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Neal v. Craig Brown, Inc.

Court of Appeals of North Carolina
356 S.E.2d 912 (1987)


Craig Brown, Inc., and its predecessors (Brown) (defendants) leased a building to a dry-cleaning business under a 15-year written lease. The same year, the dry-cleaning business sublet the building for five years to a third party under a written sublease, which contained options to renew at increased rent for two additional five-year periods. The sublease also retained a reversionary interest in the remaining portion of the lease term and a right to re-enter the premises. Three years later, after the dry-cleaning business went bankrupt, the third-party sublessor assigned his sublease to Neal (plaintiff). The bankruptcy trustee told Neal to pay rent directly to Brown. Neal paid Brown rent monthly for the next 12 years. Neal presented evidence that he then gave Brown written notice of intent to extend the lease for five years at increased rent. Neal also made improvements to the property, including installing a new boiler. Brown was aware of the improvements, and treated Neal as a long-term tenant, but claimed that he never received a notice to renew from Neal. Brown claimed that the increased rent payments resulted from negotiations with Neal, without any mention of renewal. Approximately two-and-a-half years later, Brown notified Neal to vacate the building, but Neal continued to occupy the premises. Neal claimed that the sublease was actually an assignment of the original lease, not a sublease, such that Neal was Brown’s tenant. Brown argued that the sublease was not itself an assignment, such that Neal received no more rights than the third-party sublessor who preceded him. The trial court entered summary judgment for Brown dismissing Neal’s claims.

Rule of Law


Holding and Reasoning (Martin, J.)

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