Opinion ID: 2458558
Heading Depth: 3
Heading Rank: 3

Heading: The Superior Court Must Determine The Option Agreement's Validity.

Text: Neither party has squarely asserted that the Option Agreement constitutes an unreasonable restraint on alienation and is, as a result, unenforceable. [19] Nor did the superior court address this issue. [20] We note that the Restatement (Third) of Property describes options to purchase land and rights of first refusal as servitudes that directly restrain alienation of interests in land. [21] As such, they are invalid if the restraint is unreasonable. Reasonableness is determined by weighing the utility of the restraint against the injurious consequences of enforcing the restraint. [22] A sister court has stated: It is the generally accepted rule that a fixed price repurchase option of unlimited duration, independent of the lease, is an unreasonable restraint. [23] The explicit terms of the Option Agreement in this case appear to be of unlimited duration: If the option indeed runs with the land, it will persist indefinitely until an owner elects to sell the property. The Option Agreement also appears to offer Shaffer a largely fixed price, adjusted only for inflation. If the terms of the Option Agreement are enforceable, then owners of the Ring Island property will have an incentive not to sell it so long as it has a value to them greater than the bargain price Shaffer or his successors would be able to payeven if another potential buyer would be willing to pay far more and put the island to far more beneficial use. On remand, the parties may wish to address this issue, as well as the issue of how to reform the Option Agreement or otherwise achieve an equitable resolution if the Option Agreement is unenforceable.