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Wilson v. Whinery, 37 Wash.App. 24, 678 P.2d 354

Facts

In 1975, the Whinerys sold Wilson a parcel of property and granted him a right of first refusal to an adjacent parcel, along with exclusive water rights. In 1979, the Whinerys sold another parcel to Matson, granting an easement for a drain field on the adjacent parcel and leasing it to Matson, which significantly reduced its market value. The Whinerys later quitclaimed their interest in the parcel to their daughter without notifying Wilson, who subsequently sought to exercise his right of first refusal upon learning of these transactions.

In 1975, the Whinerys sold Wilson a parcel of property (parcel A), and in conjunction with the conveyance, the Whinerys also granted Wilson a right of first refusal 1 to an adjacent parcel, parcel B, and granted Wilson sole and exclusive rights to water from three existing wells on parcel B.

Issue

Did the transfer of an easement and lease on the property trigger Wilson's right of first refusal, and was the right of first refusal an unreasonable restraint on alienation?

The Whinerys first contend the instrument creating Wilson's right of first refusal is void because it created an unreasonable restraint on alienation.

Rule

A right of first refusal is valid unless it creates an unreasonable restraint on alienation, and a sale occurs when a significant interest in the property is transferred for value, granting substantial control to a third party.

A right of first refusal is a valuable prerogative, limiting the owner's right to freely dispose of his property by compelling him to offer it first to the party who has the first right to buy.

Analysis

The court determined that the Whinerys' actions constituted a sale because they transferred a significant interest in the property to Matson, which included a lease and an easement that reduced the property's value. The court found that the Whinerys did not provide Wilson with the opportunity to exercise his right of first refusal as required. The court also ruled that the right of first refusal was reasonable and did not constitute an unreasonable restraint on alienation.

The trial judge correctly concluded that the Whinerys' transfer of all beneficial use of parcel B was the equivalent of a sale of the property, triggering Wilson's right of first refusal.

Conclusion

The court affirmed the trial court's judgment, concluding that the transfer of the easement and lease was equivalent to a sale, thus triggering Wilson's right of first refusal.

The decision of the trial court is affirmed.

Who won?

Richard D. Wilson prevailed in the case because the court found that the Whinerys' transfer of property interests triggered his right of first refusal, which they failed to honor.

Wilson was never advised of any of these transactions or given the opportunity to purchase any of the interests.

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