The right of first refusal in a land sharing agreement will remain in effect even after five years from the signing of the agreement.

A partner in a real estate property put his right to the property up for sale to a third party after about 17 years, even though the real estate partnership agreement granted the other partners a right of first refusal on the property.

The Supreme Court ruled that the right of first refusal is valid as it is a proprietary right that does not expire after five years. The Real Estate Law states that a provision in a partnership agreement that denies or limits the right of a partner in real estate to transfer his share without the consent of the other partners cannot be limited to a period exceeding five years. However, the five-year limitation refers to limitations that were established as an end in themselves and not to an impairment of the ability to make a transaction that results from the acquisition of a proprietary right in real estate and is contrary to that acquisition. The right of first refusal in real estate is a proprietary right. Here, it is a right of first refusal granted to the partners to purchase the share that the seller wishes to sell. Consequently, it is not a mere restriction on the seller’s right to sell, but rather a proprietary right granted to the other partners to purchase his share. Consequently, the five-year limitation does not apply and the contractual right of first refusal is valid.