Opinion
[No. 117, October Term, 1947]
Decided March 19, 1948.
Landlord and Tenant — Tenant Holding Over — Option to Purchase — Specific Performance — Certainty — Provision No Longer Effective — Estoppel.
A tenant for one year under a written lease, holding over with the tacit consent of the landlord, becomes a tenant from year to year and an option to purchase during the term of the original lease carries over into a subsequent tenancy. p. 225
An offer in the option to pay cash makes the time of settlement certain and eliminates any question of credit in the terms of the sale. p. 225
Where the lease provides that the terms of the sale called for by the option are to be "subject to approval of F.H.A.", but, prior to the exercise of the option, the Federal Housing Administration repealed all regulations and restrictions relevant to such approval by it, the words, "subject to approval of F.H.A.", may be disregarded in determining the enforceability of the option. pp. 225-226
Statements made by tenants, prior to the exercise of an option to purchase the leased property, that they would move out and give the landlords possession as soon as they could find another place to live are at most qualified declarations of intention and, where there is no showing that the landlords changed their positions in reliance upon such statements, the tenants are not estopped by the statements from exercising the option. pp. 226-227
A year's lease of certain realty subject to a ground rent provided for an option to purchase at a stated price subject to the ground rent at any time during the life of the lease. The tenants-appellees held over and the lessor assigned his title to the property to the appellants, who continued to accept rentals from the appellees at the rate fixed by the lease. Thereafter, the appellees gave notice of their desire to exercise the option. Upon refusal of the appellants to convey the property, appellees brought suit for specific performance. The Court held that the option carried over. The lease contained a provision that the terms of the sale called for by the option were to be "subject to approval of F.H.A." The Court held that these words may be disregarded in determining the enforceability of the option because, prior to the exercise of the option, the Federal Housing Administration had repealed all regulations and restrictions relevant to such approval by it. The tenants were held not to be estopped from exercising the option by their statements to the landlords, made after receipt by them of a certificate of the Office of Price Administration relating to eviction and prior to the exercise of the option, that they would move out and give the landlords possession as soon as they could find another place to live. pp. 225-227
Decided March 19, 1948.
Appeal from the Circuit Court for Baltimore County (MURRAY, J).
Suit for specific performance by Keith R. Clark and Jane E. Clark against Walter E. Bagley and Ernestine G. Bagley to require defendants to convey certain realty to the plaintiffs pursuant to an option contained in a lease. From a decree for the plaintiffs, the defendants appealed.
Affirmed.
The cause was argued before MARBURY, C.J., DELAPLAINE, COLLINS, GRASON, HENDERSON, and MARKELL, JJ.
Charles C. Lyons for the appellants.
J. Nicholas Shriver, Jr., with whom were Cross Shriver on the brief, for the appellees.
This is an appeal from a decree of specific performance requiring the appellants to convey to the appellees the premises 8527 Pleasant Plains Road, Towson, subject to an annual ground rent of $78, pursuant to an option contained in a lease from Better Housing, Inc., to the appellees, dated February 12, 1944.
The lease was for one year at a total rental of $570, payable in equal monthly installments. It contained a clause providing: "It is further agreed that said tenants * * * have the option of purchasing this dwelling at a price of $4700 subject to an annual ground rent of $78.00 any time during the life of this lease after February 12, 1944. Terms of such sale to be submitted in the form of Contract of Sale and subject to approval of F.H.A." The ground rent referred to had been duly created before the lease was executed. The appellees held over at the end of the term, February 11, 1945. In December, 1945, the lessor assigned the leasehold title to the appellants, who continued to accept rentals from the appellees at the rate fixed by the lease, and made no inquiry as to their rights under the lease. On November 14, 1946, the appellees gave notice of their desire to exercise the option, to execute a contract of sale, and "to make payment in full of the balance of the purchase price at such date and place as may be mutually agreeable".
The lease in question is identical with the one before this Court on demurrer in the recent case of Gressitt v. Anderson, 187 Md. 586, 51 A.2d 159. We held that the tenants in that case, holding over with the tacit consent of the landlord, became tenants from year to year, and that the option to purchase during the term of the original lease carried over into the subsequent tenancy. We further held that the offer to pay cash made the time of settlement certain and eliminated any question of credit in the terms of the sale. Upon the question as to uncertainty due to the requirement of F.H.A. approval, we said: "We are unable to determine from the words of the option what is meant by requiring the approval of the F.H.A. to the option. It may be that these houses were held subject to some restrictions of the Federal Housing Administration and are still subject to these limitations. * * * There are also possible questions involved as to the termination of the authority of the Federal Housing Administration * * *. All of these present matters which should be inquired into by the chancellor before the passage of a final decree in this case."
In the case at bar it was shown that the house in question was one of a group built by Better Housing, Inc., as a part of a War Housing project, under priority regulations which required that they be made available only to "in-migrant" war workers, approved by the F.H.A. Under these regulations, it was contemplated that purchases made by tenants exercising the standard option to purchase would be financed by F.H.A. However, as of October 15, 1945, all of the regulations and restrictions, except certain matters of rent control not here relevant, were abrogated and repealed. Shortly after that date, Better Housing, Inc., was dissolved, and the houses owned by it were distributed to stockholders. We concur in the finding of the chancellor that "the language in the option agreement `subject to approval of F.H.A.' is shown by the documentary evidence to have been rendered ineffective before the plaintiffs exercised their option to buy, and such language may be accordingly disregarded in determining the enforcibility of this contract."
The appellants contend that the appellees are estopped from exercising the option, or waived their right to exercise it, because of certain statements made by them prior to their notice of their desire to exercise the option. We find no merit in these contentions. On December 26, 1945, an O.P.A. "certificate relating to eviction" was mailed to the appellees, authorizing the appellants to commence an action to evict or remove the tenants after the expiration of six months from that date. It is not contended that this was a sufficient notice to terminate the tenancy from year to year so as to prevent renewal on February 12, 1946. Indeed, it was not a notice to terminate in any sense. The certificate stated: "This form does not order you to move. The issuance of this certificate does not affect your rights at local law under your present rental agreement."
Mr. Bagley testified that the appellees repeatedly told him, after receipt of the certificate, that they would move out and give him possession as soon as they could find another place to live. The statements, at most, were qualified declarations of intention. There is no showing that the appellants changed their position in reliance upon such statements. Compare Rodgers v. John, 131 Md. 455, 462, 102 A. 549.
Decree affirmed, with costs.