Rushing Construction Co. v. MCM Ventures, II, Inc.

395 S.E.2d 130 (1990) 100 N.C. App. 259

RUSHING CONSTRUCTION COMPANY
v.
MCM VENTURES, II, INC.

No. 8920DC1222.

Court of Appeals of North Carolina.

September 4, 1990.

Griffin & Brooks by James E. Griffin, Monroe, for plaintiff-appellee.

Griffin, Caldwell, Helder & Lee, P.A. by W. David Lee, Monroe, for defendant-appellant.

PHILLIPS, Judge.

This appeal turns upon whether defendant's exercise of its option to renew the lease was timely. In our opinion the option was not timely exercised and the judgment appealed from is affirmed.

The following legal principles apply: Nothing else appearing, the general rule is that a lessee must exercise an option to renew its lease at or before the original term expires. 50 Am.Jur.2d Landlord and Tenant Sec. 1182 (1970); Annotation, What Constitutes Timely Notice of Exercise of Option to Renew or Extend Lease, 29 A.L. R.4th 956 (1984). When the rental for the option renewal period is the same as for the initial term and a tenant holds over and pays it it is presumed that it intended to exercise its option. First-Citizens Bank & Trust Co., v. Frazelle, 226 N.C. 724, 40 S.E.2d 367 (1946). But when the additional term is at an increased rental and the tenant stays on but does not pay the increase that intent is negated. Coulter v. Capitol Finance Co., 266 N.C. 214, 146 S.E.2d 97 (1966); 50 Am.Jur.2d Landlord and Tenant Sec. 1190 (1970). A month to month tenancy may be terminated upon seven days notice. G.S. 42-14. In a month to month tenancy a landlord's timely notice increasing the rental is an offer to rent the property for the increased amount and the tenant's continued occupancy after the effective date of the increase is an acceptance of the offer. Melson v. Cook, 545 So. 2d 796 (Ala.Civ.App.1989); Stanford v. Mountaineer Container Co., 88 N.C.App. 591, 364 S.E.2d 153 (1988).

In this instance defendant having failed to renew the lease before the initial term expired, the option to renew ended and by staying on at the previous rental the tenancy became one from month to month. Plaintiff had a right to terminate the lease upon giving seven days notice; and this it did by requesting possession by 1 June 1989 and stating that after that time the monthly rent would increase to $4,000. By continuing to occupy the premises after being notified of the new rental, defendant obligated itself to pay it. If this was not the law, providing in a lease for its extension would be pointless and an owner's right to control the use of his property would be greatly reduced without, and even contrary to, its agreement.

Nor does it help defendant, as it argues, that the lease is ambiguous and that ambiguities in a lease are generally construed in favor of the lessee. Kearney v. Hare, 265 N.C. 570, 144 S.E.2d 636 (1965). For leaving aside the fact that the drafting of the instrument by defendant's attorney might require that the ambiguities be construed in plaintiff's favor, Jones v. Palace Realty Co., 226 N.C. 303, 37 S.E.2d 906 (1946), the "continuing option" granted by the lease, from whatever angle viewed, was dependent upon a term of the lease, either initial or renewal, being in effect. The option was not independent of the term contracted for; when the lease term expired so did the option. It was a "continuing" option for whatever period the lease term existed or was extended to. It did not continue after the lease term ran out and defendant chose not to extend it.

Affirmed.

ARNOLD and COZORT, JJ., concur.