Friday, April 11, 2008

A Fading Legal Precedent: The Merger Doctrine

Alright so the Cliff Notes definition of The Merger Doctrine (that doesn't do justice to my first year Property professor) is that in the context of a real estate transaction, all of the pre-closing agreements (generally the various contractual terms) "merge" into the deed at closing thereby extinguishing a parties right to sue based on a contractual term post-closing. Thus creating some sense of closure at closing.

However, our IL Supremes have cracked open the door a bit in Czarobski v. Lata. The case dealt with your plain old 105% tax proration. The buyers were to get a 105% prorated credit at closing of the last ascertainable tax bill, UNLESS, the bill was based on a partial assessment. So at closing sellers gave buyers the 105% credit but the bill was based only on a partial assessment. When the real bills came out the buyers were some $10,000 short.

So buyer sues seller based on mutual mistake of fact and misrepresentation. The Supremes ruled that the "merger doctrine" did not apply here and here the buyers suit was remanded for further action at the trial level.


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