How have courts dealt with an option to purchase in a written lease agreement?

In Sacks v. Hayes (1956) 146 Cal.App.2d Supp. 885, 304 P.2d 281, defendant entered into a written lease containing an option to purchase at a [168 Cal.App.3d 373] specific purchase price. Neither the lease nor the option provided for continued payment of rent after exercise of the option. The lessee timely exercised the option. The lessor did not refuse to perform the sale but sued the optionee for unpaid rent claimed to have accrued between exercise of the option and consummation of the sale. It was held that the exercise of the option terminated the landlord tenant relationship and the attendant rent obligation. The court followed the established rule that exercise of the option is an acceptance of an outstanding offer to sell and thus creates a binding contract of sale that exclusively controls the parties' respective duties. (Id., at pp. 887-888, 304 P.2d 281.)

Erich v. Granoff (1980) 109 Cal.App.3d 920, 167 Cal.Rptr. 538, involved lessees with an option to purchase included in their lease contract. Lessees timely notified the lessor of their exercise of the option but the lessor refused to consumate the sale. Lessees continued to pay rent until they were notified by the lessor that the lease term had expired and that he considered

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