Smith v. Benware

7ermont Superior Court
Filed 04/29/25
Franklin mit

VERMONT SUPERIOR COURT VEa CIVIL DIVISION
Franklin Unit Case No. 24-CV-05026
17 Church Street 2 SES,
St. Albans VI 05478
802-524-7993 AF

www.vermontjudiciary.org

David Smith v. Eric Benware

ENTRY REGARDING MOTION
Title: Motion to Dismiss (Motion: 6)
Filer: Eric J. Benware
Filed Date: April 11, 2025

The Court previously issued a writ of possession in this case on April 2, 2025 due to
Defendant's failure to make a rent escrow payment. Defendant filed a motion to dismiss
this ejectment action on April 11, 2025. Plaintiff filed a response on April 21, 2025. The
Court stayed the writ on April 15, 2025 to consider this motion to dismiss. As explained
below, the Court grants the motion to dismiss. The writ of possession is vacated.

The motion to dismiss is premised on the argument that the agreement between the
parties involves is a defective rent-to-own agreement of a mobile home under 9 V.S.A. §
2602(e). According to Defendant, the agreement does not satisfy the requirements of
section 2602(e)(2). Defendant asks the Court to find that because the agreement is
defective, he must be considered a tenant, and the Residential Rental Agreements Act
("RRAA") applies to this case, see zd., § 2602(e)(3). On that basis, Defendant then argues
that the Court never should have issued a rent escrow order and this case should be
dismissed because Plaintiff has failed to comply with the procedural requirements of the
RRAA prior to filing this case.

On August 29, 2024, the parties executed what appears on its face to be a rent-to-
own a mobile home agreement. The agreement identifies itself variably as a "Rent to Own-
Mobile Home" and a "Lease Agreement." And although the title of an instrument is not
necessatily determinative of its character, see Prue v. Royer, 2013 VT 12, § 20, 193 Vt. 267,
this agreement is ostensibly what it purports to be a rent-to-own mobile home agreement,
see Compl., at 6-11. See also Southwick v. City of Rutland, 2011 VT 53, J 4, 190 Vt. 106 (when
a contract is unambiguous, the plain language of the contract governs its interpretation).

The Vermont Supreme Court has fleshed out the characteristics of such an
agreement in the following terms:

Entry Regarding Motion Page 1 of 4
24-CV-05026 David Smith v. Eric Benware
"ermont Superior Court
Filed 04/29/25
Franklin -nit

A lease option to purchase is an agreement by which one binds himself to sell
and convey to another party certain property at a stipulated price within a
designated time, leaving it in the discretion of such other party to take and pay
for the property. It is a unilateral contract: The optionor is bound that the
offer shall be kept open and available in accordance with its terms, but its
acceptance rests wholly in the discretion of the optionee, and there is no
obligation upon the latter with regard to it. Besides its unilateral nature, ...
the lease payments are not ... applied on the purchase price.

Prue v. Royer, 2013 VT 12, [q 23-24 (citations and internal quotations marks omitted). In
simple terms, the key elements of a rent-to-own agreement are that (1) tenant/potential
buyer has the option to buy at a specified price within a particular time period, but the
decision to buy is solely tenant's, and (2) the lease payments are not applied to the purchase
ptice. This is consistent with the language of the mobile home rent-to-own statute, which
requires an agreement where tenant/ potential buyer has agreed to pay consideration in one
or more installments to the owner of a mobile home for the right to use or occupy the
home, see 9 V.S.A. § 2602(e)(1)(A), and upon full compliance with the terms of the
agreement, tenant has the option of becoming the owner of the home, zd, § 2602(e)(1)(B).

Here, the contract is not as clear as it could be in certain aspects, but the option to
buy is laid out explicitly as an option: it is exercisable by Defendant within a specific period
and at a specific price, Plaintiff was required to keep the option open, and Plaintiff had no
control over Defendant's decision to exercise the option. In addition, lease payments were
not automatically credited toward the purchase price they could be in certain instances, but
only after Defendant exercised the option. The Court therefore concludes that the
Agreement here is a valid rent-to-own mobile home agreement.

As stated above, underlying Defendant's arguments in the motion to dismiss is his
contention that this agreement fails to comply with the requirements of 9 V.S.A. §
2601(e)(2), section 2601(e)(3) and as a result, his tenancy subject to the RRAA.

