Background. A landowner entered into a purchase agreement to sell a cattle ranch subject to a right of first refusal granted to their ranch friend who had leased the property for more than 20 years. Although the rancher wanted to acquire the land, the timing was not right. He knew Carrollton was acquiring land and minerals in his area and contacted us to explained his dilemma.
Challenge. The only way the rancher could acquire the property was to exercise his right of first refusal. Carrollton desired minerals in the area but did not wish to hold the surface rights long-term.
Solution. Carrollton loaned the rancher the funds to acquire the ranch. Post closing, Carrollton collapsed the note and took possession of the property. The rancher retained a 5 year surface lease. Two years later, Carrollton sold the surface to the rancher and retained the minerals.
In the end, the rancher was able to acquire property he had desired for many years at a time when cattle prices were high and Carrollton sold land at market value thereby reducing its basis in the retained minerals.