OF JUDGMENT: 12/13/2016
MARSHALL COUNTY CIRCUIT COURT, HON. JOHN ANDREW GREGORY
ATTORNEY FOR APPELLANT: JOSEPH WHITTEN COOPER.
ATTORNEY FOR APPELLEE: KENT E. SMITH.
This case involves an option to purchase in a lease agreement
between Terry Lee Ing and Song Adams. Ing gave Adams timely
written notice of his intent to exercise the option, but
Adams refused to convey the property. Adams subsequently sued
Ing for eviction, and Ing counterclaimed for breach of
contract. After a bench trial, the circuit court ruled that
Ing had forfeited his right to purchase the property because
he did not "adequately exercise" the option. The
trial court also ruled that Ing was liable for rent for the
period after the expiration of the initial lease term. Ing
challenges both of these rulings on appeal.
We hold that Ing took sufficient steps to exercise the
purchase option. Once Adams expressly refused to sell the
property, Ing was not required to tender funds or obtain an
appraisal. We also hold that Ing is not liable for rent for
the period following Adams's wrongful refusal to convey
the property. During that period, Ing was the equitable owner
of the property, not a "holdover tenant."
Therefore, no "holdover rent" is owed. We reverse
and remand for further proceedings consistent with this
AND PROCEDURAL HISTORY
Adams owns a three-level building on West Van Dorn Street on
the courthouse square in Holly Springs. Adams owns and
operates a liquor store on the main level of the building,
and she rents out the upstairs as an apartment. The basement
houses Victor's Pizza, a restaurant formerly owned by
Adams's husband, Mike. Mike sold Victor's Pizza to
On January 26, 2010, Adams and Ing entered into a five-year
lease for the basement. The lease agreement required Ing to
pay Adams rent of $2, 500 per month plus thirty-three percent
of the property taxes on the building. The agreement also
provided that at the end of the initial five-year lease term,
Ing would have "the option to extend the lease for an
additional five years or to purchase the building at it's
[sic] then appraised value."
On January 22, 2015, four days before the end of the initial
lease term, Ing provided Adams with a signed, handwritten
notice of his intent to exercise the purchase option. The
notice stated that the purchase price would "be at
appraised value as agreed." On January 26, 2015, Adams
responded to Ing through a letter from her attorney. Adams
acknowledged Ing's desire to exercise the purchase option
but expressly stated that she did "not desire to sell
the building to [him]." Adams stated that she was
willing to continue to lease the basement to Ing but only
"on a month to month basis." Adams also alleged
that Ing had "committed several [unspecified] violations
of the terms of the lease."
Ing remained in the building and continued to operate
Victor's Pizza, but he stopped paying rent. On March 19,
2015, Adams filed a complaint in circuit court for eviction,
damages, and other relief. Adams's complaint acknowledged
that Ing had given notice of his intent to exercise the
purchase option. However, Adams alleged that Ing had
"failed to tender any money toward the purchase of the
property" and had "made no other overt actions
toward purchasing the property." The complaint failed to
mention Adams's own refusal, through counsel, to sell the
building. Adams also alleged that Ing had committed several
violations of the lease, such as operating a gold buying
business on the premises, residing on the premises, failing
to maintain insurance, and failing to pay his share of the
property taxes. The complaint sought damages, a declaration
that the lease had terminated and that the purchase option
had expired, and an order requiring Ing to vacate the
Ing answered and asserted a counterclaim. Ing denied that he
had breached the lease agreement, he denied that Adams was
entitled to damages or any other relief, and he alleged that
Adams had breached the agreement by refusing to sell the
building. Ing alleged that he had not taken steps to purchase
the property only because "Adams ha[d] explicitly stated
that she [was] not going to sell him the
The case proceeded to a bench trial on May 26, 2016. Ing
testified that he attempted to exercise the purchase option
prior to the expiration of the initial lease term, but Adams
refused to sell him the building-both orally and through the
letter from her lawyer. Ing also proved that he had insurance
and had paid his share of the property taxes. He testified
that he had not incurred the expense of an appraisal only
because Adams refused to sell him the building. He also
testified that he had inquired with banks about a loan to buy
the building; however, the banks told him that this
litigation needed to be resolved first.
Adams's husband, Mike, testified that he had obtained an
appraisal for the building from a licensed appraiser. The
February 2015 appraisal, which was introduced into evidence,
estimated the market value of the building to be $350, 000.
There is no evidence that the appraisal was ever disclosed or
provided to Ing prior to trial, and on appeal, Ing denies
that it was. On cross-examination, Mike testified that he
thought that his wife still "want[ed] to sell" the
building to Ing. When asked why, then, her lawyer sent Ing a
letter refusing to sell, Mike said, "I may be out of the
loop on that."
Adams's testimony was confusing to say the least. She
testified that she was willing to sell the building to Ing,
but she thought that Ing would pay her $700, 000. Adams did
not explain why she thought that Ing would pay her $700, 000
other than that she thought her building was "a
million-dollar building." When asked why her attorney
sent Ing a letter refusing to sell the building, Adams
finally said, "I don't know what's going
After both sides rested, Adams's lawyer conceded that his
"client [had] just testified that she was still willing
to sell the building"; therefore, most of Adams's
allegations that Ing had violated the lease "would not
matter because [Adams] ha[d] indicated her willingness to
sell the building for fair market value consistent with the
provisions of the lease."
