An Exception to the Merger by Acceptance Provision in a Purchase and Sale Agreement

A standard Purchase and Sale Agreement usually contains the following “Acceptance of Deed” provision that every buyer needs to understand:

The acceptance and recording of a deed by the BUYER or their title nominee as the case may be, shall be deemed to be a full performance and discharge of every agreement and obligation herein contained or expressed, except such as are, by the terms hereof, to be performed after the delivery of said deed.

The general rule in Massachusetts is that a buyer’s acceptance of a deed for a property merges all prior covenants into the deed and discharges all obligations contained in the purchase and sale agreement, except those that a specified in the deed itself.  An exception to this general rule arises when there are promises in the original contract which are additional or collateral to main promise to convey title to the land.  An example of this type of exception is when a home builder agrees to undertake the obligation to construct a new home that is collateral to the conveyance of the deed.  In this situation, the new home buyer’s claims against the home builder for defects in the new home could survive the delivery of the deed and become actionable.

- By Benjamin Kafka