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RWH Homebuilders, LP v. Black Diamond Development LLP, Not Reported in S.W. Rptr., 2015 WL 5025520

Facts

In 2006, Y–H Sabinal, the Developer, sold lots in the Caceres subdivision to RWH Homebuilders and Black Diamond Development, each agreeing to purchase half of the lots. Both contracts included a 'Right to Repurchase' clause, allowing the other builder the first option to buy if one decided not to build. In 2011, Black Diamond attempted to sell fifteen lots without satisfying RWH Homebuilders' repurchase rights, leading to a legal dispute over the enforcement of this right.

In 2006, Y–H Sabinal (the Developer) purchased certain property to develop the land for a gated community of up-scale townhomes and villas (the Caceres subdivision). In connection with the acquisition of the Caceres subdivision, the Developer received a development loan from Regions Bank (the Bank). At the time of the loan, RWH Homebuilders had already agreed to purchase twenty percent of the lots in the Caceres subdivision.

Issue

Did RWH Homebuilders have a valid right to repurchase the fifteen lots free and clear of any claims from Kirby Frank?

Did RWH Homebuilders have a valid right to repurchase the fifteen lots free and clear of any claims from Kirby Frank?

Rule

A right of first refusal matures into an enforceable option when the owner decides to sell and must notify the holder of the right, allowing them the opportunity to buy the property on the terms offered by a bona fide purchaser.

A right of first refusal matures into an enforceable option when the owner decides to sell and must notify the holder of the right, allowing them the opportunity to buy the property on the terms offered by a bona fide purchaser.

Analysis

The court found that RWH Homebuilders had a valid right of repurchase based on the contracts executed with Black Diamond. The evidence showed that RWH Homebuilders timely exercised this right when Black Diamond attempted to sell the lots. The court determined that the market value of the lots was $2.4 million, which RWH Homebuilders was prepared to pay, thus affirming their right to purchase the lots free of Kirby Frank's claims.

The court found that RWH Homebuilders had a valid right of repurchase based on the contracts executed with Black Diamond. The evidence showed that RWH Homebuilders timely exercised this right when Black Diamond attempted to sell the lots.

Conclusion

The appellate court affirmed the trial court's ruling that RWH Homebuilders had a right to repurchase the fifteen lots for $2.4 million, free and clear of any claims from Kirby Frank.

The appellate court affirmed the trial court's ruling that RWH Homebuilders had a right to repurchase the fifteen lots for $2.4 million, free and clear of any claims from Kirby Frank.

Who won?

RWH Homebuilders prevailed in the case because the court upheld their right to repurchase the lots based on the contractual agreements and the evidence presented.

RWH Homebuilders prevailed in the case because the court upheld their right to repurchase the lots based on the contractual agreements and the evidence presented.

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