when I did brew update I've used to get:
>brew update error: Your local changes to the following files would be overwritten by merge: share/doc/homebrew/Acceptable-Formulae.md share/doc/homebrew/Bottles.md share/doc/homebrew/Brew-Test-Bot-For-Core-Contributors.md share/doc/homebrew/Brew-Test-Bot.md share/doc/homebrew/C++-Standard-Libraries.md share/doc/homebrew/Common-Issues-for-Core-Contributors.md share/doc/homebrew/Common-Issues.md share/doc/homebrew/Custom-GCC-and-cross-compilers.md share/doc/homebrew/External-Commands.md share/doc/homebrew/FAQ.md [......]
fix for that is:
cd `brew --prefix` git fetch origin git reset --hard origin/master
if reset didn't work sometimes you need to do sudo, just make sure you change owner back to your user...
sudo chown -R user .
brew update brew upgrade
and all is nice and working cool ... again ;-)