ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

ANDREE LAYTON ROAF, JUDGE

DIVISION IV

RONNIE AND SHARON BUCKNER

APPELLANTS

V.

ELOISE LEWIS

APPELLEE

CA01-441

January 16, 2002

AN APPEAL FROM FAULKNER COUNTY CIRCUIT COURT, FOURTH DIVISION

E-2000-330

HONORABLE KAREN R. BAKER

AFFIRMED

This unlawful detainer action involves a lease agreement with an option to purchase a home in Faulkner County. Ronnie Buckner and Sharon Buckner, his daughter, appeal from the circuit court's order finding that they failed to exercise the option to purchase prior to termination of the lease and granting possession of the property to the lessor, appellee Eloise Lewis. On appeal, the Buckners argue that the trial court's ruling was contrary to the preponderance of the evidence, because 1) they validly exercised the option to purchase by tender of the down payment specified in the option clause, and 2) the contract became a purchase agreement after their tender. We agree that the Buckners failed to exercise the option to purchase prior to the termination of the lease agreement and affirm.

On March 31, 1994, Eloise Lewis, the lessor, and the Buckners, the lessees, entered into a lease agreement, wherein the Buckners would lease the subject property for one year beginning on April 1, 1994, and ending on March 31, 1995. The lease provided that at its expiration, it wouldautomatically renew on a month-to-month basis unless written notice of termination was given by either party at least thirty days before the end of the lease term. The lease additionally granted an option to purchase the property "after one year"for $64,000, and provided that Lewis would finance the purchase with $15,000 down and carry a $49,000 mortgage for fourteen years at 7.5 % interest. After the one-year lease period expired on March 31, 1995, the Buckners remained in possession of the property on a month-to-month basis until 2000.

On January 11, 2000, Lewis sent a written notice of termination of lease requesting the Buckners vacate within thirty days because she intended to place the property on the market. The Buckners failed to vacate, and Lewis filed suit against them for unlawful detainer requesting that a writ of possession be issued and possession returned to her. The Buckners filed an answer generally denying Lewis's complaint.

After a hearing, the trial court held that Lewis had established all the elements of unlawful detainer and was entitled to the protections set forth in Ark. Code Ann. § 18-60-301, et seq. (1987), including a writ of possession. The trial court found that Lewis had properly given notice to terminate the lease, that the money the Buckners attempted to tender pursuant to the option was not properly tendered while the lease was valid, and that any rights the Buckners had to purchase the property were terminated contemporaneously with the termination of the lease. It is from this decision that the Buckners appeal.

The Buckners argue that the trial court's ruling was in error in that it is contrary to the preponderance of the evidence. The standard of appellate review where the trial judge sits as the trier of fact, pursuant to Rule 52 of the Arkansas Rules of Civil Procedure, is whether the judge's findings were clearly erroneous or clearly against the preponderance of the evidence. Superior Improvement Co. v. Mastic Corp., 270 Ark. 471, 604 S.W.2d 950 (1980); see also Schueck v. Burris, 330 Ark. 780, 957 S.W.2d 702 (1997). A finding is clearly erroneous when the reviewing court is left with the definite and firm conviction that a mistake has been committed. Sugarloaf Dev. Co., Inc. v. Heber Springs Sewer Improvement Dist., 34 Ark. App. 28, 805 S.W.2d 88 (1991). The findings of the circuit judge, sitting as the jury, on a question of fact will not be reversed unless they are clearly erroneous or clearly against the preponderance of the evidence. See Two Bros. Farm, Inc. v. Riceland Food, Inc., 57 Ark. App. 25, 940 S.W.2d 889 (1997); Abernathy v. Weldon, Williams, and Lick, 54 Ark. App. 108, 923 s.W.2d 893 (1996). This court will give due regard to the opportunity of the trial court to judge the credibility of the witnesses and the weight to be given their testimony. Ark. R. Civ. P. 52(a); Joshua v. McBride, 19 Ark. App. 31, 716 S.W.2d 215 (1986). Ark. Code Ann. § 18-60-304 (1987) defines actions that constitute unlawful detainer and provides in pertinent part that:

The Buckners first assert that they validly exercised their option under the lease and that the relationship of landlord and tenant became one of vendor and purchaser after the tender of the downpayment as set forth in the option clause of the lease agreement. The Buckners contend that there was a proper tender of the $15,000 down payment as contained in the option clause and that the tender was refused by Lewis. The Buckners contend that the tender of $15,000 was proper because it was made to Lewis on the day the lease agreement was executed, and since Lewis refused the tender, the Buckners "believe that [Lewis] intended to have [the Buckners] make [Lewis's] mortgage payments and improve the property, and then evict them for no reason consistent with an unlawful detainer action." Lewis claims that there was no exercise of the option because there was no tender of the $15,000 required for the down payment in order for her to finance the Buckners' purchase.

Tender is an offer to perform a condition or obligation coupled with the present ability of immediate performance, such that if it were not for the refusal of cooperation by the party to whom tender is made, the condition or obligation would be immediately satisfied. Cook, supra. For tender to be effective, there must be an unconditional offer to perform in conjunction with a manifested ability to carry out the offer along with production of the subject matter of the tender. Id. Where a contract does not provide that a tender be made when the option is exercised, it is unnecessary to make a tender at that time. Rich v. Rosenthal, 223 Ark. 791, 268 S.W.2d 884 (1954).

The testimony established that on March 31, 1994, the parties entered into a lease agreement to begin on April 1, 1994, and end on March 31, 1995. Lewis testified that on that date, immediately prior to the execution of the lease, Sharon Buckner approached her and asked her to hold $15,000. Lewis refused to "hold" the money and informed Mrs. Buckner that "[i]t would be better for you to take it to the bank and draw interest on it until y'all close." Lewis stated that she was uncomfortable keeping the money until she got a clean credit report and that this request by the Buckners had nothing to do with the exercise of the option. Lewis testified that because the Buckners' first creditreport had some problems she set up the one-year term before the option could be exercised so that the Buckners could "rehabilitate" their credit. Lewis repeatedly stated that she would not go through with the option until she received a clean credit report and that was the driving force for setting up a lease agreement in the first place.

The construction that the parties have placed on a contract is entitled to great weight in interpreting it. Synergy Gas Corp. v. H.M. Orsburn & Son, 15 Ark. App. 128, 689 S.W.2d 594 (1985). An option to purchase contained in a lease expires when the lease is terminated, unless separate consideration is given for the option. Id. In an option to purchase contained in a lease, time is of the essence, and the court is without discretion to grant additional time. Id. A lessee cannot extend the prescribed period to exercise an option to purchase by holding over and paying rent. Id.

The Buckners contend and Lewis admits that there was no clause in the lease agreement that required a clean credit report in order for her to finance the Buckners' option to purchase. However, the question of whether or not a clean credit report was required is not dispositive of the case. The Buckners attempt to argue that Lewis "conveniently chang[ed] her story" about why she did not accept the $15,000 offered by the Buckners on the day the lease was executed. However, the Buckners' argument fails to recognize the plain language of the lease agreement which stated that the buyers were to have the option of the purchasing the property "after 1 (one) year for $64,000." Therefore, the Buckners' alleged offer made on the date the lease was executed was not a proper exercise of the option to purchase because the option could not have arisen until after March 31, 1995. There was no present ability of immediate performance as required for a proper tender.

The Buckners also argue that a few weeks after the expiration of the lease term they sent a letter to Lewis which noted their intention to exercise the option to purchase. The letter was datedMay 24, 1995, and stated that they were interested in obtaining a termite inspection to protect their interest in the property. The letter also stated that once the inspection was completed they "were prepared to pay the $15,000 down, to continue with the purchase option." Lewis testified that she never received this letter. This letter was also not a proper exercise of the option. The option clause provided that $15,000 was to be paid down in order for Lewis to finance the Buckners' purchase. Here, there was no unconditional offer to perform because the Buckners requested the termite inspection before they would pay, and since the termite inspection was apparently not done, there was no tender.

The Buckners claim that over the next five years Lewis never requested another credit report, and thus, it was obvious that she deliberately allowed them to improve the property and then sought to evict them. However, at no point did the Buckners exercise the option before they were given notice to vacate, and once they were given such notice, the option to purchase terminated.1 In addition, if the Buckners had chosen to finance through a bank of their choice, they did not have to tender the $15,000 to Lewis because that was a requirement only if she were to finance their purchase. Based on the foregoing, we cannot say that the circuit judge's finding that there was not a proper tender of the $15,000 was clearly erroneous.

The Buckners also argue that Lewis did not establish an unlawful detainer action because the lease agreement was "clearly a vendor/purchaser contract," based upon the testimony of both parties that a sale of the property was intended from the start of their relationship. In fact, Lewis didtestify that it was her intent to not have any rental property in Arkansas and that she intended to sell the property. The Buckners also claim that since the option clause used the word "buyer" Lewis intended to sell the property and that they indicated their desire to buy the property by tendering the $15,000 down payment on the date of the execution of the lease agreement.

Courts will not supply missing terms in a lease when the parties have not stated in their agreement a definite basis to guide the court's effort to effectuate the parties' agreement. Heral v. Smith, 33 Ark. App. 143, 803 S.W.2d 938 (1991). Where a contract is plain, unambiguous, and complete in its terms, parole evidence is not admissible to contradict or add to the written contract. Hagans v. Haines, 64 Ark. App. 158, 984 S.W.2d 41 (1998). The parole evidence rule prohibits the introduction of any extrinsic evidence which is offered to vary the terms of a written agreement, and its premise is that the written agreement itself is the best evidence of the intention of the parties. Id.

It is undisputed that both parties desired a sale of the property to result from their relationship. Lewis testified that she entered the lease agreement to allow the Buckners to clear up their credit problems. However, the Buckners argue that if Lewis was so concerned about the Buckners' credit, it was "strange that she continued to accept the payments for this long period of time, and never once received a late payment." On appeal, the Buckners claim that Lewis's testimony in regard to the clean credit report requirement is precluded by the parole evidence rule. However, no such objection or argument was made below, and as such, this court will not address the issue for the time on appeal. Barclay v. First Paris Holding Co., 344 Ark. 711, 42 S.W.3d 496 (2001).

The Buckners attempt to use the same testimony that they believe should be excluded under the parol evidence rule to support their contention that the lease agreement was essentially a sales contract. The evidence is clear that although Lewis used the word "buyer" in the lease agreementunder the option-to-purchase clause, the clear language of the agreement supports the finding that it was a lease and was not, in fact, a sales contract. Lewis's contention that she preferred to lease for one year and allow the Buckners to rehabilitate their credit is not inconsistent with the language of the agreement or the conduct of the parties. The trial court held that the parties had "entered into a valid lease with a purchase option capable of being exercised after one year," and we cannot say that this finding is clearly erroneous. Because Lewis terminated the lease pursuant to its terms by proper notice and the Buckners remained on the property in derogation of the notice, the trial court's finding that Lewis established all the elements for unlawful detainer is also not clearly erroneous.

Affirmed.

Robbins and Griffen, JJ., agree.

1 In the Buckners' answer to the complaint, they made only a general denial. They did not file a counterclaim or seek to transfer the case to chancery court to pursue specific performance or raise other equitable claims. Although the trial court allowed wide latitude in the testimony, the court recognized its limitation in considering the equitable defenses raised by the Buckners during the hearing.