Also known as: lessee's option to purchase · lessees option to purchase · purchase option · option to purchase
Written by attorneys · grounded in primary & secondary sources — see below
A contractual privilege held by a tenant permitting acquisition of the leased property upon stated conditions and payment. The privilege is treated as appurtenant to the leasehold when created in the lease itself.
Laura Lewis signed a letter expressing interest in leasing a warehouse from Linden Logistics. After negotiations the parties orally agreed on a five-year lease that included an option allowing Laura to buy the building for a fixed sum. Neither writing alone identified the parcel or stated the option price, yet the two documents together supplied the required memorandum. The court enforced the option because the writings could be read as one.
Lakeshore Industries leased equipment to Landmark Realty under a financing lease. The lease gave Landmark an option to purchase the equipment at a set price if certain revenue targets were missed. The board approved the arrangement as part of issuing secured obligations. The transaction fell within the corporation's statutory authority to grant purchase options in connection with its contracts.
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Lucas Lee leased a retail space from Lakewood Manufacturing for ten years. The lease granted Lucas an option to purchase the building exercisable only during the lease term. When the lease ended without exercise, the option lapsed. The court held that the duration of an option appurtenant to a leasehold is governed by landlord-tenant law rather than a reasonable-time standard.
Lamar Lewis leased a theater from Pergola Properties for twenty-five years. The lease contained an option to purchase the building exercisable only while the lease remained in force. After the lease term expired the landlord claimed the option violated the rule against perpetuities. The court upheld the option because it was incapable of separation from the lease and therefore appurtenant.
Lance Lee and Lucy Liu held property as joint tenants. Lance leased his interest to Lorenzo Lugo for ten years and included an option allowing Lorenzo to purchase the leased share. Lance died during the term. The surviving joint tenant argued the lease severed the tenancy. The court held the lease and its embedded option expired with the lessor's death and did not sever the joint tenancy.
The Nollans obtained a permit to rebuild their beachfront home. The commission required them to grant a public easement across their lot as a condition. The Nollans challenged the condition as an uncompensated taking. The Court held that the required easement transfer constituted a taking because it lacked an essential nexus to the permitted construction.
Yes. When two or more documents signed by the party to be charged are read together they may constitute a sufficient memorandum even if neither writing refers to the other. The test is the same as if the writings had been incorporated into a single document.
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The duration of an option appurtenant to a leasehold estate is determined by landlord-tenant law. An option not appurtenant to a lease lasts only for a reasonable time.
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An option to purchase that originates in a lease provision, is exercisable only during the lease term, and cannot be separated from the lease is valid even if vesting may occur beyond the perpetuities period. Such options are treated as appurtenant to the leasehold.
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No. A lease of a joint tenant's interest, even when it includes an option to purchase, does not sever the joint tenancy. The lease and option expire upon the lessor's death.
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…After years of rental use, however, the building had fallen into disrepair, and could no longer be rented out. The Nollans' option to purchase was conditioned on their promise to demolish the bungalow and replace it. In order to do so, under Cal. Pub. Res. Code Ann. §§ 30106, 30212, and 30600 (West 1986), they were required to…