Plan To Be 100

In Re Estate of Virgil F. Hoppert is a published Michigan Court of Appeals decision.  And while Hoppert arises out of a probate court decision in a decedent’s estate, it has much more to do with real property law than probate law.  [Click on the name to read the case.]

The Story

A, B and C enter into an agreement granting each other a right of first refusal on the land they own as tenants in common.  The agreement identifies the events that would trigger the right to exercise an option to purchase and defines the time limits under which the option must be exercised.

B violates the agreement by deeding the property to a third party, D, without notice to A and C.  When B dies (a triggering event), A fails to exercise the option within the time allowed by the agreement, arguably because of the confusion created by B’s violative deed to D (combined with bad legal advice).

D dies thereafter.

The case arises when A sues the estate of D for title.

In this appeal, two issues are decided:

Restraints on Real Property Alienation

The issue that fills almost all of this 17-page decision has to do with whether the option agreement was an illegal restraint on alienation.

D’s estate argues that the agreement was void as an illegal restraint on alienation, and therefore that A’s claim fails.

The trial court held the agreement was not and illegal restraint on alienation, and the COA affirms.  In doing so, the COA tracks Michigan’s common law from 1874 to present.  The COA finds that while Michigan law on the issue is “not a model of clarity,” over time the law has evolved to become increasingly accepting of agreements imposing purchase options on real property, provided only that the terms of such agreements are “reasonable.”  In this case it finds the terms are reasonable.

A wins on this issue.

Strict Adherence

While A wins on the validity of the option agreement, he loses the case because he did not exercise his right to purchase the property in a timely manner after B died.  While the trial court forgives A’s delay in exercising his option due to the confusion generated by B’s stray deed, the COA does not.  Rather, the COA reverses the trial judge, finding that Michigan law imposes “strict compliance” with the terms of these agreements.

Accordingly, A loses the appeal and the right to purchase the real estate at issue.

Conclusion

Hoppert is a lengthy opinion not directly related to probate matters.  Presumably the case is published because of what the COA perceives to be a lack of clarity in the law related to restraints on alienation.

362694