Owner's Refusal to Sell Property Constitutes Breach

Facts: A tenant entered into a 10-year lease that contained a clause giving it the option to purchase the property at the end of the lease period. The lease did not indicate how the option to purchase must be exercised. After approximately two years, the tenant merged with another company and sought to exercise its right to purchase the property by giving the owner notice that it intended to exercise the purchase option. The owner never responded.

Shortly after the tenant informed the owner that it wanted to purchase the property, a large retailer expressed its desire to purchase the property from the tenant. The tenant agreed and began to work on the specifics of completing the sale. While the tenant and the retailer were working out the details of the sale, the tenant's lease expired. The owner then sent the tenant a letter informing it that the lease had expired and the right to purchase the premises expired with the lease. As a result, the owner refused to convey the premises to the tenant, and the tenant sued for breach of contract.

Ruling: A South Carolina district court ruled in favor of the tenant.

Reasoning: The owner argued that the letter it received from the tenant was not sufficient notice. However, the court noted that the lease did not contain a specific method in which the tenant should exercise the option to purchase. Therefore, the court determined that the letter was sufficient notice of intent to purchase.

• Southeast Cinema Entertainment v. P.B Realty, February 2009