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REAL ESTATE 74: Right of First Refusal Agreement

In 2000, plaintiff entered into a right-of-first-refusal agreement with EAS regarding certain real property adjacent to plaintiff’s property. EAS granted to Plaintiff a Right of First Refusal to purchase the EAS Property, upon the terms and conditions set forth below.

Agreement

Within ten (10) days of receiving a bona fide written offer from a third party to purchase all or any portion of the EAS Property, EAS shall provide a written copy of said offer to Plaintiff. Plaintiff shall then have forty-eight (48) hours after receipt of the third party offer to agree to purchase all or any portion of the EAS property upon the identical terms and conditions as set forth in the third party offer. EAS may split or otherwise divide the EAS Property. In that event, an offer to purchase a portion of the EAS Property shall be subject to the terms of this Agreement.

Declined to Exercise Right of First Refusal

In 2008, the EAS Property was conveyed by quitclaim deed to the Bank in lieu of a foreclosure. There is no dispute this conveyance was not a bona fide offer that would have triggered plaintiff’s rights under the agreement. Subsequently, the Bank conveyed Parcels 1 and 3 to PS. Prior to the conveyance of Parcel 3, plaintiff was notified in writing pursuant to the agreement, and plaintiff declined to exercise his right of first refusal to purchase Parcel 3.

In 2013, the PS conveyed Parcels 1 and 3 BT. This deed and mortgage were recorded.

More than five years later, plaintiff initiated a three-count complaint for breach of the right-of-first-refusal agreement, quiet title, and declaratory relief. Plaintiff alleged that BT obtained the EAS property from the PS without plaintiff first being afforded his right of first refusal that was provided by the agreement.

Summary Disposition

Defendants moved for summary disposition under MCR 2.116(C)(8) (failure to state a claim upon which relief can be granted) and MCR 2.116(C)(10) (no genuine issue of material fact).

The trial court granted defendants’ motion for summary disposition. The court concluded that plaintiff’s right of first refusal had been extinguished after the conveyance to the PS because at that time, the conditions triggered plaintiff’s option to purchase the property and he failed to exercise that option. The agreement cannot be construed as running with the land or otherwise surviving plaintiff’s decision to affirmatively decline to exercise his right of first refusal.

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