Gold Coast hair salon owner Michelle Glynn has been forced to sell her Varsity Lakes home following the collapse of an unusual arrangement for its rental.
In September 2013 she was influenced by an acquaintance Doug Wroe to grant a lease of the home to a company owned by Malcolm Brown and in turn enter into a similar arrangement to lease a nearby home owned by Wroe .
In both cases the 5 year leases included a “call option agreement” that granted the tenant an option to buy the rented property at any time during the period at an agreed figure with “equity credits” being accrued along the way for a portion of the $2.5k/ month rent installments.
The grant of the options entailed a payment of a $20k option fee which became the deposit under the contract if the option was exercised.
In the case of the property Glynn was selling, Brown’s company was entitled to construct an extension to the home, which he did.
The arrangement worked well until about March 2015 until Glynn and Wroe had differences regarding the property Glynn was renting from Wroe and over which she had an option to buy.
He obtained an order evicting her from the home as a consequence of which she lost the benefit of her call option agreement and had nowhere to live.
Brown promptly decided to exercise his company’s option to buy, by sending Glynn the appropriate paperwork.
Glynn retaliated – in the realisation that she had lost the opportunity to purchase the property from which she had been evicted and now was being forced, as she saw it, to sell hers to Brown for $399k – by purporting to terminate the option.
The dispute inevitably led to the District Court where judge David Reid was required to adjudicate.
In his view Brown’s company had properly exercised the option and Glynn’s purported termination was of no effect.
He ruled in Brown’s favour.
Settlement of the contract was ordered to be effected forthwith and Glynn is required to pay the company’s legal costs.