Present: All the Justices 

STEVEN Q. BECK AND BEVERLY S. BECK 

v. Record No. 992904 OPINION BY JUSTICE ELIZABETH B. LACY 

 November 3, 2000 

WALTER E. SMITH 

FROM THE CIRCUIT COURT OF CULPEPER COUNTY 

Arthur W. Sinclair, Judge Designate 

 In this appeal, we consider a judgment of the trial court 

vacating a jury verdict and entering judgment against the 

buyers of property on the ground that they could not prevail 

as a matter of law on (1) a breach of contract claim because 

the terms of the contract for sale of property were merged 

into the deed, or on (2) a claim of fraud because the buyers 

had authorized a title search. 

The facts are not in dispute. In August 1995, Steven Q. 

Beck and his wife Beverly S. Beck (collectively "the Becks") 

executed a contract with Walter E. Smith for the purchase of 

unimproved real estate owned by Smith. The contract included 

provisions requiring Smith to obtain a building permit for the 

construction of a three-bedroom house on the property and to 

provide a general warranty deed subject to utility easements 

that "do not materially and adversely effect [sic] the 

Purchaser's intended use of the Property . . . ." 

On February 6, 1996, Smith granted a utility easement to 

Rappahannock Electric Cooperative (Rappahannock) across a 
portion of the land upon which the Becks' house was to be 

built. The easement was recorded on February 7.1 Settlement 

occurred two days later, February 9, 1996. 

Prior to settlement, the Becks engaged the settlement 

attorney to conduct a title search on their behalf. Neither 

the settlement attorney nor Smith told the Becks about 

Rappahannock's recorded easement prior to, or at, the 

settlement. The deed of conveyance did not specifically 

identify Rappahannock's easement, reciting only that the 

conveyance was made subject to any easements "contained in 

duly recorded deeds, plats and other instruments . . . ." 

Rappahannock subsequently began to construct an electric 

transmission line utilizing the easement. 

The Becks filed a motion for judgment against Smith for 

breach of contract and fraud. The Becks alleged that 

Rappahannock's easement materially and adversely affected 

their intended use of the property contrary to the terms of 

the sales agreement and that, by failing to tell the Becks of 

the easement, Smith knowingly misrepresented material facts 

upon which the Becks relied at settlement. 

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 On February 8, 1996, Smith gave Bell Atlantic an 

easement across the property for the installation and 

maintenance of telephone lines. However, this easement was 

inside an existing easement, was recorded after settlement, 

and is not involved in this appeal. 

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Following presentation of evidence, the jury returned a 

verdict in favor of the Becks on both counts. The Becks were 

awarded $30,900 compensatory damages and $3,000 consequential 

damages on the breach of contract count. The jury also 

awarded the Becks $10,000 in compensatory damages along with 

$17,000 in punitive damages on the fraud count. Smith moved 

to set aside the verdict arguing that the Becks were not 

entitled to recover on their breach of contract count because, 

as a matter of law, the provisions of the contract of sale 

regarding the impact of the utility easement were merged into 

the deed. Smith also argued that the Becks could not recover 

as a matter of law on the fraud count because they had 

conducted a title examination and, therefore, could not rely 

on any representations by Smith. 

After further argument and briefing, the trial court 

entered an order granting Smith's motion, vacating the jury 

verdict, and entering judgment in favor of Smith. We awarded 

the Becks an appeal. 

I. Breach of Contract 

The contract for sale provided that any utility easement 

would "not materially and adversely effect [sic] the . . . 

intended use of the Property" by the Becks. The contract for 

sale also provided that the representations and warranties of 

the seller contained in the contract "SHALL BE DEEMED MERGED 

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INTO THE DEED DELIVERED AT SETTLEMENT AND SHALL NOT SURVIVE 

SETTLEMENT." Neither this language nor similar language 

regarding the impact of utility easements was repeated in the 

deed. Based on the merger language in the contract of sale 

and on the doctrine of merger, the trial court concluded that 

the contract of sale's requirement regarding the impact of 

utility easements was not collateral to the sale, was merged 

into the final deed of conveyance, and, therefore, was no 

longer an enforceable provision. 

Under the doctrine of merger, provisions in a contract 

for sale are extinguished and merged into the deed, an 

instrument of higher dignity. However, provisions which are 

collateral to the passage of title and not covered by the deed 

are not merged into the deed and survive its execution. 

Empire Mgmt. & Dev. Co. v. Greenville Assocs., 255 Va. 49, 54, 

496 S.E.2d 440, 443 (1998); Davis v. Tazewell Place Assocs., 

254 Va. 257, 262-63, 492 S.E.2d 162, 165 (1997); Miller v. 

Reynolds, 216 Va. 852, 854-55, 223 S.E.2d 883, 885 (1976); 

Woodson v. Smith, 128 Va. 652, 656, 104 S.E. 794, 795 (1920). 

