Can a party who has a right of first refusal to purchase a property that is encumbered by a right-of-first refusal be prevented from purchasing the property?

Alberta, Canada


The following excerpt is from Hanen v. Cartwright, 2007 ABQB 184 (CanLII):

In Landymore v. Hardy (1991), 21 R.P.R. (2d) 174 (N.S.S.C.T.D.) the defendants, who owned property encumbered by a right of first refusal, purported to convey the property to a company which they had incorporated for the sole purchase of purchasing the property at an inflated price. Their apparent intention was to trigger the right of first refusal in a manner that would preclude the holder of the right from purchasing the property. Saunders J. noted, at paras. 95-96: ...The grantor of a right of first refusal is not entitled to frustrate it by conveying the property in such a way as to avoid having to give the right in the first place... Relations between the giver and the holder of a right of first refusal must be characterized by good faith and reasonableness.

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