866 N.E.2d 882 (Mass. 2007)
In 1981, executors under the will of the defendant's father, Robert F. Hayden, conveyed a parcel of subdivided land situated "in Barnstable (Cotuit)" to Albert Mattson by deed recorded in 1981 at the Barnstable County registry of deeds.1 The subject property, located at 3630 Falmouth Road, Marstons Mills, was part of a larger tract originally owned by Hayden. In 1981 the executors participated in a stock redemption plan with HLD by which HLD conveyed four parcels (lots 93, 94, 95, and 96) to the estate; the executors then sold and conveyed the four lots to Mattson subject to the restrictive covenant set forth in full in the deed.2
In 1983 Mattson conveyed the four lots to Kesten by recorded deed stating that the property remained subject to the restrictions in document no. 284,458.3 In 1996 the plaintiff purchased lots 95 and 96 from Kesten.4 At that time the defendant and his sisters executed and recorded two Assent to Sale documents expressly waiving the right of first refusal with respect to those lots.5
In December 2004 Kesten and the plaintiff entered into a purchase and sale agreement for lot 94 that made no mention of the right of first refusal, with the time for performance originally set for January 31, 2005 and later extended to March 18, 2005.6 On February 14, 2005 the plaintiff's attorney notified the defendant of the agreement and the twenty-day response period.7 On or about March 7, 2005 the defendant's attorney hand delivered notice of intent to purchase together with the required deposit check to Kesten's attorney.8
On March 17, 2005 the plaintiff filed a verified complaint in the Superior Court seeking a declaration regarding the right of first refusal, and a judge allowed an ex parte motion for a memorandum of lis pendens to be recorded against the property.9 A Superior Court judge granted the plaintiff's motion for summary judgment declaring the right void and unenforceable and entered separate and final judgment against the defendant.10 The defendant appealed and the Supreme Judicial Court transferred the appeal on its own motion.11
Whether the plaintiff has standing to challenge the validity of the right of first refusal?12
A plaintiff has standing to seek declaratory relief challenging the validity of a right of first refusal when the plaintiff has entered into a purchase and sale agreement to purchase the property at the time the defendant attempts to exercise the right.13 The resolution of the validity question will have a significant impact on the plaintiff's contractual rights under G. L. c. 231A, § 9.14
Yes. The plaintiff entered into a purchase and sale agreement with Kesten for lot 94 in December 2004.15 The defendant attempted to exercise the right of first refusal in March 2005 by delivering notice and a deposit check. The plaintiff's interest in the validity of the restriction is cognizable because any declaration will directly affect his ability to enforce the purchase and sale agreement against Kesten.16
The plaintiff has standing to challenge the validity of the right of first refusal.17
Whether a right of first refusal of unlimited duration contained in a deed is subject to the rule against perpetuities?18
A right of first refusal is not subject to the common-law rule against perpetuities because it does not create an interest that vests too remotely.19 Unlike an option to purchase at a fixed price, the right only ripens into an option upon receipt of a bona fide third-party offer acceptable to the owner.20 Therefore it imposes no cloud on title or impediment to marketability.21
No. The right of first refusal was created in the 1981 deed recorded as document no. 284,458 conveying lot 94 to Mattson and contains no temporal limitation.22 Because it becomes operational only when the owner decides to accept a third-party offer and the holder may then match those terms, the interest does not fall within the rule against perpetuities as applied to options.23
A right of first refusal of unlimited duration contained in a deed is not subject to the rule against perpetuities.24
Whether the right of first refusal constitutes an unreasonable restraint on alienation?25
A right of first refusal constitutes an unreasonable restraint on alienation only if it burdens the property by discouraging bona fide offers or making an owner unwilling to sell for a lengthy period.26 A right that arises only when the owner is prepared to accept an offer, allows the owner to receive market value, and permits sale to the third party if the holder declines is a de minimis restraint.27
No. The right arises only when the owner receives and is prepared to accept a bona fide offer.28 After that point the owner remains free to sell to the third party if the holder does not match the terms.29 In this case only twenty-three years had elapsed since the 1981 creation of the restriction in document no. 284,458, and the Hayden family retains a legitimate interest in the property.30
The right of first refusal does not constitute an unreasonable restraint on alienation.31