Summary
The Nebraska Supreme Court considers whether a right of first refusal contained in a warranty deed is enforceable under the statute of frauds. The court holds that acceptance of the deed satisfies the signature requirement for an agreement creating an interest in land, reverses summary judgment for the defendants, and remands for further proceedings.
Topics
Practice areas
Questions Presented
- Whether a right of first refusal may be reserved in a deed.
- Whether a right of first refusal is a nonvested property interest.
- Whether the right-of-first-refusal provision was governed by Nebraska's statute of frauds for interests in land rather than the statute governing contracts for the sale of land.
- Whether the Laus' acceptance of the deed, despite their failure to sign it, satisfied the statute-of-frauds signature requirement.
- Whether summary judgment for the Laus and the Sporers was proper.
- Whether Walters was entitled to summary judgment when material factual issues remained unresolved.
Holdings
- A right of first refusal is a nonvested property interest.
- A right of first refusal may be reserved in a deed, even though it is not an easement or another right to use or enjoy the land.
- The right of first refusal was governed by Neb. Rev. Stat. § 36-103, concerning the creation of interests in land, rather than § 36-105, concerning contracts for the sale of land.
- Absent fraud, acceptance of a deed by the grantee satisfies the statute-of-frauds signature requirement for reservations contained in the deed.
- Summary judgment for the Laus and the Sporers was improper because the right of first refusal was not void under the statute of frauds.
- Walters was not entitled to summary judgment at that stage because material issues of fact remained unresolved.
Key quotations
“Essentially a dormant option, a right of first refusal is merely contingent until the condition precedent is met, at which point the preemptive right ripens into a full option.” (546-547)
“Therefore, we hold that the reservation of the right of first refusal in the deed satisfied the statute of frauds.” (558)
“We hold that a right of first refusal may be reserved in a deed. Further, the acceptance of a deed, absent fraud, satisfies the requirements of the statute of frauds for any reservations contained therein.” (559)
Factual background
In 1998, John Walters conveyed approximately 8 acres to Douglas and Debra Lau by warranty deed. The deed provided that no sale could be consummated without giving the grantor 30 days' written notice of the terms and gave the grantor the right to buy the property on the same terms. The Laus later acquired an additional tract, repaid the purchase financing, and in 2013 sold the property to the Sporers without notifying Walters of the offer. Walters sought specific performance and quiet title, while the defendants argued that the right of first refusal was unenforceable because the Laus had not signed the deed.
Procedural history
Walters sued the Laus and the Sporers after the Laus conveyed the property to the Sporers without giving Walters the notice required by the deed's right-of-first-refusal provision. The district court granted summary judgment to the Laus and the Sporers and denied Walters' motion for summary judgment. The Nebraska Court of Appeals initially dismissed the appeal because unresolved counterclaims and cross-claims prevented a final order. On remand, the district court dismissed the Laus' counterclaim and determined that the Sporers' cross-claim was moot; Walters then perfected a timely appeal, which the Nebraska Supreme Court removed to its docket.
Remand instructions
Remand for further proceedings consistent with the opinion. The district court must proceed with the remaining factual and legal issues; the Nebraska Supreme Court did not direct entry of summary judgment for Walters.