Do not be left bare when exercising a first right of refusal to purchase land

A first right of refusal is a contractual right granted to a person to purchase land before the proprietor enters into an agreement to sell the land to a third party. In effect, the right grants to the person an opportunity to buy the land before any other person. 

The decision of Butchart & Anor v Sinnamon & Ors [2021] QSC 317 is important in clarifying the obligations of a seller where a residential sale contract grants the purchaser a bare right of first refusal.

This case is important for sellers and buyers alike and emphasises the need for contracts to be carefully drafted where parties contemplate a first right of refusal.

The facts

Mr Sinnamon owned and subdivided a piece of land into two lots, Lot 30 and 31, respectively. In 2019, Mr Sinnamon sold Lot 31 to Mr and Mrs Butchart. The sale contract contained a special condition that granted a bare right of refusal to the Butcharts: