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NJ court: lease/purchase options last life of lease.

Exercising a real estate lease/purchase option agreement is not necessarily a one-time thing, according to a just delivered New Jersey Appellate Court decision.

In the ruling, issued to Meryl J. Topchik, a partner in the West Orange law firm of Mandelbaum, Salsburg, Cold, Lazris & Steinberg, representing the tenant, the Appellate Division overturned a Chancery Division decision and upheld the tenant's right to exercise, more than once, the purchase option contained in its lease.

Under the terms of the lease, the tenant - Middletown Plumbing & Heating Supply Corporation, headed by Robert M. Singer was to have $1,000 of its monthly rent applied to the purchase price of the property when the option was exercised. The purchase price, specified to be at market value, was not an issue in the dispute. The owner of the property, Dr. Carroll R. Singer, is the tenant's mother.

In July, 1989, Singer, complying with the terms of the lease, notified the owner that he wished to purchase the premises under the terms of the option agreement and would apply for bank financing. However, the bank rejected the mortgage application and the tenant was unable to consummate the transaction.

After the bank turn-down, Singer continued full monthly rental payments with no change in the lease terms. In March of this year, (1992), within the term of the lease, he again notified the owner of his intention to exercise the option. At that point, the owner rejected the offer, claiming that the lease allowed only a single effort to exercise

the option.

Singer's suit to have the terms of the option agreement consummated was denied in Chancery Court. Topchik then filed the successful appeal with the Appellate Division based on a Chancery Court precedent. In the case cited in the appeal, the Chancery Court held that by an owner's continued acceptance of rental payments without changing the lease, the parties to the lease "must be assumed to have intended those conditions to continue in all respects for the term of the lease," including the option to purchase, as in Singer vs. Singer.
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Title Annotation:New Jersey Appellate Court makes ruling in case addressing purchase option contained in real estate lease
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Dec 9, 1992
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