A-14868, AUGUST 16, 1926, 6 COMP. GEN. 115

A-14868: Aug 16, 1926

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THE LEASE GRANTING TO THE UNITED STATES AN OPTION TO PURCHASE WITH A PROVISION THAT PAYMENT OF RENT SHOULD CONTINUE UNTIL THE DATE TITLE WAS TRANSFERRED AND THE CONSIDERATION PAID AND ALSO A PROVISION LIMITING THE RIGHT OF RENEWAL UNDER THE LEASE TO JUNE 30. THE UNITED STATES CEASED TO BE A TENANT OF THE LESSOR AND NO RENT IS PAYABLE FOR THE PERIOD IT REMAINED IN POSSESSION AFTER JUNE 30. 1926: THERE IS FOR CONSIDERATION THE CLAIM OF JOSEPH D. PROVIDED NOTICE WAS GIVEN IN WRITING TO THE LESSOR AT LEAST TWO MONTHS BEFORE THE LEASE EXPIRED. IT WAS FURTHER PROVIDED THAT NO RENEWAL SHOULD EXTEND THE PERIOD OF OCCUPANCY BEYOND JUNE 30. PROVIDED THAT THIS LEASE OR ANY RENEWAL THEREOF SHALL CONTINUE IN EFFECT AND THE UNITED STATES SHALL PAY RENTAL AT THE RATE STIPULATED ABOVE UNTIL THE DATE TITLE TO THE LAND IS ACTUALLY TRANSFERRED TO THE UNITED STATES AND THE SAID CONSIDERATION OF THIRTY-FIVE HUNDRED ($3.

A-14868, AUGUST 16, 1926, 6 COMP. GEN. 115

LEASES, RENT - PAYMENT OF RENT AFTER EXERCISE OF OPTION TO PURCHASE WHERE THE UNITED STATES LEASED A TRACT OF LAND, THE LEASE GRANTING TO THE UNITED STATES AN OPTION TO PURCHASE WITH A PROVISION THAT PAYMENT OF RENT SHOULD CONTINUE UNTIL THE DATE TITLE WAS TRANSFERRED AND THE CONSIDERATION PAID AND ALSO A PROVISION LIMITING THE RIGHT OF RENEWAL UNDER THE LEASE TO JUNE 30, 1925, UPON THE EXERCISE OF THE OPTION TO PURCHASE, THE UNITED STATES CEASED TO BE A TENANT OF THE LESSOR AND NO RENT IS PAYABLE FOR THE PERIOD IT REMAINED IN POSSESSION AFTER JUNE 30, 1925, THE EXPIRATION OF THE MAXIMUM RENEWAL PERIOD, PENDING THE EXECUTION OF THE DEED AND PAYMENT OF THE CONSIDERATION.

DECISION BY COMPTROLLER GENERAL MCCARL, AUGUST 16, 1926:

THERE IS FOR CONSIDERATION THE CLAIM OF JOSEPH D. STEPHENS FOR $80.54, AS RENTAL FOR THE PERIOD FROM JULY 1, 1925, TO APRIL 20, 1926, FOR A TRACT OF LAND IN CANADIAN COUNTY, OKLA., AND DESCRIBED IN LEASE BETWEEN CLAIMANT AND UNITED STATES DATED DECEMBER 8, 1923.

BY THE LEASE REFERRED TO THE CLAIMANT LEASED TO THE UNITED STATES THE TRACT OF LAND DESCRIBED THEREIN FOR THE TERM BEGINNING DECEMBER 8, 1923, AND ENDING JUNE 30, 1924, FOR THE SUM OF $8.33 1/3 PER MONTH, PAYMENT TO MADE AT THE END OF THE FISCAL YEAR. THE LEASE PROVIDED THAT IT MIGHT AT THE OPTION OF THE GOVERNMENT BE RENEWED AT THE SAME MONTHLY RENTAL AND UPON THE SAME TERMS AND CONDITIONS, PROVIDED NOTICE WAS GIVEN IN WRITING TO THE LESSOR AT LEAST TWO MONTHS BEFORE THE LEASE EXPIRED, AND IT WAS FURTHER PROVIDED THAT NO RENEWAL SHOULD EXTEND THE PERIOD OF OCCUPANCY BEYOND JUNE 30, 1925. PARAGRAPH 6 OF THE LEASE PROVIDED AS FOLLOWS:

