Rent Is Not Purchase Price: Alabama Supreme Court Strictly Construes Lease-Option Credits and Applies Prevention Doctrine in McCain v. Sneed

Rent Is Not Purchase Price: Alabama Supreme Court Strictly Construes Lease-Option Credits and Applies Prevention Doctrine in McCain v. Sneed

Introduction

In LaTonya McCain v. James Sneed and Vernetta Smoot (Appeal from Calhoun Circuit Court: CV-23-900575), the Supreme Court of Alabama issued an opinion on October 10, 2025, that clarifies two recurring issues in rent-to-own arrangements:

  • Whether monthly rent payments under a lease with an option to purchase reduce the ultimate purchase price when the contract is silent on that point; and
  • Whether a lessor may declare a default when she has hindered a lessee’s ability to tender payment.

The parties entered into a “Lease with Option to Purchase” running from October 1, 2016, through September 30, 2024, with a stated purchase price of $114,000. The lessor (McCain) sued for ejectment and declaratory relief, and the lessees (Sneed and Smoot) counterclaimed for breach of contract, unjust enrichment, and promissory fraud. After a bench trial, the circuit court found a valid lease-to-purchase contract, determined that the lessees had complied with its terms, ordered release of funds toward the mortgage, required the lessor to satisfy all liens, and compelled conveyance of fee simple title to the lessees by March 1, 2025. The court also assigned 2024 property taxes to the lessees.

On appeal, the lessor challenged: (1) the trial court’s rejection of her breach/default theory; (2) the order requiring conveyance allegedly for less than the “full amount of payments”; and (3) the trial court’s treatment of monthly rent as a prepayment toward the purchase price. The Supreme Court affirmed in part, reversed in part, and remanded.

Summary of the Opinion

The Supreme Court:

  • Affirmed the trial court’s rejection of the lessor’s breach argument. The contract did not require property taxes to be paid specifically in October, and, as to November 2023 rent, the evidence supported that the lessor hindered timely payment, invoking the prevention-of-performance doctrine.
  • Declined to reach the lessor’s challenge to the order compelling conveyance “for less than the full amount” because the argument was not properly preserved and did not comply with Rule 28(a)(10), Ala. R. App. P.
  • Reversed the trial court to the extent it treated monthly rent as reducing the purchase price. Applying the strict-construction rule governing option contracts, the Court held that only the expressly identified credits in the lease — the $10,800 initial payment and the annual $3,000 March payments — reduce the $114,000 price; monthly rent does not.

The cause is remanded for entry of a judgment consistent with the opinion, i.e., recalculating the purchase-price credits to exclude monthly rent.

Case Background

The Lease with Option to Purchase

Key terms of the October 1, 2016, lease-option included:

  • Term: 96 months (Oct. 1, 2016 – Sept. 30, 2024)
  • Rent: $825/month due on the first of each month, with a 20-day contractual cure period and a 10% late fee after six days
  • Initial payment: $10,800 “which shall apply toward purchase”
  • Annual payment: $3,000 due each March 15, “counted as prepayments” toward the $114,000 purchase price and treated as principal reductions
  • Option price: $114,000
  • Taxes: Lessees to “pay actual property taxes … each year directly to Lessor”
  • Notice to exercise: Written notice at least 30 days before lease expiration, with compliance required
  • Mortgage: Lessor to keep mortgage (and escrow for taxes and insurance) current; no additional encumbrances
  • Total-payback clause: “The total payback including down payment will be $114,000.00.”

Procedural Posture

  • Dec. 20, 2023: Lessor sues for ejectment, declaratory relief, and damages.
  • Jan. 22, 2024: Lessees answer and counterclaim (breach, unjust enrichment, promissory fraud).
  • Dec. 20, 2024: Bench-trial judgment: lessees complied; order to release funds toward mortgage; lessor to satisfy liens and deed to lessees by March 1, 2025; lessees to pay 2024 taxes.
  • Jan. 15, 2025: Lessor’s postjudgment motion raises compliance, absence of written notice, newly discovered evidence of late payments, timing of mortgage payoff, and insurance issues; denied Jan. 16, 2025.
  • Feb. 25, 2025: Lessor appeals.

