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Demise

DEFINITION

Conveyance of real property or the transfer of a leasehold, typically defined as the temporary transfer of real estate through a lease.

EXPLANATION

A lease agreement — more commonly referred to as a lease — is a contract which grants one party an exclusive, possessory interest in another party’s property for a specific period of time. It is often used synonymously with the term demise, which is the conveyance of real property or the transfer of a leasehold.

Leases can be written or verbal.

A lease agreement is different than a lease application. A lease agreement is an official contract between the landlord and tenant, whereas an application is merely used for prequalifying a tenant for a lease.

Lease Terms & Provisions

Leases can vary widely in length. Standard residential leases contain fairly simple and general language. They can range anywhere from one to five pages.

Commercial leasing agreements are much more complex. They are highly specific and  deal with a wide range of factors, including land use, business operation, and profit sharing. Filled with legalese language, they may be upwards of a hundred pages. For this reason, a real estate lawyer typically drafts a commercial lease on behalf of the landlord.

As lease provisions are at the discretion of individual landlords, all leases are different. However, the following items are included in most basic leases:

Parties involved

The subject property

Terms (including schedules payment date and amount)

Rent payments (authorized method of payment and payment schedule)

Late payments (circumstances, charges, fees)

Security deposit

Renter’s insurance

Utilities (what is and is not included in the rent payment)

Occupants (maximum occupancy)

Pets

Parking

Possession

Maintenance

Alterations (the right of tenant to alter property)

Damages

Noise

Termination

Right of entry and inspection

Report to credit (tenant authorizes credit check)

A tenant who agrees to a lease must also agree to any associated CC&Rs, if applicable.

Security Deposit

A security deposit is a refundable down payment paid by a tenant to a landlord in order to secure the tenant’s rental of a property. This deposit protects a landlord’s interests throughout the lease period in the event that a tenant fails to make payments, causes damages to the property, or violates the terms of the lease.

The maximum security deposit a landlord can charge is two month’s rent for an unfurnished residential property and three month’s rent for a furnished residential property. There is no limit restricting how much a landlord can require for a commercial real estate property.

A landlord also has the right to charge up to $30.00 in order to cover the cost of a background check on a tenant. This may include a check of credit reports, financial records, and/or general records.

If a tenant upholds the lease terms, a security deposit will either be returned at the expiration of the lease period or applied to the final rental payments. (If the deposit is used towards a rental payment, it is considered income and therefore, is taxable.) A landlord must return a tenants security deposit within a 21 day period of the tenants moving out.

Should a landlord sell a property while a tenant inhabits the property, the former landlord must transfer the tenant’s security deposit to the new landlord, or return the security deposit to the tenant. It is the responsibility of the former and new landlords to determine the details of the tenant’s security deposit.

A landlord is not required to pay interest on a tenant’s security deposit.

Inspections

A landlord may inspect a property prior to the expiration of a lease (Civil Code Section 1950.5(f)). He or she must provide a tenant with 48 hours advance notice prior to conducting the inspection. This provides a tenant with sufficient time to make repairs, if necessary. Should a tenant not respond to a landlord’s request for an inspection, the landlord may conduct the inspection regardless of whether the tenant is present.

A tenant has the right to request an independent inspection of a property, both before living on a property and prior to vacating it.

Damages

Wear and tear refers to the natural damage that results from a tenant’s reasonable use of a property. Reasonable use assumes that a property’s features — such as the flooring and paint — will be at a lower standard than when a tenant originally moved in.

Wear and tear costs are the responsibility of the landlord (California Civil Code Section 1950.5 (e)). A landlord cannot shift the costs of wear and tear to a tenant by reducing or forfeiting the tenant’s right to his or her security deposit.

However, a landlord may withhold a tenant’s security deposit if there are unreasonable damages to a property. In this case, the landlord must supply the tenant with an itemized breakdown of damages and the total cost of repair. This includes all material and labor costs that are required to return the property to its original state.

(A landlord is not required to provide a tenant with an itemized list of expenses if the cost of repair is less than $125.00.)

The burden of proof falls on the landlord to prove the cost of repairs is as he or she claims. Therefore, a landlord must provide a tenant with a copy of all repair receipts within 14 days of the repairs being completed.

Should there be a dispute about the costs of repair, both the landlord and the tenant have the right to negotiate and verify the other party’s findings.

