by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
VENDOR/PURCHASER; MERGER: Seller's warranty that septic system had no defects and Seller's promise to spread topsoil and seed backyard did not merge into deed. Greco v. Vollmer, 890 S.W. 2d 307 ( Mo. App. 1994). Only provisions of sale agreement relating to the delivery and the sufficiency of the deed merged into the deed.
Comment: It certainly is appropriate to limit the "merger by deed" doctrine to matters that ought to be resolved prior to closing. The question is whether the doctrine should be limited only to matters of title.
The doctrine makes some sense in the context of title warranties. In essence the doctrine is just a shorthand statement that if the buyer knowingly and without objection accepts title that does not meet the standards set forth in the agreement, the buyer is deemed to have waived the deficiencies. As so limited, the rule makes some sense. Frequently, following the close analysis of title that occurs following execution of a land sale agreement, some title problems are identified. It is not unusual for a buyer to assume the risk of such problems. Sometimes, in fact, a title company will insure against them. Further, it is not unfair to expect the buyer who does have serious concerns about title to raise the issue and refuse to close.
Applying the merger by deed doctrine to warranties on non-title matters - like the sewer warranty in this case - is a different question. Buyers generally would not be deemed to have waived continuing warranties or promises that will be fulfilled after closing, and the merger doctrine should have no application to these aspects of the contract. In any event, the modern merger doctrine properly should track the probable intentions of the parties as indicated by their actions. This is unlike the merger "rule of law" doctrine we all learned in law school - useful primarily for cutting off equally archaic contingent remainers.
In either case, the doctrine is so different from the ancient merger "rule of law," it is probably misnamed. Shorthand names are useful, however. Perhaps we could call the new rule "Bubba."
The unsolved question is whether the doctrine should apply to non-title problems that might have been resolved prior to closing. Are the same presumptions appropriate here that are appropriate for title issues - that it is unlikely that the buyer or seller would anticipate there would be a closing without waiver? Or should we assume that objections are waived unless raised in this case? For instance, what if seller was to make certain improvements to the property prior to closing, and did not do so? Where it is unlikely that the parties intended that the seller would make the improvements after the closing, should we permit the buyer to close anyway, without reserving any rights, and later sue? How should Bubba operate here?
Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last five years, these Reports annually have been collated, updated, indexed and bound into the Annual Survey of Developments in Real Estate Law, volumes 1-5, published by the ABA Press. The Annual Survey volumes are available for sale to the public. Contact Shawn Kaminsky at the ABA. (312) 988 5260.
Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.