The key question here is what happens when there is a rent-to-own agreement but
there is a breach of that agreement before the option to purchase was exercised or
completed. As noted above, after full compliance with the terms of a rent-to-own
agreement, Defendant here has he option of becoming the owner of the home. 9 V.S.A. §
2602(e)(1)(B). Subdivision (2), on which Defendant telies, deals with the requirements to
consummate a sale under rent-to-own agreements. Id., § 2602(e)(2). It dictates that under a
rent-to-own arrangement, ownership does not transfer unless and until, there is a written retail
installment contract compliant with requirements set out in Chapter 59 of this title, z., §
2602(e)(2)(A), and unless and until a mobile home uniform bill of sale transferring the mobile

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24-CV-05026 David Smith v. Eric Benware
7ermont Superior Court
Filed 04/29/25
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home from the seller to the buyer is properly completed, endorsed, executed, and filed, 3 §
2602(e)(2)(B).

In this respect, Plaintiff is correct that the parties were not yet at the stage where all
of the section 2602(e)(2) obligations had come into effect. If the rent-to-own agreement is
in compliance with the sale steps when it reaches the sale stage, it is not subject to the
RRAA. Id., § 2602(e)(3). Indeed, subdivision (2) ("Requirements to consummate sale under
rent-to-own agreements") clearly indicates that rent-to-own, as the name suggests, is a two-
part arrangement wherein tenancy (the rent part) can at the option of the tenant change into
ownership (the own part). The sale part, however, as subdivision (2) indicates, needs to be
consummated.

In reviewing the statute in detail, the only reasonable interpretation is that before the
sale part of the arrangement is consummated, the RRAA applies. In other words, sections
2602(e)(3) and (4) only begin to operate at the sale stage of the arrangement. Before such
time, however, the arrangement is a tenancy subject to the RRAA. See Pitman v. Sanditen, 626
S.W.2d 496, 498 (Tex. 1981) ("[A] tenant under a lease containing an option to purchase
exercises the option, a binding, bilateral contract is formed. The relation of landlord and
tenant ceases and that of vendor and purchaser arises.'').

Based on this analysis, Defendant has been renting and is considered a tenant waless
and until he exercises the option to purchase. As a result, the RRAA currently applies. Since
the parties are not at the sale stage, the sale formalities are irrelevant to its analysis.

In his opposition, Plaintiff argued that the Agreement falls outside the scope of the
Mobile Home Act because it involves the sale of the home and "10 acres of land." See
Compl., at 10. Plaintiff argues, section 2602(e)(2) explicitly excludes the application of the
RRAA to the Agreement because it does not apply to agreements to purchase a mobile
home financed as residential real estate. To further lend support he states that the home
here has been permanently sited. See 9 V.S.A. § 2601(d).

The Court disagrees. If that is what the parties intended, their contract is woefully
inadequate. The only reference to this agreement involving land comes on the last page in
paragraph 27 titled "End Statement," where it states it is an agreement "to rent to own a
single wide Mobile Home on 10 acres of land under the conditions within this contract."
This lone, vague reference to "10 acres of land" is simply not enough to establish that the
Agreement will be sold or financed as residential real estate. For starters, the Agreement
includes no description of the land purported to be sold. See Stewart v. Thompson, 3 Vt. 255,
257 (1831) ("The instrument is ineffectual, because it contains no description of estate;
which is necessary in order to determine what title, or interest, passes by the deed.").

Because the Court concludes that this Agreement is subject to the RRAA, the case
must be dismissed. There was no valid notice to vacate here. The October 20, 2024, notice
does not state the amount of rent required to redeem the tenancy or Defendant's right to
Entry Regarding Motion Page 3 of 4
24-CV-05026 David Smith v. Eric Benware
"ermont Superior Court
Filed 04/29/25
Franklin Unit

redeem. See 9 V.S.A. § 4467(a). It also does not specifically state the termination date. a § 3

4467(f). And although the later notices attached to the Complaint appear to specify
redemption amounts ("$1008.00" and "$2259.00") and one of them specifies the termination
date ("end of April'), an ejectment action must be commenced "not later than 60 days from
the termination date set forth in the notice." 9 V.S.A. § 4467(k). The October 20, 2024,
notice is facially invalid, and the earlier notices can be only reasonably interpreted to be from
2016 ("[Y]ou have until the 15" of October 2016 to have paid in full the agreed amount[.]")
and 2017 ("[Y]ou have until the of April 2017 to have paid in full the amountf.]"),
respectively. No eviction matter may be commenced until a valid notice to terminate has
been provided to a tenant with the appropriate information and deadlines.

Order

The motion to dismiss is granted. The rent escrow order and writ of possession are
vacated. The matter is dismissed without prejudice.

Electronically signed on April 28, 2025, pursuant to V.R.E.F. 9(d).

Navah C. Spero
Superior Court Judge

Entry Regarding Motion Page 4 of 4
24-CV-05026 David Smith v. Eric Benware