The Massachusetts Land Court decided an interesting case interpreting a conveyance that reads like a right of first refusal but can be interpreted as a broader restraint on alienation giving discretion to a nonprofit entity to refuse absolutely to any transfer of the land. Gottlieb v. Girl Scouts of E. Mass., 2016 WL 3523859 (Mass. Land Ct. 2016). The conveyance stated that "before [charitable organization A] shall sell, transfer, or otherwise dispose of the [land, it] shall first offer said land to [charitable organization B] as an unencumbered gift, sale or otherwise to be used by [charitable organization B] for any charitable or civic purpose…"
The court found that the clause was not a use restriction but a limit on transfer and thus a restraint on alienation. It also found that it was not a right of first refusal because it did not require purchasing the property at fair market value or matching a bona fide third party offer but allowed the holder of the right to say "no" to a sale without having an obligation to buy the property when it said "no."
The court also held that the restraint on alienation did not violate the common law rule against perpetuities since the agreement was between charitable organizations and thus was exempt from the rule.
It could not determine if the restraint on alienation was unreasonable and remanded for further proceedings. If the text allowed unrestrained discretion and that discretion was exercised unreasonably in fact, then the restaint would be an invalid restraint on alienation. If the text would be interpreted to require a good reason for not agreeing to a sale, or if it would be exercised that way in practice, then the restraint would be reasonabled.