William Martens leased commercial property to BB’s Childcare and Tasha McNeil. The Lease contained a purchase option which was automatically rendered void if the tenants defaulted.
When the tenants failed to pay rent following a 90-day grace period, landlord asserted an eviction claim in county court. Judgment was rendered for landlord; tenants appealed.
The appeal was primarily based on a theory that the country court lacked jurisdiction to enter a Judgment because the Lease contained a purchase option in favor of the tenants. The purchase option essentially granted the tenants equitable title to the land and building. Not legal title. Still, when title issues are raised, summary resolution is improper and instead the title matters must first be resolved in a court with appropriate (higher) jurisdiction, as title and ownership must be sorted before trailing issues of possession can be addressed.
The district court affirmed the ruling of the county court due to procedural reasons not relevant to this purchase option / equitable title issue. So the tenants further appealed, this time to the Court of Appeals.
The Supreme Court moved the appeal to the docket of the Supreme Court. Yeah, I also did not know this was possible. The Attorney General filed a brief too, on behalf of the landlord, Martens.
The Supreme Court restated the well-worn principle that tenants cannot be evicted if title issues are apparent. Title issues must be resolved first, possession issues come later. Insertion of a title matter into a claim for possession automatically divests the court from jurisdiction, if the court receives evidence supporting the conclusion that a true title issue exists.
Next up: Does a purchase option – unexercised when the eviction claim started – create the type of equitable title interest that would preclude the ability of the eviction court to hear the arguments and decide who has the superior right of possession? Does that court completely lack jurisdiction?
Answer: A title issue means the trial court is divested of jurisdiction and cannot make decisions. As a consequence, neither could the district court. Simply put, a court cannot determine a title question in an eviction setting. The only option of the court is to dismiss the eviction case for lack or jurisdiction.
And yes, it seems that merely the right to later acquire title to the building and land through exercise of an option is enough to support the transfer of “equitable” title to the option beneficiary. Which means that, in turn, if the issue is raised in eviction court the justice / judge is required to dismiss the eviction claim, and await the outcome of the title issue decided months or years later by a court with appropriate jurisdiction.
Tenants win; landlord loses; this may take years for landlord to recover possession. One might assume that the landlord receives no rent while title issues are being sorted. So perhaps landlord’s lender inherits this problem following foreclosure, if landlord does not have sufficient assets to service the mortgage debt and pay property taxes.
See Martens v BB’s Childcare; Nebraska Supreme Court, 321 Neb 335; May 8, 2026: https://law.justia.com/cases/nebraska/supreme-court/2026/s-24-914.html.
Stuart A. Lautin, Esq.*
* Board Certified, Commercial and Residential Real Estate Law, Texas Board of Legal Specialization
Licensed in the States of Texas and New York