Analysis

Standard of Review: Ore Tenus and Legal Error

The Court applied the ore tenus standard because the trial was bench and involved oral testimony. Under that standard:

  • Findings of fact based on live testimony are presumed correct and will not be disturbed unless plainly and palpably wrong. See, e.g., Smith v. Muchia, 854 So. 2d 85, 92 (Ala. 2003); Allstate Ins. Co. v. Skelton, 675 So. 2d 377, 379 (Ala. 1996).
  • The presumption does not apply to errors of law or improper applications of law to facts. See Ex parte Bd. of Zoning Adjustment of Mobile, 636 So. 2d 415, 417 (Ala. 1994); Fort Morgan Civic Ass’n v. City of Gulf Shores, 100 So. 3d 1042, 1045–46 (Ala. 2012); Kennedy v. Boles Invs., Inc., 53 So. 3d 60, 67–68 (Ala. 2010).

I. Alleged Breach: Taxes and November 2023 Rent

The lessor argued that the lessees defaulted by failing to pay October 2023 property taxes and November 2023 rent within the 20-day cure. The Court affirmed the trial court’s rejection of that argument for two reasons.

1. Property Taxes

The lease did not require payment of property taxes in October. It said only that the lessees must pay “actual property taxes … each year directly to Lessor.” The absence of a specific October due date undercut any October-based default theory.

2. November 2023 Rent and the Prevention Doctrine

The lessees offered evidence that they attempted to coordinate payment consistent with the lessor’s instruction to notify her before delivering it. On November 3 and 5, 2023, lessee Sneed texted to arrange delivery of the mortgage/rent and taxes; the lessor did not respond. Instead, on November 21, she sent a default-and-termination letter. On November 29, the lessees placed a money order dated November 3 for the November rent in the lessor’s mailbox.

The Court invoked the prevention doctrine: “A party to a contract who has caused a failure of performance by the other party cannot take advantage of that failure.” Big Thicket Broad. Co. of Alabama v. Santos, 594 So. 2d 1241, 1244 (Ala. Civ. App. 1991). On this record, the trial court could reasonably find that the lessor’s non-responsiveness impeded timely payment within the 20-day cure window, and she could not then leverage that impediment to cancel the lease. Because credible evidence supported the trial court’s factfinding, ore tenus deference required affirmance on the breach issue.

II. Challenge to Ordered Conveyance for “Less Than Full Amount” — Waiver

The lessor argued that the trial court erred in requiring conveyance without full payment, citing only § 12-13-11(a), Ala. Code 1975 (grounds for new trials). The Supreme Court declined to consider the argument because:

  • The lessor did not advance this contention in her postjudgment motion; and
  • The sole cited authority was inapposite; the briefing failed to comply with Rule 28(a)(10), Ala. R. App. P., which demands meaningful legal argument and supporting authority.

The takeaway is a procedural one: appellate courts will not develop arguments for litigants or consider inadequately supported issues.

III. Can Monthly Rent Be Credited Against the Purchase Price?

This was the dispositive legal correction. The lessor contended the trial court effectively treated monthly rent as a prepayment/credit toward the $114,000 purchase price. The Supreme Court agreed that was error.

Strict Construction of Option Contracts

Alabama strictly construes option contracts. See Colonial Baking Co. of Alabama v. Pine Dale, Inc., 436 So. 2d 856 (Ala. 1983). Applying that principle, the Court held:

  • The lease expressly identifies only two categories of payments that reduce the purchase price: the $10,800 initial payment and the annual $3,000 March payments.
  • The lease is silent about monthly rent reducing the price. Given strict construction, courts will not imply credits that the option contract does not clearly grant.

