Present: All the Justices 

EMPIRE MANAGEMENT & DEVELOPMENT 

COMPANY, INC. 

v. Record No. 970545 OPINION BY JUSTICE ELIZABETH B. LACY 

 January 9, 1998 

GREENVILLE ASSOCIATES 

FROM THE CIRCUIT COURT OF ALBEMARLE COUNTY 

Paul M. Peatross, Jr., Judge 

 This appeal arises out of a dispute between Empire 

Management & Development Company, Inc., (Empire) and Greenville 

Associates (Greenville) over a rental income guarantee involved 

in the sale of commercial real estate in Albemarle County. 

 Under a contract dated February 28, 1986, Sunset Corporation 

(Sunset),1 agreed to purchase two parcels of commercial real 

estate located in Albemarle County. The first parcel, designated 

"Rio I," was owned by Greenville, while the second parcel, 

designated "Rio III," was owned by Caleb N. and Lynn W. Stowe. 

The February contract contained a combined sale price for the 

parcels of $2,416,000 and also listed several "Special 

Conditions," one of which provided for the following rental 

income guarantee: 

 (2) Sellers agrees [sic] to guarantee a monthly 

income of $2,350.00 on Suite 3, [Rio] 

Building III and a $1,370.06 [monthly income] 

on Suite 6, [Rio] Building I, until such time 

as the monthly income on each of these suites 

shall equal or exceed these amounts for 3 

consecutive months. Each suite may be 

released from the guarantee separately upon 

obtaining the required figures. 

 Sunset and Greenville subsequently entered into a second 

 

 1 Sunset subsequently assigned its rights under the 

contracts involved in this case to Empire. 
 2 

 

contract, dated April 15, 1986, which involved the sale only of 

Rio I. The April contract listed a sale price for Rio I of 

$1,150,000 and also contained a rental income guarantee provision 

which was identical, with respect to Rio I, to the guarantee 

provision in the February contract.2

 Shortly thereafter, on June 3, 1986, Greenville and the 

Stowes executed deeds conveying Rio I and Rio III, respectively, 

to Empire. Neither deed made reference to the rental guarantees. 

 On the same day, a closing statement prepared by Empire's 

attorney was signed by attorneys representing the buyers and 

sellers. The closing statement referred to the sale of both Rio 

I and Rio III and, in a section labeled "Notes," contained the 

following reference to the rental guarantees: 

 5. Contract provisions in contract dated 

February 28, 1986 regarding guarantee of 

leases (more particularly identified as 

special condition 2 and special condition 6) 

where Seller guarantees the monthly income on 

Suite 3, Building III and Suite 6, Building 

I, shall survive closing and Sellers 

guarantee of rent on Suite 4 for one year 

from date of settlement shall survive 

closing. 

 Greenville paid Empire a total of approximately $24,000 in 

monthly rental guarantees for Suite 6 in Rio I. By letter dated 

November 29, 1988, however, Greenville notified Empire that the 

 2 The April 15 contract provided: 

 Seller agrees to guarantee a monthly income 

of $1,370.06 on Suite 6 until such time as 

the monthly income on this suite shall 

equal or exceed this amount for 3 

consecutive months. 
 3 

amount paid was "in excess of its maximum obligation," demanded 

repayment of the overpayment, and stated that it had "no further 

obligation" under the April 15, 1986 contract. 

 On March 20, 1990, Empire filed a motion for judgment 

against Greenville alleging breach of the April 15, 1986 

contract, seeking the unpaid rental guarantees as damages. 

Empire nonsuited that action and filed a second motion for 

judgment against Greenville on December 16, 1994, again alleging 

that Greenville breached the April 15, 1986 contract. Empire 

sought to amend its second motion for judgment by adding the 

February 28 contract as a basis for its breach of contract claim. 

 Greenville objected, arguing that the amendment would add a new 

cause of action, and that such a new cause of action was barred 

by the statute of limitations. See Vines v. Branch, 244 Va. 185, 

418 S.E.2d 890 (1992). The trial court denied Empire's motion to 

amend the motion for judgment. 

 Following a bench trial, the trial court issued a letter 

opinion in which it determined that the April 15, 1986 contract 

"was extinguished" and could not "now be asserted as the grounds 

for a cause of action." Although conceding that "[t]he deed in 

the instant case does not deal with the subject of the rental 

guarantee," applying the merger doctrine as articulated in 

Woodson v. Smith, 128 Va. 652, 104 S.E. 794 (1920), and Charles 

v. McClanahan, 130 Va. 682, 108 S.E. 858 (1921), the trial court 

concluded that mention of the February contract in the closing 
 4 

statement was sufficient to extinguish the April contract. The 

opinion letter also rejected Empire's claim that Greenville was 

estopped from denying the validity of the April 15 contract. 

