge of the deceased’s property. As Is protects the estate, but the executor must still disclose anything they are aware of.
3 Investor Flips: Investors who have renovated and resold may use As Is to limit warranty claims on renovation quality. Check whether all work was done with proper permits — unpermitted work can cause serious problems at closing or future sale.
4 Tenanted Properties: Landlords who cannot regularly access the property may use As Is when they genuinely don’t know current conditions inside the unit.
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Step 3: Buyer Protection Strategies for As Is Properties
Always Include a Home Inspection Condition
An As Is clause essentially tells you to do your own due diligence — so a home inspection condition is non-negotiable. In Ontario’s 2026 buyer’s market, sellers rarely refuse inspection conditions. Use an OAHI-certified inspector. If significant issues are found, you can exit without penalty and recover your deposit in full.
Request a Seller Property Information Statement (SPIS)
A SPIS is a written disclosure form where the seller declares known facts about the property. While not legally mandatory, any false statements in an SPIS can be used as grounds for legal action. Review every answer carefully — especially responses about known defects, work done without permits, and insurance claims.
Pull the Property’s Permit History
Contact the local Building Department (most municipalities allow online searches) to check for open or expired building permits. Open permits signal uninspected renovation work that could create liability for you as the new owner. This is especially important for flip properties and Power of Sale homes.
Have Your Lawyer Review and Add Protective Language
Before accepting an As Is offer, have your real estate lawyer review it. Ask to add language clarifying that the As Is clause does not waive the seller’s obligation to disclose known latent defects. This language is legally sound and a reasonable ask — many sellers will accept it.
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Frequently Asked Questions
What does “As Is” mean in Ontario real estate?
It means the buyer agrees to purchase in the property’s current condition with no seller warranties. Common in power of sale, estate sales, and investor flips. It does not release the seller from disclosing known latent defects.
Does As Is protect the seller from all liability?
No. Ontario courts have held that As Is clauses do not excuse deliberate concealment of known latent defects. Sellers who knowingly hide material problems can still be sued for misrepresentation.
Should I still do a home inspection on an As Is property?
Absolutely — As Is makes inspection even more important. Always include a home inspection condition. If major issues surface, you can exit the deal and recover your full deposit.
Are power of sale properties always sold As Is?
Yes — virtually all power of sale properties are sold As Is, Where Is. The bank has no knowledge of the property’s condition. Check for liens, open permits, and get a thorough home inspection before proceeding.
Concerned about an As Is property?
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