Because there was “no ambiguity in the lease with respect to what payments are to be applied to the purchase price,” the trial court erred by crediting monthly rent. The judgment is reversed to that extent and remanded for entry of a corrected judgment.

Precedents and Authorities Cited

  • Ore tenus standard:
    • Smith v. Muchia, 854 So. 2d 85 (Ala. 2003); Allstate Ins. Co. v. Skelton, 675 So. 2d 377 (Ala. 1996) — trial courts’ factual findings based on oral testimony are given deference.
    • Born v. Clark, 662 So. 2d 669 (Ala. 1995); Hall v. Mazzone, 486 So. 2d 408 (Ala. 1986) — rationale for deference (demeanor and credibility assessments).
    • Reed v. Bd. of Trs. for Alabama State Univ., 778 So. 2d 791 (Ala. 2000); Raidt v. Crane, 342 So. 2d 358 (Ala. 1977) — presumption of correctness when supported by credible evidence.
    • Ex parte Bd. of Zoning Adjustment of Mobile, 636 So. 2d 415 (Ala. 1994) — deference ends when law is misapplied.
    • Kennedy v. Boles Invs., Inc., 53 So. 3d 60 (Ala. 2010); Fort Morgan Civic Ass’n v. City of Gulf Shores, 100 So. 3d 1042 (Ala. 2012) — restating the standard.
  • Prevention of performance:
    • Big Thicket Broad. Co. of Alabama v. Santos, 594 So. 2d 1241 (Ala. Civ. App. 1991) — a party cannot profit from a nonperformance it caused; applied to lessor’s hindrance of rent tender.
  • Strict construction of option contracts:
    • Colonial Baking Co. of Alabama v. Pine Dale, Inc., 436 So. 2d 856 (Ala. 1983) — option terms are enforced as written and not expanded by implication; used here to reject treating rent as equity absent express contract language.
  • Appellate briefing requirements:
    • Rule 28(a)(10), Ala. R. App. P. — issues lacking developed argument and authority are not considered.

Legal Reasoning

  • On breach: The trial court could credit testimony and texts showing that the lessor required pre-delivery notice and then failed to respond, impeding payment within the cure period. Under ore tenus deference and the prevention doctrine, the trial court’s no-breach finding is sustainable.
  • On conveyance “for less than full amount”: The claim was not preserved or properly briefed; dismissing it reinforces appellate process norms rather than making new substantive law.
  • On credits against the purchase price: The lease’s credit provisions are specific (initial $10,800 and annual $3,000 payments). Monthly rent is not specified as a credit; thus, strict construction precludes judicially adding it. Because the trial court’s ruling effectively did so, it misapplied law to facts — a point that does not receive ore tenus deference — warranting reversal on that issue.

Impact and Practical Significance

1. Lease-Option Drafting in Alabama

This decision delivers a clear drafting rule: monthly rent will not build “equity” in the purchase price unless the lease-option expressly says it does. Generic phrases like “total payback” will not be stretched to include rent if specific credit terms identify different payments.

  • For lessors: If rent is not intended to reduce the purchase price, leave the contract as here (specify only certain credits). If intended otherwise, say so in unambiguous terms and outline how rent credits are calculated and applied.
  • For lessees: Do not assume rent creates equity. Insist on explicit language if part of the rent is to count toward purchase.

2. Payment Logistics and the Prevention Doctrine

Lenders and landlords who require pre-delivery coordination risk invoking the prevention doctrine if they then withhold cooperation and declare default. The case incentivizes:

  • Clear, accessible payment channels (e.g., accepted methods and drop-off/online options);
  • Written acknowledgment of tender attempts; and
  • Good-faith responses during cure periods.

3. Litigation and Appellate Practice

The Court’s refusal to consider an inadequately briefed issue underscores Rule 28(a)(10)’s teeth. Preservation matters: arguments should be raised below (e.g., in postjudgment motions where needed) and supported on appeal with pertinent authority.

