Massachusetts Agencies

Right of First Refusal

Purchase and Sale Agreements

A right of first refusal is generally triggered if either party desires to "sell" their respective properties. Although Massachusetts is a "title state," it is wondered whether the new mortgage would "trip" the right on the part of the neighbor to purchase the property. See Fisher v. Fisher, 23 Mass.App.Ct. 205, 500 N.E.2d 821 (1986), wherein the Appeals Court held that a deed given for a dollar would not be considered to be a "sale" under a right of first refusal.[1] 

1 In the Fisher case, however, there was a deed out for a dollar and a deed back for the same consideration. The opinion seems to revolve around the two transactions "cancelling" each other, rather than upon the consideration paid or the form of the instrument. In 1973 Ann Fisher conveyed property to her in-laws, William and Gertrude Fisher. The deed stated that:

[I]n the event that the grantees or either of them wishes to sell the above property, they agree first to give the grantor herein the right of first refusal at a price no greater than $40,000.

Gertrude died. Then William died. Before William died he had made some conveyances for $1, which the court said did not trigger the right of first refusal because such conveyances were not considered "sales."

We assume, for purposes of this opinion, that William held the property prior to his death fully subject to Ann's right of first refusal. That right, however, was extinguished by William's death, Gertrude having predeceased him. The language used—'[I] n the event that the grantees or either of them wishes to sell'—does not contain the words such as heirs or assigns but speaks in personal terms of the two specific grantees. Their wishes, the condition upon which Ann's right depends, could only occur during the lives of the grantees. The clause does not provide for transfer as a result of death.

Whether the right of first refusal is unenforceable on account of a violation of the rule against perpetuities has been addressed in Thomas v. Kiendzior, 27 Mass.App.Ct. 370, 538 N.E.2d 66 (1989). Compare Certified Corp. v. GTE Products Corp., 392 Mass. 821, 467 N.E.2d 1336 (1984).