Deed restrictions?

[ItDepends]

After a long drought, I've been given a report to work on. The subject, an office building, was purchased in 1990 by the current owner. Prior to that, it last sold in 1985. The 1985 deed contains a restriction stating that if the property is resold at any point in the future, the 1985 Grantor/seller has the right to match the offer. I'm in MA, and from what I've read, it appears deed restrictions are only enforceable here for 30 years in most cases.

1. How do I determine if this restriction has expired, or is an exceptional case extending beyond the 30 years?

2. If the restriction is still enforceable, how do I determine the affect of the restriction on the fee simple value? My initial thought is that it wouldn't affect the value. If a future sale was to an arms length buyer, then allowing the 1985 seller an opportunity to match the offer still means the property is selling for a price reflected by the market. However, I've never worked on a deed restricted property, so I'm probably wrong.

(the owner isn't trying to sell the property, it's for an equity loan if that matters)

 

[glenn walker]

After a long drought, I've been given a report to work on. The subject, an office building, was purchased in 1990 by the current owner. Prior to that, it last sold in 1985. The 1985 deed contains a restriction stating that if the property is resold at any point in the future, the 1985 Grantor/seller has the right to match the offer. I'm in MA, and from what I've read, it appears deed restrictions are only enforceable here for 30 years in most cases.

1. How do I determine if this restriction has expired, or is an exceptional case extending beyond the 30 years?

2. If the restriction is still enforceable, how do I determine the affect of the restriction on the fee simple value? My initial thought is that it wouldn't affect the value. If a future sale was to an arms length buyer, then allowing the 1985 seller an opportunity to match the offer still means the property is selling for a price reflected by the market. However, I've never worked on a deed restricted property, so I'm probably wrong.

(the owner isn't trying to sell the property, it's for an equity loan if that matters)

No its dead but not your issue anyway lender has a Title Insurance Policy to make these kinds of determinations not the appraiser. Just move on LOL

 

[ItDepends]

No its dead but not your issue anyway lender has a Title Insurance Policy to make these kinds of determinations not the appraiser. Just move on LOL

I'm not concerned that the current ownership doesn't legitimately hold title. I'm wondering - if all parties agreed the restriction was still in place - how to determine what affect, if any, it would have on the value. Also, given the ambiguity of the phrase, in most cases, how do I determine for sure if the restriction is still enforceable so I can support my assertion in the report?

 

[Meandering]

It's a right of first refusal, and has no bearing on the market value of the property.

https://www.investopedia.com/terms/r/rightoffirstrefusal.asp

 

[shrubberyvaluation]

I don't see the issue, if its still valid they can just match the highest offer, won't change anything.

 

[sputnam]

It's a right of first refusal, and has no bearing on the market value of the property.

https://www.investopedia.com/terms/r/rightoffirstrefusal.asp

I agree. No impact on market value. I would disclose the deed restriction.

 

[Zephyr999]

I'm not concerned that the current ownership doesn't legitimately hold title. I'm wondering - if all parties agreed the restriction was still in place - how to determine what affect, if any, it would have on the value. Also, given the ambiguity of the phrase, in most cases, how do I determine for sure if the restriction is still enforceable so I can support my assertion in the report?

If there's no agreement on specific price, handle it like a First Right of Refusal...it may have an impact from a Buyers perspective since a PA contract triggers the right. Call some brokers and ask some questions to help tell the story.