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REAL ESTATE 49: Plaintiff filed suit to compel defendant to transfer the property under the terms of the lease.

On April 22, 2014, plaintiff and defendant entered into an agreement for plaintiff to lease from defendant, for a period of 36 months, the real property located in Michigan (the property).

The lease contained the following pertinent language: At the end of the 36-month period the leasee will purchase the property for a price of $13,500. If leasee does not purchase said property at that time, the leasee forfeits all rights to the property and all monies paid on it.

During the several months preceding the termination of the lease period, plaintiff and defendant communicated regarding the exercise of the option, but no purchase transaction closed, and no money was exchanged. Defendant then attempted to evict plaintiff from the property by serving plaintiff with a Notice to Quit dated May 3, 2017.

On May 26, 2017, plaintiff filed suit, seeking to compel defendant to transfer the property to her under the terms of the option. Plaintiff alleged in her complaint that she and defendant had exchanged text messages in January 2017 about plaintiff’s exercise of the option. Plaintiff further alleged that she had informed defendant in writing via text message that she was exercising the option to purchase prior to the expiration of the 36-month period set forth in the lease.

According to plaintiff, defendant did not provide her with a payoff amount, did not (despite her requests) provide any information to her about where or how to tender the funds, did not provide any information about how or where the title would be transferred, and actually demanded “substantially more money from Plaintiff in order to close, despite the plain language of [the lease].” Plaintiff maintained that she was, and remained, ready and able to tender the amount of $13,500 to purchase the property.

In his answer, defendant admitted that plaintiff had indicated a desire to exercise the option but denied that plaintiff had ever followed through on those representations. Defendant also denied that plaintiff’s rental payments were timely and that they ever exceeded $500 per month unless an excess payment was made to account for back rent. According to defendant, the option had expired, and he was no longer willing to sell the house to plaintiff.

The matter proceeded to a bench trial. At trial, plaintiff testified that she and defendant had engaged in discussions during the course of the 36-month lease period regarding her purchase of the property. Plaintiff indicated that those conversations began at some point in the fall of 2016. According to plaintiff, defendant told her that someone else was interested in the property if plaintiff decided not to buy it, and plaintiff reminded defendant of her option to purchase.

Defendant testified that under the terms of the lease, plaintiff “would have the option by the 22nd to purchase the property. And if she didn’t purchase it by then, then the contract was over.” Defendant contended that the $13,500 had to have been tendered by midnight on April 22, 2017, when the contract expired, in order for the option to have been exercised. Defendant testified that plaintiff never purchased the property, never gave him the funds, and never told him that the funds were being held somewhere with instructions to transfer the funds to defendant upon his presentation of clear title to the property.

The trial court issued a written opinion and order granting plaintiff’s request for an order of specific performance.

In addition to the text messages, plaintiff discussed the purchase of the property with defendant over the phone and sometimes in person, beginning around January 2017. She discussed the need for mortgage payoff information, tax documentation, and lien information. She was trying to get title work going and arrange for a time and place for a closing, but defendant did not provide any requested information and eventually stopped answering her phone calls.

Defendant’s legal position is that the option to buy expired at midnight on April 22, 2017, and the lack of any tender of payment by that time means the option expired and plaintiff forfeited all rights to the property. That position lacks merit.

The terms of the agreement state that plaintiff will purchase the property at the end of the 36-month period. The option does not require plaintiff to purchase the property before the end of the term, and the plain language technically does not even allow it. The agreement does not mention anything about tender of payment, and, by its terms, the option only ripens at the expiration of the 36-month period. Based on the plain language of the agreement, which was drafted by defendant, there is no way to infer a condition that payment be immediately tendered at midnight on April 22, 2017 or else forfeiture would result.

Are you involved in a real estate dispute in Michigan? Are you seeking an efficient and effective resolution to a property litigation matter?

If you are facing a residential or commercial real estate, seek the advice of an experienced and skilled real estate litigation attorney at Aldrich Legal Services in Plymouth.

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