Tenant Wasn't Ready, Willing, and Able to Buy Building

Facts: A tenant leased space in a commercial building for its manufacturing company. The lease contained an option to buy the property at any time during the tenancy for $350,000. The option also provided that the closing of title was to take place within 90 days of the tenant's notice to exercise the option.

The tenant notified the owners via certified mail, as required by the terms of the option, that he wanted to purchase the property in an all-cash transaction. However, the owners refused to cooperate with the tenant in scheduling a closing of title.

The tenant sued the owners for specific performance of the contract—that is, a court order compelling the owners to schedule the closing—and asked the court for a judgment in his favor without a trial. The court denied the tenant's request, and he appealed.

Decision: The appeals court upheld the lower court's denial of judgment in the tenant's favor without a trial.

Reasoning: The appeals court noted that the tenant had established that the option was an enforceable agreement, and that he sent a timely notice to the owners of his intent to exercise the option. However, the court said that to be entitled to specific performance of a contract, a tenant must demonstrate that it was ready, willing, and able to perform its obligations under the contract—regardless of the owner's breach.

Therefore, for the court to order specific performance of the option, the tenant was required to demonstrate his financial ability to close during the 90-day time period. The tenant's corporate secretary testified to the lower court that after he exercised his option, the tenant was ready to buy the property with an all-cash transaction funded by a mortgage taken on property owned by his in-laws. But the appeals court stated that the corporate secretary's assertion alone, without proof that the actual money was in escrow, was insufficient to demonstrate that the tenant had the necessary funding to close the deal. The appeals court ruled that, even though the option was enforceable, the tenant failed to demonstrate that he was ready, willing, and able to proceed with the purchase.

• Island Auto Seat Cover Company, Inc. v. Minunni, et al., January 2010