Daily Development for Monday, March 23, 2009
by: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Husch Blackwell Sanders
Kansas City, Missouri
Note that there are 2 reports on the same case here:
LANDLORD;TENANT; LEASE OPTIONS; EXERCISE; NOTICE: Where 1920 ground lease with 99 year term stipulates notice address of individual lessor and states a procedure for changing such notice address, such requirement remains binding on the parties 70 years later when lessee/assignee attempt to exercise purchase option contained in lease. Lessee need not seek out the addresses or identity of the heirs of the original lessor.
Moosavideen v. Garrett, 2008 WL 4965165 (Tex.App.-Hous. (1 Dist.) Nov 20, 2008), also discussed under the heading: “Landlord/Tenant; Lease Options; Tenant Default.”
The assignee of the leasehold estate ascertained from his predecessor the names and address of four heirs of the decedent lessor, to whom the predecessor had been paying rent. The assigne send notice of exercise of the purchase option to these four. But there was one other heir, who had died, and his estate was in probate.
The lessors contended that the lessee/optionee had notice of the identity of this heir and constructive notice of the way to contact his estate, and that his notice of exercise of the option was therefore invalid.
The court held that whether or not the lessee/optionee had notice of the fifth heir was immaterial. In fact, the only notice requirement for a valid exercise of the option was a requirement to send notice to the long deceased original lessor at her home address, as listed in the lease, and to any other successor lessor who had filed a change of notice address. It is unclear whether any of the heirs had complied with the requirement. Certainly the deceased heir had not. Therefore, no one could argue that the notice to the missing heir was inadequate.(In fact, the lessee did send notice to a Bank that was involved with the estate of the missing heir, but this apparently was an incorrect address.)
Note that there is nothing in the case indicating that the optionee in fact sent notice to the home of the original deceased lessor The court assumes that when the lessee knew that the lessor had deceased and knew the addresses of the four heirs in question, sending notice to them fulfilled the requirements.
Comment 1: Because of the issues resolved by the court in the other part of the case, referenced in the caption, all the folderol about notice is essentially moot. The lessee/optionee did manage to get notice to the last heir’s estate before the lease expired, and that is all that was required.
Comment 2: The lessee’s interest had changed a number of times. The court doesn’t comment whether formal notice of change of address was given. It appears that the original notice address for the lessee was not the property address. Is there an argument that the lessee should not be able to take advantage of a provision that he and his predecessors had ignored? It does appear, however, that at least informally over the years, the identities and the locations of the party paying rent and the parties receiving rent were known to both sides, and it may be that the court’s leaving the issue at that is the best policy here.
LANDLORD/TENANT; LEASE OPTIONS; TENANT DEFAULT: Where lease does not specifically condition lease option right on tenant’s performance of other obligations under the lease, but says simply that option may be exercised during lease term, optionee may exercise option even though at the time optionee is in default under lease.
Moosavideen v. Garrett, 2008 WL 4965165 (Tex.App.-Hous. (1 Dist.) Nov 20, 2008), also discussed under the heading: “Landlord/Tenant; Lease Options; Exercise; Notice.
The premises was a gas station and the tenant/optionee stipulated that he had not been in environmental laws for the preceding two years. The lessors had a right to terminate the lease for breach of public law requirements, and did send such notice, terminating the lease if the breach was not cured in 180 days. The lessee, however, had already sent notice of exercise of the option. The court held that, even if the lessors had sent notice prior to the notice of exercise of the option, the exercise of the option was still valid, since the only stated condition was the continuation of the lease.
Lessee validly exercised purchase option, even though lessee did not send notice to the heirs whose addresses were unknown, where lessee provided notice to all of the rest of the heirs (i.e., those for whom he had addresses); key to this decision was that the lease imposed upon the heirs the ongoing duty to provide current addresses (see lease provision below)
The lease stated: "In the event the address of any party hereto is changed or desired to be changed. . . it shall be the duty of the party making or desiring to make such change to notify the other party hereto . . . "
The court wrote: "The trial court erroneously concluded that [said provision] did not apply because none of the heirs had changed his address. It is irrelevant that the heirs had not changed the addresses...At issue is the lessors' duty in the event he or she wished to change the address for receiving notices under the lease...to some other address…. Because Moosavadeen's failure to provide notice to the remaining heirs was brought about by the conduct of those heirs through their failure to comply with [said provision] of the lease, Moosavadeen's failure to give notice to them separately is excused. See Jones v. Gibbs, 133 Tex. 627, 130 S.W.2d 265, 272 (Tex.1939) (stating that "failure of the optionee to strictly comply with the terms or conditions of the option will be excused when such failure is brought about by the conduct of the optionor.")….Because some heirs did not comply with [said provision] of the lease, Moosavideen's notice of intent to exercise the purchase option wa
s complete when he gave notice on May 18, 2001 to the only four heirs for whom he had either received notice or had actual knowledge of their addresses."
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