Section 24007 (b)(2) of the Vehicle Code states it is the responsibility of the seller to provide a valid smog certificate at the time of delivery of the vehicle. There is no provision in the law to sell a vehicle "as is."
The buyer has the option of paying for any repairs necessary to get the car to pass the smog check but may end up taking the seller to Small Claims Court to recover their costs. Although the law clearly supports the buyer, collecting on a small claims judgment can be difficult, so the amicable solution is usually best.
In this specific case it might be that the seller is conducting the illegal act of "unlicensed dealer". We recommend getting in touch with the DMV's Investigative Services division and report the activity. They may be able to intervene.