In the recent case of Watermark LLC v. R H Benea Cranberry Co., Inc. (Docket No. SJC-13843), the Massachusetts Supreme Judicial Court (SJC) addressed a controversy surrounding the sale of a cranberry bog in Duxbury, Massachusetts. Because the land was assessed and taxed as “agricultural,” under Chapter 61A of the Massachusetts General Laws, any sale of the land was “subject to the parties securing [Duxbury’s] waiver” of its statutory right of first refusal. The SJC concluded that the plaintiff-buyer’s notice of intent to purchase the land triggered Duxbury’s right of first refusal, and that the buyer’s subsequent withdrawal of the notice of intent did not vitiate Duxbury’s right of first refusal.
The dispute originated in 2021, when the plaintiff, Watermark LLC, contracted with the other defendant, RH Benea Cranberry Co., Inc., to purchase the cranberry bog. Benea’s notice of intent to Duxbury incorporated language from an e-mail in which Watermark stated it would “subdivide off [two] 40,000 square-foot lot[s] plus or minus and keep the rest agricultural.” Their purchase and sale agreement was contingent upon securing Duxbury’s waiver of its statutory right of first refusal.
After learning that Duxbury might exercise its right of first refusal, Watermark and Benea sent a joint letter to Duxbury purporting to negate Benea’s notice of intent, and Duxbury’s right of first refusal, on the basis that Watermark would not convert any portion of the land to non-agricultural use. Duxbury responded by invoking its purchase option (and, thus, rejecting the supposed withdrawal of the notice of intent).
In 2022, Watermark filed suit against Benea and Duxbury, seeking to (a) have Duxbury’s purchase option voided, and (b) compel Benea to sell the land to Watermark. On cross-motions for summary judgment, a Superior Court judge ruled in favor of Benea and Duxbury. Watermark filed an appeal. The SJC took the case on its own initiative and eventually affirmed the Superior Court decision rejecting Watermark’s claims.
The SJC scrutinized the language and legislative history of G. L. c. 61A, emphasizing Section 14’s admonition that land taxed as agricultural must not be sold for “residential, industrial or commercial use” unless the relevant municipality “has been notified of the intent to sell for … that other use.” Watermark argued that, because its notice of intent did not exactly specify the type of non-agricultural use to which the land would be converted, the notice was ineffectual in triggering Duxbury’s purchase option. But the SJC found that the statutory language merely enumerates the types of uses that trigger the notice-of-intent requirement, and does not dictate the precise language to be used in the notice of intent. The SJC found that, so long as the notice of intent “reasonably discloses the intended nonhorticultural or nonagricultural use to the municipality,” it will be sufficient for statutory purposes.
Watermark also argued that, due to conflicting evidence concerning Watermark’s intended use of the property at different points in time, its intent with respect to future use of the property was a disputed issue of fact that could not be resolved on summary judgment. The SJC again disagreed, finding that, because the statute is liberally written to protect the municipality’s ability to make an informed decision about whether to exercise its purchase option, the notice’s expressed intent is all that matters – in this instance, the expressed intent to convert some of the land to non-agricultural use. Any later effort to modify the expressed intention – such as Watermark’s – is irrelevant.
Watermark further argued that Duxbury totally lost its purchase option when Watermark “withdrew” its notice of intent. Yet again, the SJC disagreed, finding that – as in the common law of “vested options” – the grant of a Chapter 61A purchase option is an irrevocable offer that creates a power of acceptance in the optionee. This conclusion was buttressed by the finding that the Legislature previously amended G.L. c 61A, § 14 to eliminate a seller’s ability to revoke its notice of intent.
Finally, Watermark sought to limit Duxbury’s purchase option to the 40,000 foot lots identified for conversion in the notice of intent. Watermark noted G. L. c. 61A, § 17’s language that, if a landowner separates a portion of land for non-agricultural use, that portion shall be subject to conveyance or roll-back taxes, without impairing the rights and remedies applicable to the remaining agricultural land. Here, the SJC ruled that § 17 only concerns taxes, not municipal rights of first refusal; and, that § 14 does not contemplate the municipality’s purchase of anything but the entire property at its full sale price.
The lessons to be learned from the SJC decision are fairly straightforward. First, any notice of intent to sell agricultural land will be construed very liberally in favor of the municipality receiving the notice. Second, the notice will very likely be irrevocable. Third, any disputes about the parties’ real intentions, or their changed intentions, are very unlikely to be deemed relevant; the intent is determined by the liberally-construed notice and nothing more. In other words, once a Chapter 61A notice of intent is issued, the relevant municipality holds all the cards.
For any questions about this decision, please contact Michael Sullivan or any member of Prince Lobel’s Real Estate or Construction groups.
With many thanks to summer law clerk Lauren Price for her assistance with this piece.