4. Remedies on Remand

The trial court must revise its judgment to exclude monthly rent from purchase-price credits. Practically, that means:

  • Recomputing the sums credited toward $114,000 to include only the $10,800 initial payment and the annual $3,000 payments (plus any other express prepayments fitting the contract’s terms);
  • Determining whether, with those credits, the lessees have satisfied the price or whether additional payment(s) or conditions are required before conveyance; and
  • Leaving intact the trial court’s other affirmed directives (e.g., release of held funds toward the mortgage, satisfying liens, assignment of 2024 taxes), unless recalculation necessitates adjustment of dates or conditions to effectuate specific performance consistent with the opinion.

Complex Concepts Simplified

  • Ore tenus standard: When a judge hears witnesses live (rather than deciding on papers), appellate courts defer heavily to the judge’s factual findings because the judge observed demeanor and credibility firsthand.
  • Prevention doctrine: A party cannot create or worsen a breach by the other side and then use that breach as a weapon. If the lessor’s conduct makes timely payment impracticable, she cannot claim default.
  • Strict construction of options: Options are unilateral rights to buy on specified terms. Courts enforce them strictly; conditions must be met as written, and courts will not imply terms to help one side.
  • Rule 28(a)(10) compliance: Appellate briefs must actually argue each issue with legal authority. Unsupported or undeveloped claims are treated as waived.
  • Specific performance: An equitable remedy compelling a party to carry out a contract (e.g., deed a property) when legal damages are inadequate. Here, the trial court’s order resembles specific performance; the Supreme Court’s partial reversal means the terms of performance must reflect only those credits the contract actually allows.

Key Provisions of the Lease That Drove the Outcome

  • “Lessees agree to pay actual property taxes … each year directly to Lessor” — no October due date specified.
  • 20-day cure clause for rent defaults — tempered by the prevention doctrine when the lessor impedes tender.
  • Credits against the purchase price are expressly limited to the $10,800 initial payment and the annual $3,000 payments; monthly rent is not listed as a credit.
  • Strict notice requirement for option exercise (written notice 30 days before expiration) — although the Supreme Court affirmed the trial court’s overall compliance finding, the opinion does not announce a new rule on notice; it simply defers to the trial court’s determinations under ore tenus review.

Practice Pointers

  • Drafting lease-options: State, in explicit terms, whether and how monthly rent, down payments, annual payments, and any other sums apply to the purchase price. Define timing, method, and routing of payments to avoid “hindrance” disputes.
  • Payment logistics: Provide multiple, documented payment methods (e.g., electronic payment, certified mail, drop box with receipt). If you require prior coordination, commit to responding within the cure period.
  • Exercising the option: Follow the contract: deliver written notice within the stated timeframe and preserve proof of delivery.
  • Appellate preservation: Raise issues in the trial court (including postjudgment motions where necessary) and brief them on appeal with on-point authority. Avoid relying on inapposite statutes (e.g., new-trial statutes) to support unrelated arguments.

Conclusion

McCain v. Sneed confirms two core principles in Alabama lease-option law. First, monthly rent payments do not reduce an option’s purchase price unless the contract unequivocally says so; option agreements are strictly construed, and courts will not infer credits from silence or ambiguous phrasing. Second, a lessor cannot engineer a default by impeding the lessee’s tender and then claim the benefit of that default — the prevention doctrine forbids it.

Substantively, the decision aligns outcomes with the text of the parties’ agreement; procedurally, it underscores the discipline of appellate practice and the deference owed to trial courts’ factual findings under the ore tenus rule. On remand, the trial court must recalibrate the financials to exclude rent-as-credit while otherwise implementing specific performance consistent with its affirmed findings. For Alabama practitioners and parties using rent-to-own structures, the message is clear: say exactly what counts toward the price, set precise payment mechanics, and do not weaponize logistics to create a default.

Disposition: Affirmed in part; reversed in part; and remanded. Stewart, C.J., and Wise, Sellers, and Cook, JJ., concur.

Case Details

Comments