Brewer v. Fountain, 583 S.W.3d 871 (Tex. App.—Houston [1st Dist.] 2019, no pet. h.).



Right of First Refusal

Testator’s will and codicil provided that named individuals would have the right of first refusal to purchase real property from the estate at a “sales price equal to the Appraised value of the Real Property” at the date of the testator’s death. These individuals exercised the right to purchase some, but not all, of the real property using the value of the homestead plus a prorated amount for additional acreage. The part they wanted to purchase was “better” than the remaining acreage (included a lake and access road) which arguably would make the remaining property less valuable. The court ordered a reappraisal of just the property the individuals wanted to purchase which resulted in a price over 350% higher. The named individuals objected to the new appraised value. The trial court ruled that the named individuals had the right to purchase all the real property at its appraised value but because they were purchasing less than the whole, they were entitled to an offset reimbursement. No provision of the testator’s will authorized this result.


The appellate court examined the testator’s will and codicil and found them to be unambiguous. The court explained that the trial court’s resolution effectively required the named individuals to purchase all of the land despite the clear language granting them the right to purchase “any or all” of the property based on the value at the date of the testator’s death. The court then held that the named individuals may purchase any portion of the property based on the date of death value “without regard to any diminution in value to the remainder of the property.” Id. at 878.


Moral:  A testator granting a right of first refusal which may be exercised over only a portion of a tract of real property needs to anticipate that the person may select property which has the effect of reducing the value of the remaining property. The testator may then indicate whether a reappraisal of the selected property is needed to determine the purchase price.