Should a landlord make a bad faith claim and withhold a security deposit from a tenant after the maximum 21 day period, the landlord may be subject to twice the amount of the security deposit and any damages associated with retaining the deposit (California Civil Code 1950.5(i)).

Types of Leases

Tenancy for Years

A tenancy for years — also known as an “estate for years” or a “fixed-term lease” — is a lease with a clear beginning and end date. They are typically used for short-term or seasonal leasing.

A tenant will pay rent to a landlord on a specified payment schedule. Following the end of the lease period, the landlord controls the power to renew the agreement. If the landlord chooses not to renew, the lease ends automatically and no formal written agreement is required.

Tenancy at Will

A tenancy at will — also known as an “estate at will” — is a flexible lease in which a tenant occupies a property without a formal written agreement. Typically, this type of agreement has no definitive beginning or end date; rather, a landlord agrees to lease to a tenant “until further notice”.

For example, a landlord may allow a friend or family member to rent one of his or her properties without a formal lease in place.

Either the tenant or landlord can terminate an estate at will-that is whenever they wish. This distinct feature is what makes it a tenancy “at will.” Although this can provide flexibility, it can also produce uncertainty for both the tenant and landlord.

For example, if a tenant suddenly needs to relocate for a job, the tenant could move out with no advance warning and leave the landlord with a non-rented unit. Alternatively, because a tenant at will is not locked into a written lease agreement, a landlord has the ability to raise rental rates without warning.

Tenancy at Sufferance

A tenancy at sufferance is when a tenant whose lease has expired continues to lease a property without signing a new agreement. This “holdover” tenant typically continues to uphold the terms of the original lease until a new one is created.

A tenancy at will and a tenancy at sufferance are similar in that both situations feature a tenant who lives on a property without a current lease. However, a tenancy at sufferance differs in that the tenant did once have an official agreement.

In California, a “holdover” tenant who does not pay rent after a lease’s expiration date is considered a trespasser.

Periodic Tenancy

Periodic tenancy — also known as an “estate from period to period” — is a lease that automatically renews until a tenant or landlord terminates it in writing. Most periodic tenancies are month-to-month.

In the event that a landlord wants to change any lease terms — such as the payment schedule or rent amount — he or she must provide the tenant with a 30-day advance warning of proposed changes. If the landlord wishes to increase the rent beyond the standard cost of living increase (3.5%), he or she must provide the tenant with a 60-day advance warning.

Both landlord and tenant must also provide advance notice prior to terminating the lease. Typically, a 30-day advance termination warning is expected. However, if a tenant has been living on the property for more than 12 rental months, a landlord must provide at least a 60-day advance warning. If the tenant is renting though Section 8 housing, the landlord must provide a 90-day advance warning.

Leases may be terminated earlier if both parties agree.

Under California law, a termination notice can be scheduled on a different date than the first or last day of the lease agreement as long as both parties have been provided advance warning.

Purchase Option

A purchase option — also known as an “option to purchase” — is an agreement which affords a tenant the exclusive right to purchase a leased property in the future at an agreed-upon price. Once an agreement has been signed, a seller cannot sell the property to anyone else.

A tenant will typically lease the property during the option period before deciding whether to purchase the property. However, he or she is under no obligation to purchase the property at the end of the contract period.

A purchase option must include a price — or a reasonably clear price range — of how much a buyer is willing to pay for the property.

Assignment

An assignment refers to when a tenant forfeits his or her rights to a property by transferring them to another party. In this case, the new tenant typically becomes fully liable for the property.

Typically, tenants utilize an assignment when they are moving, they wish to get out of a lease, or they can no longer afford the lease terms.

For example, say a tenant signs a two-year lease for his business location. After six months, however, the business is losing money and he wishes to close the business. The tenant can assign the lease to another tenant in order to get out of the lease.

Before a property can be assigned, the property’s landlord must approve and sign a “License to Assign” form. The departing tenant and the new tenant must also sign an “Assignment of Lease Agreement” form.

In an assignment, a landlord typically issues a new lease and deal directly with the new tenant. The departing tenant should request a release form indicating that he or she is no longer liable for the lease.

Sublease

Although similar, an assignment differs from a sublease. A sublease involves a tenant leasing a property to another tenant while still being liable for the terms of the original lease.

In this case, no new lease is created between the landlord and the subletter. Rather, the original lease remains intact and the original tenant acts as a middleman between the landlord and the subletter to uphold its terms. The original tenant is responsible for facilitating all communication and ensuring all repairs and rent payments are made. A subletter is expected to pay the rent, although the original tenant is ultimately responsible if the subletter fails to do so.

