Court Battle Over Option Agreement To Repurchase Farmland - Iowa

September 17, 2009 | Erin Herbold

The dispute in this case goes back to 2002, when a brother and sister entered into a contract for the sale of farm land. In an attempt to help her brother, a sister purchased 150 acres of land from her brother and his wife, subject to her brother’s option to repurchase the land by July 1, 2007. Under the “option agreement,” the brother was required to inform his sister via written notice (to be delivered by certified mail) of his decision whether to repurchase the property.  In addition, he was required to pay 10 percent of the purchase price at the time he took exercised his option to buy the land.  In August of 2006, the brother exercised his option, without resistance from his sister. A date was set for closing, but the closing date passed without the parties closing the deal. 

The brother claimed he was told his sister would not close on the property because of issues “not included in the contract.”  The sister claimed that her brother simply failed to meet the contract conditions.  The brother sued for specific performance of the contract to force his sister to go through with the sale.  Before trial, the siblings met to discuss the matter with their respective attorneys present. The sister stated that her brother did not give her proper notice of his wish to exercise the option and did not tender the required down payment. So the brother tried to personally deliver the downpayment to his sister at her home, but she wasn’t there.  He then tried to deliver the downpayment to her at her place of work and to her attorney.  Her sister’s attorney didn’t accept payment and told him to leave, and the sister later testified that she was unaware of his attempts to make payment and deliver a proper notice of his option to repurchase the land. Eventually the brother’s attorney sent the check and option agreement to the sister two days before his right to repurchase expired. The sister did not sign the receipt for the check and accompanying document until after the option period had expired.  The trial court determined that the brother properly complied with the terms of the “option agreement” and ordered the sister to sell the land back to her brother. 

On appeal, the court examined the specific terms of the contract.  The court noted that the agreement allowed that the brother to exercise his option at any time before July 1, 2007. The sister argued that since she did not “receive” the funds until after that date, her brother had not properly exercised his option. But, the appellate court disagreed, noting that the sister had prevented her brother from performing by her tactics of obstruction and delay.  The brother had clearly demonstrated an intent to repurchase the land and that such attempts were reasonable.  Zemke v. Zemke, No. 9-556/08-2054 (Iowa Ct. App., Sep. 17, 2009).