The parties' attorneys then debated whether Ing was
liable for rent for the period after the expiration of the
initial lease term. Ing argued that he was not liable for
rent because Adams had breached their agreement by refusing
to convey the property. Adams argued that Ing was liable for
rent because he had done nothing to purchase the property.
The court took the case under advisement.
The court subsequently entered a final judgment with findings
of fact. The court first found that Ing was not in material
breach of the lease during the initial lease term; therefore,
Ing "had the right to exercise the option to purchase up
to January 26, 2015." However, the court also found that
Ing "did NOT adequately exercise his option to purchase
the property." The court noted that Ing did not tender
money to purchase the property or obtain an appraisal. The
court next ruled that Ing owed Adams rent of $2, 500 per
month for each month following the expiration of the initial
lease term. Finally, the court ordered Ing to vacate the
premises within thirty days. The judgment was stayed pending
Two issues are before this Court on appeal: whether Ing
adequately exercised his purchase option and whether he is
liable for rent for the period after the expiration of the
initial lease term. "The standard of review for a
judgment entered following a bench trial is well
settled." Maldonado v. Kelly, 768 So.2d 906,
908 (¶4) (Miss. 2000). Any findings of fact made by the
trial judge will not be disturbed when "they are
supported by substantial, credible, and reasonable
evidence." Id. However, we review issues of law
de novo. Id.
Ing Adequately Exercised the Option to
"A valid and enforceable option contract requires: (1)
an adequate description of the property, (2) consideration,
and (3) a date when the option must be exercised."
Prestenbach v. Collins, 159 So.3d 531, 533 (¶9)
(Miss. 2014). These conditions are satisfied in this case.
There is no dispute as to the property involved or that there was
consideration. Finally, the lease granted Ing the right to
exercise the option "[a]t the end" of the initial
lease term, and Ing gave timely notice four days prior to the
expiration of the lease term.
On appeal, Adams briefly argues that option is unenforceable
because it fails to specify a sales price. However, this
issue was not raised or addressed in the trial court.
In response, Ing argues that the option is enforceable under
this Court's decision in Crow v. Crow's Sports
Center Inc., 119 So.3d 352 (Miss. Ct. App. 2012). In
Crow, this Court addressed a lease that granted the
lessee an option to purchase the "property for a fair
market value as determined by appraisal by a licensed real
estate appraiser or such other term as the parties [might]
negotiate between themselves." Id. at 354
(¶2) (alteration omitted). The lessor argued the option
was unenforceable because it "fail[ed] to state a
specific purchase price." Id. at 356
(¶10). However, this Court disagreed. We held that
although "there was no stated purchase price, . . .
there was a clear method of determining one"-i.e., an
appraisal by a licensed appraiser. Id. at
(¶12). Ing notes that the option at issue in this case
provides that the purchase price shall be the building's
"then appraised value." Ing argues that
"appraised value" necessarily implies an appraisal
by a licensed real estate appraiser, which we deemed
sufficiently definite in Crow.
Given that Adams did not raise this issue in the trial court,
we agree with Ing that the price term is sufficiently
definite to be enforced. We also note that at oral argument,
Ing essentially conceded that he was "stuck" with
the $350, 000 appraisal presented by Adams at trial since he
had not offered a competing appraisal.
Adams's primary argument on appeal is that the trial
court correctly found that Ing failed to take sufficient
steps to exercise the option. Adams argues that Ing
"made no attempt to have the building appraised, "
"has not tendered any payment towards the purchase
price, " and "has given no assurances of his
ability to pay." However, once Adams expressly refused
to convey the property, Ing was not required to take any of
"[W]ritten notice to the seller of intent of the option
holder to exercise an option has the effect of an acceptance,
converting the option into an enforceable bilateral contract.
It is not necessary for an option holder to tender the
purchase price in order to exercise the option."
Creely v. Hosemann, 910 So.2d 512, 519 (¶29)
(Miss. 2005) (emphasis added) (citing Busching v.
Griffin, 542 So.2d 860, 864-65 (Miss.1989)). Indeed,
"[a]bsent language in the contract to the contrary, an
option holder has no obligation or duty to show an
ability to pay the entire sales price before the
closing." Prestenbach, 159 So.3d at 534
(¶12) (emphasis added). "The holder of an option is
entitled to specific performance of the optioner's duty
to convey, so long as the holder is willing to pay the option
price." Creely, 910 So.2d at 519 (¶29).
Thus, contrary to Adams's arguments, it was not necessary
for Ing to tender the purchase price or prove or provide
assurances of his ability to pay. The law is clear that
Ing's written notice to Adams effectively converted the
option into an enforceable sales contract. Id.;
Prestenbach, 159 So.3d at 533-34
(¶¶10-12). We also hold that Ing did not forfeit
his right to exercise the option by not obtaining an
appraisal. When Ing attempted to exercise his option, he
received a prompt response from Adams's lawyer that Adams
did "not desire to sell the building to [him], "
and Adams then sued him for eviction. In the face of
Adams's clearly stated refusal to honor the option and
convey the property, Ing was not required ...