COA rules on right of first refusal issue

The Indiana Court of Appeals concluded that the right of first refusal set forth in a purchase agreement of land between neighbors could only be exercised between the two neighbors and didn’t apply to the sale of land by an estate.

Richard and Elizabeth Ryan purchased a piece of land from Russell and Mary Keen in 1972. According to a purchase agreement, the Ryans had right of first refusal if the Keens ever elected to sell their property adjacent to the Ryans’ land. After Russell and Mary died, the estate sold the property to another couple without providing the Ryans a chance to exercise the right.

The Ryans sued and, in turn, the estate of Mary Keen sued Agri-Town and Lawyers Title Insurance Corp., alleging those companies were contracted to perform a title search and issue/guarantee title insurance upon which the estate relied to convey clear title to the property. The search didn’t reveal any right of interest as alleged by the Ryans.

The trial court granted summary judgment for Agri-Town and Lawyers Title, finding the right of first refusal ended at the death of the last surviving seller, Mary, and was now unenforceable.  In Richard and Elizabeth Ryan v. Lawyers Title Insurance Corp. and Elaine E. English d/b/a Agri-Town Agency, No. 56A03-1101-PL-75, the Court of Appeals affirmed after examining the terms and language of the right of first refusal as set forth in the purchase agreement.

“We are not persuaded that the designated materials and the terms of the Purchase Agreement demonstrate clear evidence of the intent of the parties to the Purchase Agreement that the right of first refusal at issue here was to continue beyond the lifetimes of the Keens as the grantors of the right,” wrote Judge Elaine Brown. “If the parties to the Purchase Agreement had intended to bind each others’ heirs or personal representatives in connection with the rights of first refusal, they could easily have so provided.”

Judge John Baker concurred in a separate opinion.