Some landlords may prohibit subleases. A lease may include a provision that expressly prevents subletting (Civil Code Section 1995.230). If it doesn’t, however, a tenant has the right to do so. If a landlord does not allow subletting, but has accepted rental payments from the original tenant while the subletter lives on the property, the landlord’s acceptance of payment indicates his or her consent of the subletter.

If a tenant chooses to sublet a property for more money than the original terms of the lease, the landlord is entitled to a portion of the income (Civil Code Section 1995.240).

Case Law Relating to Demise and Leases

Case Review: Edmond’s of Fresno v. McDonald Group, Ltd. (1985)

The case, Edmond’s of Fresno v. McDonald Group, Ltd. (1985) 171 Cal.3d 598., involved a dispute over a competition provision between a property owner and a tenant.

A jewelry store owner (Edmond’s of Fresno) leased retail space in a mall. It had a competition provision with the mall owner (McDonald Group, Ltd.) that barred McDonald Group from leasing retail space to other jewelers. However, when McDonald Group added additional space to the mall, it leased retail space to other jewelers in that additional space. Edmond’s brought a lawsuit against McDonald Group for violating the competition provision.

In Superior Court, McDonald Group argued that the competition provision only applied to the portion of the mall that was in place at the time of the agreement, not the additional space that had been added. However, the court contended that the competition provision must apply to the entire mall, not just a portion of it. Therefore, it ruled in favor of Edmond’s.

Case Review: Burnett v. Chimney Sweep (2004)

The case, Burnett v. Chimney Sweep (2004) 123 Cal.4th 1057., involved a dispute regarding an exculpatory clause.

A couple (the Burnetts) signed a commercial lease with a landlord (Chimney Sweep). The lease included an exculpatory clause which required the Burnetts to waive the right to hold Chimney Sweep liable for any injury resulting from leasing the property (except in the instance of negligence). When the Burnetts moved into the property, they discovered water stains, the existence of excessive moisture, and mold and mildew growths. The Burnetts informed Chimney Sweep of the damages, but the landlord refused to repair them. The Burnetts filed a complaint for general negligence and negligent maintenance.

The Superior Court argued that the lease’s exculpatory clause freed Chimney Sweep from liability. It ruled in favor of Chimney Sweep. The Burnetts appealed. The Court of Appeals argued that the exculpatory clause applied only to passive negligence, not to active negligence. Chimney Sweep had actively avoided and refused to fix the excessive moisture and mildew/mold growth. Therefore, the court reversed the lower court’s ruling and ruled in favor of the Burnetts.

Case Review: People v. Parkmerced Co. (1988)

The case, People v. Parkmerced Co. (1988) 198 Cal.3d 683., involved a dispute regarding a landlord who charged unfair nonrefundable fees.

A large apartment complex was owned by Parkmerced Co. On top of the first month’s rent, Parkmerced Co. charged new tenants a nonrefundable $65 moving-in fee and a nonrefundable $50 transfer fee if a tenant wished to move to another unit in the building. The tenants believed these fees to be unfair. The district attorney brought legal action against Parkmerced Co. for violating lease deposit law.

In court, the district attorney argued that Parkmerced Co. had violated the laws governed in Civil Code Section 1950.5. The Code stated that landlord fees should be used in connection with repairs or to cure tenant defaults. However, Parkmerced Co. had used the fees for cleaning, administrative, and process fees. Therefore, the Superior Court ordered Parkmerced Co. to reimburse the fees with interest to the tenants who were affected.

Case Review: Wilson v. Gentile (1992)

The case, Wilson v. Gentile (1992) 8 Cal.4th 759., involved a dispute over whether an option agreement had been properly exercised.

A lessee (Wilson) entered into a lease agreement with a property owner (Gentile) with a six-month option for Wilson to purchase the property. The agreement required Wilson to exercise his option right 30 days prior to the option’s expiration date. Wilson exercised the option six days prior to its expiration date. Gentile refused the offer, citing that the offer was too late. Wilson stopped making rental payments and Gentile brought an unlawful detainer action against him. Wilson sued for declaratory relief and specific performance, citing that Gilbert had violated the terms of their contract.

The trial court determined that Wilson had properly exercised his option to purchase the leased property, even if it was six days before the expiration date. Gentile appealed. The Court of Appeals affirmed the lower court’s ruling.

