Bagley v. Clark

²²⁵ Henderson, J., delivered the opinion of the Court. This is an appeal from a decree of specific performance requiring the appellants to convey to the appellees the premises 8527 Pleasant Plains Road, Towson, subject to an annual ground rent of $78, pursuant to an option contained in a lease from Better Housing, Inc., to the appellees, dated February 12, 1944. The lease was for one year at a total rental of $570, payable in equal monthly installments. It contained a clause providing: “It is further agreed that said tenants * * * have the option of purchasing this dwelling at a price of $4700 subject to an annual ground rent of $78.00 any time during the life of this lease after February 12, 1944.

Terms of such sale to be submitted in the form of Contract of Sale and subject to approval of F. H. A.” The ground rent referred to had been duly created before the lease was executed. The appellees held over at the end of the term, February 11, 1945. In December, 1945, the lessor assigned the leasehold title to the appellants, who continued to accept rentals from the appellees at the rate fixed by the lease, and made no inquiry as to their rights under the lease. On November 14, 1946, the appellees gave notice of their desire to exercise the option, to execute a contract of sale, and “to make payment in full of the balance of the purchase price at such date and place as may be mutually agreeable”.

The lease in question is identical with the one before this Court on demurrer in the recent case of Gressitt v. Anderson, 187 Md. 586 , 51 A. 2d 159 . We held that the tenants in that case, holding over with the tacit consent of the landlord, became tenants from year to year, and that the option to purchase during the term of the original lease carried over into the subsequent tenancy. We further held that the offer to pay cash made the time of settlement certain and eliminated any question of credit in the terms of the sale. Upon the question as to uncertainty due to the requirement of F.H.A. approval, we said: “We are unable to determine from ²²⁶ the words of the option what is meant by requiring the approval of the F. H. A. to the option.

It may be that these houses were held subject to some restrictions of the Federal Housing Administration and are still subject to these limitations. * * * There are also possible questions involved as to the termination of the authority of the Federal Housing Administration * * *. All of these present