The issue raised in this appeal is whether a lessee's right of first refusal to purchase the leased property (a nursing home) was triggered by the lessor's grant of an option to purchase to a third party. 1
The trial court determined that the grant of the option by the lessor, Dr. Boddy, to the third party, Jupiter Hospital Corp., activated the right of first refusal belonging to the lessee, Health Service Centers, Inc. (HSC) and granted specific performance. Hasty, executor of the estate of Dr. Boddy, appeals that final judgment.
HSC's right of first refusal was set forth as a provision of the lease agreement between it and Dr. Boddy:
. . . during the term of this Lease, prior to any sale of the Leased Premises or Leased Personalty or any interest therein, Lessor shall give Lessee written notice specifying the specific terms on which it will sell the Leased Premises or Leased Personalty whether resulting from an offer to purchase the Leased Premises or Leased Personalty received by Lessor or otherwise, and Lessee shall have thirty (30) days within which to purchase the Leased Premises or Leased Personalty or such interest therein on the same terms and conditions as set forth in such written notice. . . .
The option granted by Dr. Boddy to Jupiter stated:
. . . Seller does hereby grant and convey to Purchaser the exclusive option to purchase [the nursing home]. . . . The option granted in Section 1 hereof may be exercised by Purchaser, by giving notice of the exercise thereof to Seller. . . . In the event Purchaser elects to exercise the option . . . from and after the giving of said notice, this Agreement shall be deemed for all purposes a legally enforceable contract between Seller and Purchaser for the sale and purchase of the Real Property and Personal Property, subject, however, to the right of first refusal in the "Lease" (as hereinafter defined) if exercised during the term of the Lease. . . . [Emphasis supplied.]
A right of first refusal may have many similarities to an option but is more adequately defined by the term preemptive right. [Cit.] An option right gives to the holder the power to compel a sale by an unwilling owner. A preemptive right merely sets a requirement that when the owner decides to sell the person holding the preemptive right must be offered the opportunity to buy. [Emphasis supplied.]
See generally 1A Corbin, Corbin on Contracts, 261.
It is apparent that this preemptive right of first refusal is protected even under the terms of the option agreement in the event of an exercise of the option during the term of the lease. The real issue then, is whether under the first refusal agreement it can be activated before an exercise of the option; that is, by the grant of the option itself.
Hasty's argument is that the right of first refusal is triggered only by a sale 2
of the nursing home and that the mere granting of the option does not amount to a conveyance of an interest in property. While it is true, under Georgia law, an option is not a conveyance of a real property interest, 3
Reeve v. Hicks, 197 Ga. 181
, 185 (28 SE2d 649
) (1944); Hughes v. Holiday, 149 Ga. 147
, 150 (99 SE 301
) (1919); 2 Pindar, Georgia Real Estate Law and Procedure, 18.7 (3d ed. 1986), it nonetheless demonstrates beyond any doubt the intent of the grantor of the option to dispose of his property. Indeed, he is contractually bound to sell his property if the optionee accepts the unilateral offer within the option period. Hughes v. Holiday, supra at 150.
The right of first refusal granted by Dr. Boddy to his lessee, HSC, does not require a sale of the property nor the exercise of the option. The plain and sufficiently precise language that lessor must give notice
prior to any sale . . . [of] the specific terms on which it will sell the leased premises . . . whether resulting from an offer to purchase . . . received by lessor or otherwise requires a conclusion that the preemptive right of first refusal was triggered by the granting of the option. The option amounted to a method by which lessor otherwise committed himself to sell the premises on specific terms.
To support his contention that only a sale during the lease period will trigger the preemptive right, Hasty relies on a New York case, Kings Antiques Corp. v. Varsity Properties, Inc., 503 NYS2d 575, 577 (1986), and a Massachusetts case, Seward v. Weeks, 274 NE2d 813 (Mass. 1971). We find both cases distinguishable on their facts: the former, 4
because the language of the right of first refusal required a sale; the latter, 5
because the option could not be exercised during the term of the right of first refusal. 6
The trial court correctly decided that Jupiter's option triggered the lessee's right of first refusal and its grant of specific performance is affirmed.
Parker, Hudson, Rainer & Dobbs, J. Marbury Rainer, for appellants.