Definition of Demise:

Conveyance of real property or the transfer of a leasehold, typically defined as the temporary transfer of real estate through a lease.

Explanation of Demise:

A lease agreement — more commonly referred to as a lease — is a contract which grants one party an exclusive, possessory interest in another party’s property for a specific period of time. It is often used synonymously with the term demise, which is the conveyance of real property or the transfer of a leasehold.

Leases can be written or verbal.

A lease agreement is different than a lease application. A lease agreement is an official contract between the landlord and tenant, whereas an application is merely used for prequalifying a tenant for a lease.

Lease Terms & Provisions

Leases can vary widely in length. Standard residential leases contain fairly simple and general language. They can range anywhere from one to five pages.

Commercial leasing agreements are much more complex. They are highly specific and  deal with a wide range of factors, including land use, business operation, and profit sharing. Filled with legalese language, they may be upwards of a hundred pages. For this reason, a real estate lawyer typically drafts a commercial lease on behalf of the landlord.

As lease provisions are at the discretion of individual landlords, all leases are different. However, the following items are included in most basic leases:

Parties involved

The subject property

Terms (including schedules payment date and amount)

Rent payments (authorized method of payment and payment schedule)

Late payments (circumstances, charges, fees)

Security deposit

Renter’s insurance

Utilities (what is and is not included in the rent payment)

Occupants (maximum occupancy)

Pets

Parking

Possession

Maintenance

Alterations (the right of tenant to alter property)

Damages

Noise

Termination

Right of entry and inspection

Report to credit (tenant authorizes credit check)

A tenant who agrees to a lease must also agree to any associated CC&Rs, if applicable.

Security Deposit

A security deposit is a refundable down payment paid by a tenant to a landlord in order to secure the tenant’s rental of a property. This deposit protects a landlord’s interests throughout the lease period in the event that a tenant fails to make payments, causes damages to the property, or violates the terms of the lease.

The maximum security deposit a landlord can charge is two month’s rent for an unfurnished residential property and three month’s rent for a furnished residential property. There is no limit restricting how much a landlord can require for a commercial real estate property.

A landlord also has the right to charge up to $30.00 in order to cover the cost of a background check on a tenant. This may include a check of credit reports, financial records, and/or general records.

If a tenant upholds the lease terms, a security deposit will either be returned at the expiration of the lease period or applied to the final rental payments. (If the deposit is used towards a rental payment, it is considered income and therefore, is taxable.) A landlord must return a tenants security deposit within a 21 day period of the tenants moving out.

Should a landlord sell a property while a tenant inhabits the property, the former landlord must transfer the tenant’s security deposit to the new landlord, or return the security deposit to the tenant. It is the responsibility of the former and new landlords to determine the details of the tenant’s security deposit.

A landlord is not required to pay interest on a tenant’s security deposit.

Inspections

A landlord may inspect a property prior to the expiration of a lease (Civil Code Section 1950.5(f)). He or she must provide a tenant with 48 hours advance notice prior to conducting the inspection. This provides a tenant with sufficient time to make repairs, if necessary. Should a tenant not respond to a landlord’s request for an inspection, the landlord may conduct the inspection regardless of whether the tenant is present.

A tenant has the right to request an independent inspection of a property, both before living on a property and prior to vacating it.

Damages

Wear and tear refers to the natural damage that results from a tenant’s reasonable use of a property. Reasonable use assumes that a property’s features — such as the flooring and paint — will be at a lower standard than when a tenant originally moved in.

Wear and tear costs are the responsibility of the landlord (California Civil Code Section 1950.5 (e)). A landlord cannot shift the costs of wear and tear to a tenant by reducing or forfeiting the tenant’s right to his or her security deposit.

However, a landlord may withhold a tenant’s security deposit if there are unreasonable damages to a property. In this case, the landlord must supply the tenant with an itemized breakdown of damages and the total cost of repair. This includes all material and labor costs that are required to return the property to its original state.

(A landlord is not required to provide a tenant with an itemized list of expenses if the cost of repair is less than $125.00.)

The burden of proof falls on the landlord to prove the cost of repairs is as he or she claims. Therefore, a landlord must provide a tenant with a copy of all repair receipts within 14 days of the repairs being completed.

Should there be a dispute about the costs of repair, both the landlord and the tenant have the right to negotiate and verify the other party’s findings.

