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Purchase-price error threatens sale of self-storage assets

Does mutual mistake allow rescission of lease option?

Lipton-U City LLC desired to acquire three self-storage properties owned by Shurgard Storage Centers, a nationwide owner of such buildings. The parties agreed on a compromise offer of a lease with a purchase option based on a 9.6 percent capitalization rate for the past six months of operating income. Unfortunately, the written agreement was not clear for one of the properties. The lease annual rent was $636,000 based on a property valuation of $7 million. Shurgard thought the purchase option price was to be determined by multiplying the last six months' rent by two to annualize the income. Purchase Bob Bruss reports online. However, the actual lease inexplicably omitted any reference to annualizing the six-month net-operating income to arrive at the option purchase price. Shurgard's board of directors approved the lease, including Lipton's option to purchase. About eight months after signing the lease option, Lipton exercised its option to purchase based on the lease-option terms ...

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