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Real Estate Sales Contracts & The Doctrine of Merger

On Behalf of | Apr 7, 2014 | Sales Contracts

Some say buying a home is the most important purchase a person will make. It’s understandable then, that these sales contracts are long and contrived documents that are seldom understood in their entirety. Having an early understanding of the terms of your sales contract is important, however, as the rights and guarantees therein don’t always last.

You should always review the terms of such important contracts with a real estate attorney who can help to preserve your rights under the relevant documents, and ensure you’re getting a deal that makes sense.

Typically, any real estate sale is largely governed by two documents. The first is the agreement for sale, which typically lays out the terms of the transaction including any warranties and financing details. The second is the deed of conveyance, which effectively transfers title in the land sold to the buyer when the deal is done.

In most cases, the agreement for sale is said to “merge” into the deed of conveyance, meaning that any guarantees in the agreement for sale that are not also in the deed of conveyance are extinguished. This is known as the “Doctrine of Merger.” When both documents are not carefully considered together, the doctrine of merger can operate to terminate otherwise intended terms in a transaction to a purchaser’s detriment.

For example, say you agree to buy a parcel of land so long as it is zoned for construction of a residential residence. If you accept the deed but later discover the land was not zoned as requested, the doctrine of merger may operate to extinguish that guarantee if it is not restated in the deed.

Of course, the doctrine of merger will not always apply. With such an important purchase, it’s smart to review each contract with a real estate law attorney to make sure you’re getting exactly what you bargained for.