Q: Several real estate firms in the Washington area are stamping this on their sales contract: "This contract and its provisions shall not be extinguished by the merger of the deed of bargain and sale but shall expressly survive the transfer of the property." What is the legal implication for a seller who has accepted a contract with this statement on it?
A: Many Virginia real estate companies have been using that language on their form contracts, but that same (or similar) language has been used in the standard Maryland and District of Columbia real estate form contract for a number of years.
Real estate law is, to a large extent, quite archaic. If one looks to the origin of a lot of our real estate doctrines, they can be found in the English feudal system. In those days, for example, in order for a piece of property to be legally transferred prior to the 17th Century, the typical form of conveyance was called "the feoffment with livery of seisin."
I doubt that most lawyers today understand this concept, although we all remember these terms from our first property law course. The seller would formally "give" or "deliver" the seisin to the buyer in the presence of witnesses from the neighborhood. In order to complete the transaction, a ceremonial act took place, whereby the seller actually gave the buyer a branch, twig or piece of the ground as a symbol of the delivery. In return, the seller received a "peppercorn" to assure valuable consideration for the transaction.
Another old English concept was the doctrine of merger. This doctrine held that all prior negotiations entered into between the buyer and the seller merged into the deed when it was accepted by the buyer. In other words, the buyer, by taking the twig to the property--in this case the deed--indicated his satisfaction with the entire transaction, and thus all previous negotiations, including the sales contract, were merged into that deed. In simple terms, the doctrine of merger stood for the proposition that, once a buyer took the deed, he could not sue the seller for breach of contract.
Clearly there should be no place for this doctrine of merger in today's society. Indeed, the courts in many states either have specifically repealed the doctrine of merger or have narrowed down its application significantly.
However, the doctrine still has legal consequence today and, accordingly, most standard form contracts contain the lauguage referenced above.
From the buyer's point of view, the doctrine of merger is quite anti-consumer and, of course, should be eliminated. Your question, however, asks for the legal implication of the language to a seller who has accepted a contract with that anti-merger clause. Legally, it means anything that you have agreed to in the contract will be binding on you even after the buyer accepts the deed at settlement. This does not mean, of course, that the buyer can sue you indefinitely for breach of contract; statutes of limitations curtail the time for such lawsuits. More importantly, it puts the obligation on you as the seller to follow through on all of your contractual obligations.
This is not an onerous burden on the seller. Presumably you have read carefully all of the provisions in the standard contract. If you do not understand some of these provisions, discuss them with your real estate broker and your attorney. After all, one should not be able to get out of a contractual obligation merely because the purchaser has accepted the "twig" to the property.
Our real estate laws must be brought into the 20th century. In this day of computer electronics there is no role for the twig or the peppercorn.
Benny L. Kass is a Washington attorney. Write him in care of the real estate section, The Washington Post, 1150 15th St. NW, Washington 20071. For a copy of the free booklet, "A Guide to Settlement on Your New Home," send a self-addressed stamped envelope to Benny L. Kass, 1528 18th St. NW, Washington 20036.