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Purchase option is assignable without consent, but there can still be a fight


The Hulls signed a real estate lease with a purchase option and put down a deposit of $56,000, which could be applied to the $198,500 purchase price, but would otherwise be non-refundable. The Hulls created a limited liability company (LLC) called Briar Road, and Briar Road attempted to exercise the purchase option. Stenger, the seller, refused, claiming that it had not approved the assignment of the purchase option by the Hulls to Briar Road.

What difference does the identity of the purchaser make? While the court’s opinion in Briar Road LLC v. Lezah Stenger Homes doesn’t contain the reason, the usual reason is that the seller wants the option to vanish so the property can be sold to at a higher price.

In 2006, Stenger refused to sell to Briar Road, and Briar Road sued for specific performance, asking the court to enforce the obligation of Stenger to sell the property. The trial court first granted summary judgment in favor of Stenger, finding that the Hulls had failed to follow language in the lease that required consent to assignment. The Missouri Court of Appeals reversed the summary judgment, sending the case back down for a trial.

At the trial, the court found that the Hulls assigned the option to Briar Road, but that consent to the assignment of the option was not required. The requirement of consent applied only to the lease, which said that the tenant “shall not assign or sublet the Premises without the written consent” of the landlord. A landlord is rightly concerned about who lives in the landlord’s property, but upon the sale, the landlord’s interest would disappear.

In the second appeal, the court pointed out that Stenger’s attorney admitted that the landlord had no reason to care about who purchased the property, saying “why would you care as long as someone gets the money?” The court said that this was “a judicial admission,” that waived the right of Stenger to raise the issue of the requirement of consent to the assignment of the option, which seems like a not-so-subtle slap at the attorney.

This simple case required four years of litigation, involving two appeals. If the judge had not erroneously granted summary judgment in 2006, the matter probably would have been resolved in a year. The first appellate decision, issued in 2008, dictated the eventual result, but there was apparently enough at stake to make the parties press on.

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About Harry Styron

I'm a lawyer who lives in Branson, Missouri, whose professional interests involve real estate, construction and local government.

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