Plaintiff timely exercised an option, in its lease, to buy the property from the landlord for its fair market value.  The parties could not agree on the fair market value, ultimately suing each other for breach of contract and specific performance.  The court found the fair market value somewhere between the two parties’ extremes and ordered specific performance of the purchase agreement at that figure.  This opinion holds that the trial court erred in failing to adjust the fair market value purchase price so as to place the parties, so far as possible, in the same position they would have been in had the purchase occurred when it should have, immediately after timely exercise of the option.  The lessee-purchaser should be credited with the rent it paid after exercising the option since, upon exercise, the lease ceased to exist, being replaced by a contract to buy the property.  However, the landlord-seller was entitled to a contrary adjustment to account for the delay in payment of the full purchase price.

California Court of Appeal, Fourth District, Division 1 (Aaron, J.); March 15, 2018; 2018 WL 1324478