OPTION TO PURCHASE.--- THE LESSOR HEREBY GIVES TO THE UNITED STATES OF AMERICA, DURING THE TERM OF THIS LEASE OR ANY RENEWAL THEREOF, THE OPINION TO PURCHASE THE ABOVE-DESCRIBED PROPERTY FOR THE SUM OF THIRTY FIVE HUNDRED ($3,500.00) DOLLARS; PROVIDED THAT THIS LEASE OR ANY RENEWAL THEREOF SHALL CONTINUE IN EFFECT AND THE UNITED STATES SHALL PAY RENTAL AT THE RATE STIPULATED ABOVE UNTIL THE DATE TITLE TO THE LAND IS ACTUALLY TRANSFERRED TO THE UNITED STATES AND THE SAID CONSIDERATION OF THIRTY-FIVE HUNDRED ($3,500.00) DOLLARS IS PAID. IF AND WHEN THE UNITED STATES SHALL EXERCISE THE OPTION HEREIN CONTAINED BY SERVICE UPON THE LESSOR OF A NOTICE TO THAT EFFECT, THE LESSOR SHALL PROMPTLY THEREAFTER AT HIS EXPENSE FURNISH AN ABSTRACT OF TITLE COVERING THE ABOVE-DESCRIBED PROPERTY, SHOWING OWNERSHIP TO BE IN THE LESSOR FREE AND CLEAR OF ALL ENCUMBRANCES, AND FURTHER, WILL RECERTIFY THE SAID ABSTRACT DOWN TO THE DATE OF TRANSFER OF TITLE TO THE UNITED STATES, SHOWING THAT DURING SAID PERIOD THERE HAVE BEEN NO CHANGES OF RECORD IN THE OWNERSHIP OF THE PROPERTY, OR ANY LIENS OR ENCUMBRANCES CREATED OR EXISTING AGAINST THE SAME.

THE LEASE WAS RENEWED IN ACCORDANCE WITH ITS TERMS UNTIL JUNE 30, 1925, BUT NO LEASE WAS ENTERED INTO FOR THE PERIOD SUBSEQUENT TO THAT DATE. PRIOR TO THE EXPIRATION OF THE TERM UNDER THE RENEWAL LEASE, THE CLAIMANT WAS ADVISED THAT THE GOVERNMENT ELECTED TO EXERCISE ITS OPTION TO PURCHASE. HOWEVER, THE DEED CONVEYING THE LAND TO THE UNITED STATES WAS NOT EXECUTED UNTIL FEBRUARY 11, 1926, AND PAYMENT THEREFOR WAS NOT MADE UNTIL APRIL 20, 1926, THE INSTANT CLAIM BEING FOR THE PERIOD SUBSEQUENT TO THE EXPIRATION OF THE TERM UNDER THE RENEWAL LEASE AND PRIOR TO THE DATE PAYMENT WAS RECEIVED FOR THE PROPERTY.

THE CLAIMANT CONTENDS THAT HE IS ENTITLED TO RENTAL FOR THE LAND UNTIL HE RECEIVED PAYMENT THEREFOR AND RELIES ON THE SECTION OF THE LEASE QUOTED ABOVE TO SUPPORT HIS CONTENTION.

IT IS OBVIOUS THAT THE OCCUPANCY DURING THE PERIOD FOR WHICH RENTAL IS NOW CLAIMED WAS NOT UNDER THE LEASE OF DECEMBER 8, 1923, NOR THE RENEWAL THEREOF, SINCE IT WAS EXPRESSLY PROVIDED THAT THE PERIOD OF OCCUPANCY THEREUNDER SHOULD NOT EXTEND BEYOND JUNE 30, 1925.

THE EXERCISE OF THE OPTION TO PURCHASE PRIOR TO THE TERMINATION ON JUNE 30, 1925, OF OCCUPANCY UNDER THE LEASE PLACED THE UNITED STATES IN THE POSITION OF OWNER OF THE PREMISES ON AND AFTER JULY 1, 1925, SUBJECT TO COMPLIANCE WITH THE CONTRACT CREATED BY THE EXERCISE OF SAID OPTION, AND THE RELATION OF LANDLORD AND TENANT THEREUPON CEASED TO EXIST. SEE 26 COMP. DEC. 928; 1 COMP. GEN. 625; ID. 752; AND THE AUTHORITIES CITED THEREIN.

THE EFFECT OF THE PROVISION IN ARTICLE 6 OF THE LEASE RELIED UPON AS THE BASIS FOR THIS CLAIM, WAS TO GIVE THE LESSOR THE RIGHT TO RENT FOR THE ENTIRE PERIOD COVERED BY THE LEASE AND AUTHORIZED RENEWALS THEREOF UNLESS THE PURCHASE PRICE SHOULD BE PAID IN THE MEANTIME. RENT HAS BEEN PAID UP TO JUNE 30, 1925, WHICH WAS THE DATE OF EXPIRATION OF THE LEASE AS RENEWED, AND PAYMENT OF RENT BEYOND SAID DATE IS NOT AUTHORIZED.