Daily Development for
Monday, November 2, 1998
by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
OPTIONS; EXERCISE: Where purchase option specifies that the Purchaser has the right to "purchase the property at any time during the term," written notice of exercise given to the Seller during the term effectively exercises the option, even though actual payment and transfer of deed will occur after the running of the term. Optionee has a "reasonable time" to complete the purchase.
Ingram v. Kasey's Associates, 493 S.E.2d 856 (S.C.App. 1997).
Purchaser was the tenant under a 10 year lease from the Seller. The lease provided for an option to purchase, with rent payments being applied to the purchase price if the option was exercised. The option language provided as follows:
"Lessee shall have the right to purchase the Premises at any time during the [Lease's] term."
Seller asserted that such language required that Purchaser "purchase" the property during the lease term and that "purchase" included paying the purchase price.
The court disagreed, finding that, by giving the written notice of exercise, the Purchaser created a bilateral executory contract for the sale of the property and that entering into such a contract created legal obligations sufficient to satisfy the term "purchase" set forth in the option. Purchaser's promise to pay, and Sellers existing promise to convey, were required to be discharged within a reasonable time thereafter.
Comment: This strikes the editor as the sensible interpretation of the concept "right to purchase," notwithstanding the ambiguity that necessarily follows as to what is a "reasonable" time period within which to close. The editor has had to deal with the question in practice more than once, and it is useful to have a case that spells things out.
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