Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

An as-is clause in a contract may prevent claims under which act?

1. Fair Housing Act

2. Home Mortgage Disclosure Act

3. Texas Deceptive Trade Practices Act

4. Real Estate Settlement Procedures Act

The correct answer is: Texas Deceptive Trade Practices Act

The as-is clause in a contract is significant in determining the extent to which a buyer can claim that the seller misrepresented the condition of the property. Specifically, this clause generally indicates that the buyer is accepting the property in its current state, with all existing defects, and waives the right to seek recourse for issues that may arise after the purchase. In the context of the Texas Deceptive Trade Practices Act (DTPA), this is particularly relevant. The DTPA protects consumers from false, misleading, or deceptive acts. However, if a buyer signs a contract that includes an as-is clause, that clause may limit the buyer's ability to assert claims under the DTPA regarding the condition of the property. The rationale is that the buyer has acknowledged the property's state at the time of the sale and accepted it without expecting the seller to make any repairs or disclosures concerning defects. In contrast, the other acts mentioned (Fair Housing Act, Home Mortgage Disclosure Act, and Real Estate Settlement Procedures Act) are focused on different aspects of real estate transactions. The Fair Housing Act prohibits discrimination in housing; the Home Mortgage Disclosure Act requires financial institutions to disclose mortgage lending information; and the Real Estate Settlement Procedures Act regulates real estate settlement processes and