ContractsIntermediateAlabama Exam

Under the doctrine of 'merger,' what happens when a real estate purchase contract closes?

AThe purchase contract survives closing and continues to be enforceable, under this approach

BThe purchase contract merges into the deed, and the deed becomes the controlling documentCorrect

CThe lender's loan documents replace both the contract and the deed

DAll contingencies automatically extend for 30 days after closing

Why The purchase contract merges into the deed, and the deed becomes the controlling document Is Correct

Answer B: The purchase contract merges into the deed, and the deed becomes the controlling document

Under the doctrine of merger, the terms of the purchase contract are 'merged' into the deed at closing. Post-closing, the deed is the operative document.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

Key Contracts Terms in This Question

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

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Key Terms to Know

Deed

A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).

Earnest Money

A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.

Contingency

A condition in a purchase contract that must be satisfied before the sale can proceed to closing.

Purchase Agreement

A legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.

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