Source: https://lawyerslegalresearch.com/not-all-duties-in-a-purchase-and-sale-agreement-create-warranties/
Timestamp: 2019-04-23 23:07:25+00:00

Document:
A buyer may argue that this “Condition of Premises” provision creates a warranty, enabling the buyer to sue the seller after the sale is complete if premises fail to comply with applicable laws. However, the Condition of Premises clause does not create a warranty, does not survive the closing and, therefore, cannot provide a basis for the buyer to sue the seller after the sale is complete.
the acceptance and recording of a deed by the BUYER … 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 the deed.
Relying on the Acceptance of Deed provision, courts have held that the Condition of Premises provision does not create warranties or covenants that survive the recording of the deed. Instead, it merely states conditions which, if not satisfied, justify the buyer’s refusal to close the sale. It does not entitle the buyer to complete the sale, record the deed, and then sue to enforce those obligations or for damages. By virtue of the Acceptance of Deed provision, such conditions cease to exist when the deed is accepted and recorded.
There is an exception to this general rule when a home builder agrees to undertake an obligation, such as constructing or repairing a building on the property, that is in addition or collateral to the conveyance of the deed….
This paragraph is not a warranty. Rather, it describes some of the conditions on which the Albrechts could have refused to purchase the residence. The agreement provided that if Clifford had been unable to provide good title, convey or deliver possession of the residence, or “if at the time of the delivery of the deed the premises do not conform with [the agreement’s] provisions”-including paragraph 9-he had up to thirty days to use reasonable efforts to remedy any of these problems. If he failed to fix any problems within that time, the agreement would have become void. We agree with the judge that Count I of the Albrechts’ complaint fails because paragraph 9 is not a contractual warranty that survived the Albrechts’ acceptance of the deed.
Id. at 716-17. (Emphasis added, footnote references omitted).
Section 4 of that agreement calls upon the seller to convey a good and clear record and marketable title, free from encumbrances, except, among other things, provisions of existing building and zoning laws. Section 9, upon which the plaintiffs heavily rely, provides: “Full possession of said premises free of all tenants and occupants … is to be delivered at the time of the delivery of the deed, said premises to be then (a) in the same condition as they now are, reasonable use and wear thereof excepted, and (b) not in violation of said building and zoning laws….” Into this latter section, i.e., § 9, the plaintiffs read a warranty by the sellers that the premises at the time of delivery of the deed will conform to the building code of the city of Newton. If the agreement so warrants, the materials submitted by the plaintiffs in opposition to the defendants’ motion for summary judgment are sufficient to raise a question of fact whether at the closing between the parties a building code violation existed.
We do not think that the purchase and sale agreement so warrants. Sections 4 and 9 of the agreement are interdependent. Section 4 deals fundamentally with the state of the title. It does so expressly and mentions building and zoning laws, party wall agreements, taxes, and betterments as aspects of title considerations. There is a blank subparagraph in which counsel tailoring the agreement may insert references to such things as easements. Under § 4, certain fundamental criteria for conveyance of title are established so that the buyer, between the time of execution of the purchase and sale agreement and delivery of the deed, can investigate what kind of pig is in the poke. If the buyer discovers a building or zoning law violation, the buyer may, under § 9, opt out of the agreement, unless the defect is cured in accordance with the provisions of § 10. Section 9 is not expressed in terms of warranty, but rather in terms of the conditions upon which the buyer may accept or refuse conveyance.
It is difficult to imagine that an agreement designed by a real estate association would contain a twenty-year warranty about a fact of which the seller is likely to have imperfect knowledge, i.e., whether his structure, at the time of sale, conforms in every respect with the building code.
Id. at 640-41. (Emphasis added, footnote reference omitted).
Clause 9 of Limoncelli’s contract provides that “Full possession of said premises … is to be delivered at the time of the delivery of the deed, said premises to be then … (b) not in violation of said building and zoning laws …” Massachusetts courts have held that (1) identical language in a purchase and sale agreement, in combination with a merger clause, fails to create a warranty or collateral obligation, and (2) acceptance of the deed extinguishes all of the seller’s obligations under the purchase and sale agreement. See Albrecht v. Clifford, 436 Mass. 706, 716-18, 767 N.E.2d 42 (2002); Solomon v. Birger, 17 Mass.App.Ct. 634, 640-43 (1985).
Id. at *2. (Emphasis added).
The provision stating that the property at the time of the closing will not be in violation of building and zoning laws is not a warranty by the seller that the premises at the time of the closing will conform to building and zoning laws; rather, it is a condition upon which the purchaser may accept or refuse conveyance. In other words, the purchaser may not bring an action against the seller after the closing should he discover that the property is in violation of building or zoning laws in some respect. If the purchaser discovers such violations before the closing and the seller is unable to make the premises conform to the agreement, the purchaser may, depending upon the wording of the agreement, terminate the agreement and receive a refund of his deposit, require the seller to use reasonable efforts during a specified period to correct the problem, or accept the property in its present condition with or without a reduction in the price.
36A Mass. Prac. Consumer Law, §28:35 (3rd ed.) (Footnote references omitted).
In sum, the Condition of Premises provision of a standard P&S does not create a warranty enforceable after the parties have complete the sale. That conclusion flows from the language of that provision, which creates only a condition on the buyer’s duty to complete the sale, and from the clear language of the “Acceptance of Deed” provision.

References: § 9
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