 The trial court entered a final judgment order denying 

Empire's breach of contract claim and a special plea of 

recoupment filed by Greenville. We awarded Empire an appeal 

limited to its claim that the trial court erred in ruling that 

the merger doctrine operated to extinguish the April contract at 

closing.3

 The merger doctrine deals with extinguishing a previous 

contract by an instrument of higher dignity. Miller v. Reynolds, 

216 Va. 852, 854, 223 S.E.2d 883, 885 (1976). The doctrine 

generally provides that, in the case of the sale of real 

property, the deed of conveyance represents the final agreement 

of the parties and all prior agreements, oral or written, are 

merged into the deed of conveyance. Id. at 855, 223 S.E.2d at 

885; Charles, 130 Va. at 686, 108 S.E. at 859. In this case, the 

trial court's decision that the doctrine of merger operated to 

extinguish the April 15 contract was not based on an analysis of 

the deed of conveyance, but was based on the statement 

referencing the rent guarantees in the closing statement. This 

was error. 

 

 3 At the petition stage of their appeal, we denied 

Empire's assignments of error regarding the trial court's 

rejection of Empire's claim of estoppel and denial of its 

motion to amend and Greenville's assignments of cross-error. 
 5 

 Closing statements are not deeds, nor are they part of a 

deed. Closing statements generally recapitulate the particulars 

of the "closing" on a real estate transaction. 2 Milton R. 

Friedman, Contracts and Conveyances of Real Property § 11.14 (5th 

ed. 1991). A closing statement is defined as a "[w]ritten 

analysis of closing (i.e. final steps) of [a] real estate 

transaction setting forth purchase price less deductions for such 

items as mortgage payoff, tax adjustments, etc. and adding 

credits to arrive at net amount due seller." Black's Law 

Dictionary 255 (6th ed. 1990). 

 In this case, the provisions contained in the closing 

statement itemized the agreements set out in the February and 

April contracts of sale. For example, the contracts of sale 

provided that all taxes, insurance, rents, and interest were to 

be prorated at settlement; the closing statement set forth the 

specific dollar amounts relative to prorations of those items. 

The contracts for sale indicated that title was to be conveyed 

free of liens and indebtedness; the closing statement recited 

that the sellers would secure the release of a deed of trust on 

Rio I and that the purchasers were assuming first and second 

liens of indebtedness on Rio III.4

 The contracts for sale 

provided for rent guarantees for space in both Rio I and Rio III; 

the closing statement referenced the provisions of the February 

 

 4 Assumption of these liens was also contained in the Rio 

III deed of conveyance. 
 6 

 

contract relevant to the rent guarantees, which, as to Rio I 

space, were identical to those in the April contract. 

 In summary, the closing statement in this case did no more 

than recapitulate previously established agreements between the 

buyers and sellers and itemize the dollar value of those 

agreements where relevant. It did not state that those 

previously executed agreements upon which the recapitulations 

were based were extinguished or superseded. As to the rent 

guarantees for Rio I, the closing statement did no more than 

identify the terms and conditions of the guarantees; it did not 

change those conditions, create new terms, or in any way alter 

the pre-existing agreements between the parties. 

 There is nothing in this closing statement that qualifies it 

as an instrument of higher dignity than the contracts for sale 

upon which it is based. The doctrine of merger simply is not 

applicable to the facts of this case.5

 Therefore, the trial 

court erred in holding that the April 15 contract could not be 

asserted as the grounds for a cause of action because it was 

extinguished by the closing statement pursuant to the merger 

doctrine. 

 5 In its brief on appeal, Greenville apparently also 

relies on the doctrine of integration of contracts to support 

the trial court's decision. Greenville asserts that "where the 

parties enter into a written agreement then all prior 

agreements which are on the same subject are merged into the 

subsequent contract and are extinguished." We reject this 

argument. Neither party has claimed that the closing statement 

was an independent contract, and the attributes of the closing 

statement set out above would not support such a contention. 
 7 

 Even though the closing statement did not extinguish the 

April 15 contract, the question remains whether the rent 

guarantees of the April 15 contract were merged into the June 3, 

1986 deed conveying Rio I to Empire. Clearly, the deed is an 

instrument of higher dignity than the April 15 contract. 

However, the merger doctrine is not absolute. Agreements which 

are collateral to the passage of title and are not covered in the 

deed can survive the execution of the deed. Davis v. Tazewell 

Place Associates, 254 Va. 257, 262-63, 492 S.E.2d 162, 165 

(1997); Miller v. Reynolds, 215 Va. at 855, 223 S.E.2d at 885; 

Woodson v. Smith, 128 Va. at 656, 104 S.E. at 795. 

 The rent guarantees are not addressed in the deed, and are 

collateral to the passage of title. There is no evidence to 

suggest that the parties intended the rent guarantees to 

terminate with the execution of the deed. Although the closing 

statement had no effect on the validity of the prior contracts 

for sale, it nevertheless reflected the parties’ intent that the 

rent guarantees for both Rio I and Rio III established in the 

prior contracts "survive closing." Indeed, the rent guarantees 

are executory until the property is conveyed. Thus, we conclude 

that the rent guarantees contained in the April 15 contract were 

not merged into the June 3, 1986 deed conveying Rio I to Empire. 

 Accordingly, we will reverse the judgment of the trial court and 

remand the case for further proceedings. 

Reversed and remanded.