In the last year or so the major or “gateway’ markets in the U.S., including Los Angeles (and I would include most of California south of L.A. as well) have become more and more “seller’s markets” and you will find more resistance than before to what previously were the more or less “standard” set of warranties*. Knowledge qualifiers have become more limited as well. The phrase “to the best of Seller’s knowledge” carries with it a duty to have investigated. This is always difficult to get and especially so if the property is an attractive one that can be counted on to attract a number of interested buyers. The phrase “to Seller’s knowledge” is limited to what the Seller actually knows, without having investigated. Also, the identification of the “Seller” will be limited to certain key individuals in the Seller’s organization. All of this is a matter of the relative bargaining leverage and sophistication of the parties, the quality of the property involved, and the negotiating skill of the parties’ representatives. A sophisticated seller will also negotiate for a short time limit on survival post-agreement (or no survival at all) of the warranties and a dollar limitation on liability for them). But warranties are never a substitute for thorough due diligence, and even that is being increasingly circumscribed by sellers with premiere properties. *The “standard” warranties that buyers try to obtain are many pages long.