In discussing the doctrine of merger, we have explained 

that a deed "is a mere transfer of title." Miller, 216 Va. at 

855, 223 S.E.2d at 885. The deed is the final expression of 

the agreements between the parties as to "every subject which 

it undertakes to deal with," and any conflicts between the 

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terms of prior agreements and the terms of the deed are 

resolved by the deed. Woodson, 128 Va. at 656, 104 S.E. at 

795. 

Nevertheless, we have recognized that not all agreements 

between the parties regarding the purchase and sale of the 

property are contained in the deed. Id. Such agreements are 

considered collateral to the sale if they are distinct 

agreements made in connection with the sale of the property, 

if they do not affect the title to the property, if they are 

not addressed in the deed, and if they do not conflict with 

the deed. See, e.g., Empire Mgmt., 255 Va. at 54, 496 S.E.2d 

at 443 (agreement for payment of rental income after transfer 

of property deemed collateral); Davis, 254 Va. at 263-64, 492 

S.E.2d at 165-66 (warranty that house to be constructed on 

property would be constructed in workmanlike manner held 

collateral); Miller, 216 Va. at 854-56, 223 S.E.2d at 884-86 

(agreement that land was suitable for percolation and would 

qualify for building permit found collateral). 

If an agreement meets these criteria, it is a collateral 

agreement, is not merged into the deed, and survives the 

execution of the deed. In this case, the provision in the 

sales contract regarding the impact of easements is a distinct 

agreement, does not affect the validity or nature of the title 

conveyed, is not addressed in the deed, and does not conflict 

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with the terms of the deed. Under these circumstances, the 

agreement in the contract for sale regarding the impact of 

utility easements on the Becks' intended use of the property 

was collateral to the transfer of title, was not merged into 

the deed, and survived the execution of the deed. 

Accordingly, we will reverse the judgment of the trial 

court entered in favor of Smith on the breach of contract 

count. 

II. Fraud 

The Becks assert that Smith's failure to notify them of 

the Rappahannock utility easement constituted the deliberate, 

intentional, and knowing misrepresentation of Smith's actual 

knowledge that the easement would interfere with the location 

of the Becks' residence and that they were damaged by their 

reliance on this misrepresentation. The trial court held that 

because the Becks undertook to investigate the status of the 

title prior to settlement through their attorney, the Becks 

were not entitled to rely on any misrepresentation on the part 

of Smith with regard to the easements. 

An action for fraud requires a showing that there was a 

false representation of a material fact, made intentionally 

and knowingly with the intent to mislead, and relied upon by 

the party misled to his detriment. Winn v. Aleda Constr. Co., 

227 Va. 304, 308, 315 S.E.2d 193, 195 (1984). Concealment of 

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a material fact may constitute the element of 

misrepresentation. Van Deusen v. Snead, 247 Va. 324, 328, 441 

S.E.2d 207, 209 (1994). 

Reliance may not be justified, however, when a potential 

buyer undertakes an investigation regarding the matter at 

issue. Upon undertaking such an investigation, the buyer is 

charged with the knowledge the investigation reveals, or, if 

the investigation was incomplete, the knowledge that would 

have been revealed had the investigation been pursued 

diligently to the end. Watson v. Avon St. Bus. Ctr., Inc., 

226 Va. 614, 619, 311 S.E.2d 795, 798 (1984); Poe v. Voss, 196 

Va. 821, 827, 86 S.E.2d 47, 50 (1955); Masche v. Nichols, 188 

Va. 857, 867-68, 51 S.E.2d 144, 148 (1949). 

The Becks' primary argument is that there was "nothing in 

the public land records which would place the title examiner 

on notice that the newly recorded rights of way resulted" in 

an adverse impact on the intended use of the property. In 

short, the Becks assert that because the alleged 

misrepresentation of material facts was not an issue of title, 

it was outside the scope of the title examination and would 

never have been revealed by a title examination. The Becks 

correctly characterize the scope of a title examination; 

however, in conducting the title examination, the Becks' 

settlement attorney would or should have discovered the 

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existence and location of the Rappahannock easement. The 

settlement attorney's knowledge is imputed to the Becks.2 

Yamada v. McLeod, 243 Va. 426, 433, 416 S.E.2d 222, 226 

(1992). With such imputed knowledge, the Becks were in a 

position to determine whether the easement interfered with 

their use of the property because they, like Smith, knew the 

intended location of their home. Thus, the trial court 

correctly held that the Becks were not entitled to rely on 

Smith's misrepresentation. 

For the stated reasons, we will affirm the judgment of 

the trial court in favor of Smith on the fraud count and 

reverse the judgment of the trial court in favor of Smith on 

the breach of contract count, reinstate the jury verdict 

awarding the Becks $30,900 in compensatory damages and $3,000 

in consequential damages, and enter final judgment. 

Affirmed in part,

reversed in part,

and final judgment.

 2

 Because we deal here with imputed notice derived from an 

independent investigation, the decisions in Adams v. Seymour, 

191 Va. 372, 380, 61 S.E.2d 23, 27 (1950), and Bossieux v. 

Shapiro, 154 Va. 255, 261, 153 S.E. 667, 668 (1930), holding 

that constructive notice of duly recorded instruments will not 

defeat a fraud claim are inapplicable. 

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