George Gordon Bridgers

UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF NORTH CAROLINA
WILSON DIVISION
IN RE:
GEORGE GORDON BRIDGERS
DEBTOR
CASE NO.
06-03055-8-RDD
ORDER DENYING MOTION FOR RELIEF FROM STAY
AND MOTION TO DECLARE OPTION VOID
The matters before the court are the motion for relief from stay and motion to declare option void
filed by Roland Mohesky and Shirley Mohesky. A hearing was held in Wilson, North Carolina on
November 29, 2006.
These motions stem from an agreement, entitled “Option to Purchase,” (“the option”) between Mr.
Mohesky and the debtor which was entered into on March 1, 2004. The agreement allowed Mr. Bridgers
to purchase the subject property located in Edgecombe County (“the property”) for $45,000.00. It
allowed for an interest rate of 10% and specified that the lease payments made by Mr. Bridgers would be
applied to the purchase price, after the deduction of taxes, interest and fees. Pursuant to the option, Mr.
SO ORDERED.
SIGNED this 30 day of November, 2006.
________________________________________
Randy D. Doub
United States Bankruptcy Judge
____________________________________________________________
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Bridgers could tender the remaining balance, at which time Mr. Mohesky would deed the property to Mr.
Bridgers. The option also stated that a default on the lease agreement would void the option.
Testimony was heard from both Mr. Mohesky and Mr. Bridgers regarding the agreement and their
respective interpretations of the agreement. The testimony of both parties agreed that Mr. Bridgers began
renting the property from Mr. Mohesky in December 2001 for $250.00 per month. Mr. Bridgers
approached Mr. Mohesky regarding the possibility of purchasing the property. Because Mr. Bridgers was
unable to obtain financing for the purchase of the property, the parties entered into the option, at which time
Mr. Bridgers’ monthly obligation increased to $500.00.
Mr. Mohesky testified that the parties had an oral lease agreement which was referred to in the
option. That lease agreement increased the monthly rent from $250.00 to $500.00 because the original
lease included only the mobile home located on the property and the new lease included access to the
seventeen acres upon which the mobile home was situated. Mr. Mohesky further testified that Mr. Bridgers
defaulted on the lease in September 2004 when he failed to make his required monthly payment under the
terms of the lease. At that time, Mr. Mohesky considered the option to be void because of the default.
However, he did not give a notice of default to Mr. Bridgers, nor did he notify him that the option was
terminated. Mr. Mohesky also continued to accept payments from Mr. Bridgers after September 2004.
On September 1, 2006, after several months of missed payments, Mr. Mohesky had his attorney send a
letter to Mr. Bridgers notifying him of his default and requesting that he vacate the property to avoid an
action for summary ejectment.
Mr. Bridgers testified that at the time the parties entered into the option, he considered himself to
be the owner of the property. He considered the increase in monthly payments to be because of his
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purchasing the property rather than leasing it. Mr. Bridgers further testified that he made improvements to
the property after the option was signed that he would not have made if he had been only leasing the
property. Mr. Bridgers testified that it was his understanding that the property was his unless he became
90 days delinquent in payments.
It is the law of North Carolina that installment land sales contracts are to be treated as mortgage
contracts. Lamberth v. McDaniel, 131 N.C.App. 319, 506 S.E.2d 295 (1998). As in the case of In re
Robinson, Case No. 03-08856-8-ATS (Bankr. E.D.N.C. December 31, 2003), the debtor in this case
was in possession of the property, was making payments to be applied toward the purchase of the
property, and the agreement between the parties contemplated the transfer of the property to the debtor.
In Robinson, the court found that because the debtor “has the same general rights as a mortgagor under
a traditional mortgage, he is entitled to cure the arrearage through the plan so long as he maintains his
postpetition payments, and relief from the automatic stay is not appropriate at this time.” Id., slip op. at 3.
The court finds that the option entered into by the parties on March 1, 2004 shall be construed
against the Moheskys, as the drafters of the instrument. The option has all of the attributes of a valid land
sales contract and, pursuant to North Carolina law, shall be treated as a mortgage contract for purposes
of determining the rights of Mr. Bridgers.
Based on the foregoing, the Moheskys’ motion to declare the option void and motion for relief from
stay are DENIED. The October 2006 and November 2006 payments previously made by Mr. Bridgers,
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and being held in trust by counsel for the Moheskys, shall be released to the Moheskys immediately. The
continuation of the automatic stay is conditioned on the following:
1. For a period of eighteen months beginning December 1, 2006, all payments made by Mr. Bridgers
to the Moheskys must be received within ten days from the due date.
2. If any payment is received later than ten days from the due date, the automatic stay shall be lifted
as to the Moheskys without further hearing, and they may pursue any legal remedies available to
them.
SO ORDERED.
END OF DOCUMENT
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