Land Sale To Son For More Than Nominal But Less Than Appraised Value May Trigger Right Of First Refusal
08/19/08
Parents granted right of first refusal in land. Thereafter, parents sold land to son at less than appraised value at “price[] . . [that son] could afford,” because they wanted son to have the property. Appeal court overturns trial court’s granting of summary judgment finding that the sale to son was a gift and not the sort of “bona fide offer” and “sale” required to trigger the right of first refusal.
Under Missouri law, a transfer of property by gift from one family member to another does not trigger a right of first refusal. An inter vivos gift is “a voluntary transfer of property by the owner to another, without consideration or compensation as an incentive or motive for the transaction.” A gift is “a voluntary and gratuitous assignment of something by one without compensation to another who takes it without valuable consideration.” The appeals court finds the transfer to son was not a gift.
However, genuine issues of material fact exist as to whether the offer by son to parents was a bona fide offer. A bona fide offer is one that is made in good faith, by a person with good judgment and acquainted with the value of the property, with sufficient ability to pay in cash, and based upon fair market value. There is no requirement that the property be placed on the open market, nor is the sale negated as a bona fide offer because of the parties’ desire to keep the property in the family. A bona fide offer does require that the offer is based on fair market value. In addition, a fact finder must determine the additional elements of whether a bona fide offer by son to parents existed. That is the fact finder must determine if the offer was made in good faith, by a person with good judgment and acquainted with the value of the property, with sufficient ability to pay in cash. Therefore, grant of summary judgment was improper and the matter is remanded to the trial court for fact determination of the questions of fact.
Schroeder v. Duenke, Docket No. ED90666 (Mo.Ct.App.E.D. August 19, 2008).
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