The Integration Clause -- put ALL terms in contract!

I recently spoke with a buyer who just purchased a conversion condo (it had previously been a rental apartment). The buyer was upset with the seller, as the seller had promised to do a significant amount of work on the unit prior to closing but had failed to do so. These promises had been made orally by the seller and had not been incorporated into the written purchase and sale agreement. Unfortunately, I had to tell this buyer that she probably did not have any legal remedy due to the presence of an integration clause in the purchase and sale agreement.

An integration clause in a contract indicates that the written agreement is the final and complete agreement of the parties in regards to the contractual terms. The written contract supersedes all prior or contemporaneous understandings and representations. Moreover, the clause requires that any modification to the contractual terms be in writing and signed by all parties. The law favors such a clause because it provides for certainty as to the rights and obligations of the parties to the contract. Most real estate form contracts (including the one used by this particular buyer) include an integration clause.

When I spoke with this buyer, she indicated that the seller had repeatedly promised to replace all of the old appliances with brand new ones. He also indicated that he would be doing a significant remodel of the unit, and in fact told her that she could not do an interior inspection of the unit as a result. He promised to repair the elevator and re-pave the driveway. The buyer made sure to make notes of all of these conversations. When she closed on the sale and moved in, she was understandably upset that none of this work had been performed.

Unfortunately for the buyer, none of the seller's promises had been incorporated into the original purchase and sale agreement, nor had they been included in the agreement as written (and signed) amendments. Given the presence of the integration clause, the buyer almost certainly would not be able to enforce these promises by legal action or obtain compensation from the seller due to his failure to keep them. Thus, this buyer learned the hard way that ALL relevant terms should be included in the purchase and sale agreement. If you fail to include certain terms, you run the risk of not having any legal remedy in the event that the other party fails to abide by those omitted terms. Ronald Reagan said, "Trust -- but verify." In the world of contracts, "Trust -- but include in the contract."