Should a landlord make a bad faith claim and withhold a security deposit from a tenant after the maximum 21 day period, the landlord may be subject to twice the amount of the security deposit and any damages associated with retaining the deposit (California Civil Code 1950.5(i)).

Types of Leases

Tenancy for Years

A tenancy for years — also known as an “estate for years” or a “fixed-term lease” — is a lease with a clear beginning and end date. They are typically used for short-term or seasonal leasing.

A tenant will pay rent to a landlord on a specified payment schedule. Following the end of the lease period, the landlord controls the power to renew the agreement. If the landlord chooses not to renew, the lease ends automatically and no formal written agreement is required.

Tenancy at Will

A tenancy at will — also known as an “estate at will” — is a flexible lease in which a tenant occupies a property without a formal written agreement. Typically, this type of agreement has no definitive beginning or end date; rather, a landlord agrees to lease to a tenant “until further notice”.

For example, a landlord may allow a friend or family member to rent one of his or her properties without a formal lease in place.

Either the tenant or landlord can terminate an estate at will-that is whenever they wish. This distinct feature is what makes it a tenancy “at will.” Although this can provide flexibility, it can also produce uncertainty for both the tenant and landlord.

For example, if a tenant suddenly needs to relocate for a job, the tenant could move out with no advance warning and leave the landlord with a non-rented unit. Alternatively, because a tenant at will is not locked into a written lease agreement, a landlord has the ability to raise rental rates without warning.

Tenancy at Sufferance

A tenancy at sufferance is when a tenant whose lease has expired continues to lease a property without signing a new agreement. This “holdover” tenant typically continues to uphold the terms of the original lease until a new one is created.

A tenancy at will and a tenancy at sufferance are similar in that both situations feature a tenant who lives on a property without a current lease. However, a tenancy at sufferance differs in that the tenant did once have an official agreement.

In California, a “holdover” tenant who does not pay rent after a lease’s expiration date is considered a trespasser.

Periodic Tenancy

Periodic tenancy — also known as an “estate from period to period” — is a lease that automatically renews until a tenant or landlord terminates it in writing. Most periodic tenancies are month-to-month.

In the event that a landlord wants to change any lease terms — such as the payment schedule or rent amount — he or she must provide the tenant with a 30-day advance warning of proposed changes. If the landlord wishes to increase the rent beyond the standard cost of living increase (3.5%), he or she must provide the tenant with a 60-day advance warning.

Both landlord and tenant must also provide advance notice prior to terminating the lease. Typically, a 30-day advance termination warning is expected. However, if a tenant has been living on the property for more than 12 rental months, a landlord must provide at least a 60-day advance warning. If the tenant is renting though Section 8 housing, the landlord must provide a 90-day advance warning.

Leases may be terminated earlier if both parties agree.

Under California law, a termination notice can be scheduled on a different date than the first or last day of the lease agreement as long as both parties have been provided advance warning.

Purchase Option

A purchase option — also known as an “option to purchase” — is an agreement which affords a tenant the exclusive right to purchase a leased property in the future at an agreed-upon price. Once an agreement has been signed, a seller cannot sell the property to anyone else.

A tenant will typically lease the property during the option period before deciding whether to purchase the property. However, he or she is under no obligation to purchase the property at the end of the contract period.

A purchase option must include a price — or a reasonably clear price range — of how much a buyer is willing to pay for the property.

Assignment

An assignment refers to when a tenant forfeits his or her rights to a property by transferring them to another party. In this case, the new tenant typically becomes fully liable for the property.

Typically, tenants utilize an assignment when they are moving, they wish to get out of a lease, or they can no longer afford the lease terms.

For example, say a tenant signs a two-year lease for his business location. After six months, however, the business is losing money and he wishes to close the business. The tenant can assign the lease to another tenant in order to get out of the lease.

Before a property can be assigned, the property’s landlord must approve and sign a “License to Assign” form. The departing tenant and the new tenant must also sign an “Assignment of Lease Agreement” form.

In an assignment, a landlord typically issues a new lease and deal directly with the new tenant. The departing tenant should request a release form indicating that he or she is no longer liable for the lease.

Sublease

Although similar, an assignment differs from a sublease. A sublease involves a tenant leasing a property to another tenant while still being liable for the terms of the original lease.

In this case, no new lease is created between the landlord and the subletter. Rather, the original lease remains intact and the original tenant acts as a middleman between the landlord and the subletter to uphold its terms. The original tenant is responsible for facilitating all communication and ensuring all repairs and rent payments are made. A subletter is expected to pay the rent, although the original tenant is ultimately responsible if the subletter fails to do so.

