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33. If the court rules for the daughter, what will be the likely reason?
The common law Rule Against Perpetuities is unmodified in the jurisdiction, and there are no applicable statutes.
The daughter has asserted all possible defenses.
The corporation has brought an appropriate action for specific performance of the right of first refusal after taking all of the necessary preliminary steps in its effort to exercise its right to purchase the smaller tract.
Last year, the grantee died. The smaller tract passed by the grantee's will to his daughter. She has decided to sell the smaller tract. However, because she believes that the corporation has been a very poor steward of the larger tract, she refuses to sell the smaller tract to the corporation even though she has offered it for sale in the local real estate market.
Ten years ago, a corporation acquired the larger tract from the grantor. At that time, the grantee had no interest in acquiring the larger tract and by an appropriate written document released any interest he or his heirs or assigns might have had in the larger tract.
With appropriate references to the other property and the parties, there followed a reciprocal provision that conferred upon the grantor and her heirs and assigns a similar right to purchase the smaller tract, purportedly binding the grantee and his heirs and assigns.
«I, the grantor, bind myself and my heirs and assigns that in the event that the larger tract that I now retain is ever offered for sale, I will notify the grantee and his heirs and assigns in writing, and the grantee and his heirs and assigns shall have the right to purchase the larger tract for its fair market value as determined by a board consisting of three qualified expert independent real estate appraisers.»
Fifteen years ago, the grantor conveyed the smaller tract to a grantee. The grantor retained the larger tract. The deed to the grantee contained, in addition to proper legal descriptions of both properties and identifications of the parties, the following language:
A grantor owned two tracts of land, one of 15 acres and another of 5 acres. The two tracts were a mile apart.
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(i) Contingent remainders — To A for life, then to the heirs of B (assuming B is alive).
(ii) Executory interests — To A, but if A marries, to B; To A for life, then to B if B delivers a eulogy at A's funeral.
(iii) Class gifts where the class is still open OR a condition has not been satisfied for every class member) — To A for life, then to A's children who attain age 30.
(iv) Unexercised options and rights of first refusal — To A for life, then B has the right to purchase.
(v) Powers of appointment — To A to be distributed as he sees fit.
A right of first refusal is a conditional option. It provides that if the owner ever decides to sell the property, the person or entity holding the right of first refusal has the right to purchase the property on specified terms.
A is correct. The key to understanding this question is the call. The question asks you to analyze why the court would rule against the landowner. This is essentially a hypothetical, asking you IF the court did something, WHY did they do it. To tackle a question like this, you have to look at all the answer choices and decide which scenario would make the hypothetical situation stated in the call occur.
15 years ago, each of the parties granted a reciprocal right of first refusal (or a preemptive right) to the other. The purchase price was to be set by three qualified expert independent real estate appraisers and was thus fair. The rights of first refusal, however, violate the RAP. The right to purchase is triggered by the decision to sell the land. In this case, that decision might occur more than 21 years after a life in being at the time the right was granted. Thus, the right of first refusal is struck ab initio. The question notes that the RAP is unmodified in this jurisdiction. Thus, there are no applicable statutory reforms to the rule. And because the daughter prevails, there must be no applicable exceptions to the RAP.
B is incorrect. Ten years ago, the grantee had the right to purchase the larger tract of land under the right of first refusal (or a preemptive right) given to the grantee. The grantee chose not to exercise that right. The fact that the grantee chose not to exercise the right of first refusal has no effect on whether the grantor can exercise the reciprocal right of first refusal regarding the grantee's land.
C is incorrect. Here, the rights were reciprocal as to two tracts of land. It does not matter that the tracts were not adjacent. The reciprocal rights of first refusal will be struck for violating the RAP.
D is incorrect. As explained above, the reciprocal rights of first refusal violate the RAP and would be struck at once, with neither party able to enforce the right either for money damages or for specific performance.