The Most Important 4 Words in a Warranty

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You see this line on almost every warranty clause:

The Seller represents and warrants that the chattels and fixtures as included in this Agreement of Purchase and Sale will be in good working order and free from all liens and encumbrances on completion. The parties agree that this warranty shall survive and not merge on the completion of this transaction, but apply only to the state of the property at completion of this transaction.

It's a strange sounding phrase that confuses a lot of people.

But it stems from the legal doctrine of merger.

The general rule in real estate is once a deal closes, the Agreement of Purchase and Sale is "dead."

The contract is considered fulfilled and it "merges" (absorbs) into the Deed.

That creates a problem.

If the contract is dead, the promises inside it (like "Good Working Order") are dead too. If your client moves in and finds the furnace is broken, there's no recourse.

This is why we the phrase “survive and not merge” is added.

It means, even though the deal is done, this specific promise stays alive.

• Survive: The promise lives past the closing date.
• Not Merge: The promise doesn't disappear into the Deed.

Without those words, your client buys the house "as is" the moment they get the keys.

With them, they have legal recourse if there's a problem.

But remember...

This clause does not extend the warranty itself. It only extends the time you have to enforce it.

It is not a 1-year guarantee that the appliance won't break. The warranty still only applies to the state of the property on the day of closing.

• Scenario A: The dishwasher works on closing day but breaks two weeks later. Not covered.
• Scenario B: The dishwasher was already broken on closing day, but the buyer didn't run it until two weeks later. Covered.

The clause allows you to sue in Scenario B. It lets you look back in time and enforce a promise about the closing day, even though the deal is already done.

The hard part, of course, is proving it

So, whenever you write a warranty clause, make sure you include that phrase. It’s what keeps the door open for your client's legal recourse.