Some landlords may prohibit subleases. A lease may include a provision that expressly prevents subletting (Civil Code Section 1995.230). If it doesn’t, however, a tenant has the right to do so. If a landlord does not allow subletting, but has accepted rental payments from the original tenant while the subletter lives on the property, the landlord’s acceptance of payment indicates his or her consent of the subletter.

If a tenant chooses to sublet a property for more money than the original terms of the lease, the landlord is entitled to a portion of the income (Civil Code Section 1995.240).

Case Law Relating to Demise and Leases

Case Review: Edmond’s of Fresno v. McDonald Group, Ltd. (1985)

The case, Edmond’s of Fresno v. McDonald Group, Ltd. (1985) 171 Cal.3d 598., involved a dispute over a competition provision between a property owner and a tenant.

A jewelry store owner (Edmond’s of Fresno) leased retail space in a mall. It had a competition provision with the mall owner (McDonald Group, Ltd.) that barred McDonald Group from leasing retail space to other jewelers. However, when McDonald Group added additional space to the mall, it leased retail space to other jewelers in that additional space. Edmond’s brought a lawsuit against McDonald Group for violating the competition provision.

In Superior Court, McDonald Group argued that the competition provision only applied to the portion of the mall that was in place at the time of the agreement, not the additional space that had been added. However, the court contended that the competition provision must apply to the entire mall, not just a portion of it. Therefore, it ruled in favor of Edmond’s.

Case Review: Burnett v. Chimney Sweep (2004)

The case, Burnett v. Chimney Sweep (2004) 123 Cal.4th 1057., involved a dispute regarding an exculpatory clause.

A couple (the Burnetts) signed a commercial lease with a landlord (Chimney Sweep). The lease included an exculpatory clause which required the Burnetts to waive the right to hold Chimney Sweep liable for any injury resulting from leasing the property (except in the instance of negligence). When the Burnetts moved into the property, they discovered water stains, the existence of excessive moisture, and mold and mildew growths. The Burnetts informed Chimney Sweep of the damages, but the landlord refused to repair them. The Burnetts filed a complaint for general negligence and negligent maintenance.

The Superior Court argued that the lease’s exculpatory clause freed Chimney Sweep from liability. It ruled in favor of Chimney Sweep. The Burnetts appealed. The Court of Appeals argued that the exculpatory clause applied only to passive negligence, not to active negligence. Chimney Sweep had actively avoided and refused to fix the excessive moisture and mildew/mold growth. Therefore, the court reversed the lower court’s ruling and ruled in favor of the Burnetts.

Case Review: People v. Parkmerced Co. (1988)

The case, People v. Parkmerced Co. (1988) 198 Cal.3d 683., involved a dispute regarding a landlord who charged unfair nonrefundable fees.

A large apartment complex was owned by Parkmerced Co. On top of the first month’s rent, Parkmerced Co. charged new tenants a nonrefundable $65 moving-in fee and a nonrefundable $50 transfer fee if a tenant wished to move to another unit in the building. The tenants believed these fees to be unfair. The district attorney brought legal action against Parkmerced Co. for violating lease deposit law.

In court, the district attorney argued that Parkmerced Co. had violated the laws governed in Civil Code Section 1950.5. The Code stated that landlord fees should be used in connection with repairs or to cure tenant defaults. However, Parkmerced Co. had used the fees for cleaning, administrative, and process fees. Therefore, the Superior Court ordered Parkmerced Co. to reimburse the fees with interest to the tenants who were affected.

Case Review: Wilson v. Gentile (1992)

The case, Wilson v. Gentile (1992) 8 Cal.4th 759., involved a dispute over whether an option agreement had been properly exercised.

A lessee (Wilson) entered into a lease agreement with a property owner (Gentile) with a six-month option for Wilson to purchase the property. The agreement required Wilson to exercise his option right 30 days prior to the option’s expiration date. Wilson exercised the option six days prior to its expiration date. Gentile refused the offer, citing that the offer was too late. Wilson stopped making rental payments and Gentile brought an unlawful detainer action against him. Wilson sued for declaratory relief and specific performance, citing that Gilbert had violated the terms of their contract.

The trial court determined that Wilson had properly exercised his option to purchase the leased property, even if it was six days before the expiration date. Gentile appealed. The Court of Appeals affirmed the lower court’s ruling.

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