The First Right of Refusal

About 35 years ago, my brother and I were looking for a ranch. We had little money, but lots of time and energy.

We heard about a property we might be able to buy at an affordable price. It was listed for sale with a real estate broker with whom I was acquainted. He explained the situation like this.

Two brothers, Frankie and Al, had owned a ranch for many years. They had purchased it primarily as a hunting club. One of the brothers ran the business affairs and the other had made a hobby of making physical improvements like dams and roads. Over time they purchased additional property and the ranch grew to over 1,000 acres. In addition, it was adjacent to two land-locked sections of BLM ground – giving them almost 2,000 acres on which to hunt. The had it almost to themselves.

They had also built a very nice home on the property and they invited family members to hunt. Some of their guests actually paid a fee which allowed them unaccompanied access to the ranch.

Over the years, the brothers agreed that in their old age, they would sell the ranch if they needed money for retirement. Little did they know that Albert would drop dead from a heart attack at about the age of 50. Al was married and his portion of the ranch went to his wife. Having no other means to support herself, Albert’s wife asked Frank to purchase her interest in the property, or (at least) allow her to sell her half.

Although Frank did not agree to purchase her half, he did agree to letting her subdivide and sell subject to Frank having a first right of refusal to purchase.

Their agreement included a division of half the ranch into five 120 acre parcels. The parcels were put on the market for about $100,000 each with seller financing. As offers came in, Frank had the right to either match the offer or let Albert’s wife sell to the buyer.

The price was acceptable, but nobody wanted to be the guinea pig for Frank. It became clear to us that the agent and Albert’s wife were frustrated by their inability to obtain a viable offer.

My agreement with the seller’s agent was that we would split a 10% commission, but I couldn’t see making an offer just to watch Frank take the opportunity away from us. The $100,000 price was a little too rich for Rob and I to handle on our own, so we found a partner who would become  co-owner if the deal came together.

Then I got an idea that made a lot of sense. If the seller wanted to get the property sold, she might need to pay a higher commission. If she were willing to pay 20% and the selling agent was willing to accept 5%, we could pay me 15% even if Frank purchased the property. That would fund a pay out of 5% to me and each of my partners. Once I proposed this idea, my partners were a go. If Frank acted on the first right, we would each be compensated for our efforts.

The seller’s agent and the seller were fine with idea. At this point we made our $100,000 offer and waited to hear from Frank. He acted upon the first right.

There were  four remaining parcels available and we still didn’t know exactly what to expect from Frank, so we made an offer that would repeat itself on each of the remaining parcels with a commission being paid to me (and indirectly my partners) each time Frank acted.

Frank not only exercised his first right, but he became so annoyed that he outright purchased the remainder of the ranch. I received a commission of 15% on all five parcels. My partners and I were disappointed that we couldn’t own the property, but we were compensated for our disappointment.

Some significant information can be gleaned from this story. First of all, it is clear that a first right of refusal has a negative impact on one’s ability to sell property. And, it is clear that the first right decreases the value of the property – in this case about ten percent. In my opinion the actual decrease in value was even higher than that.

Locked Out – The Battle for LaCosta Ridge

Accessing property via a road that has no deeded rights is common. In the hills around Livermore, very few of the landowners have right-of-ways that have been validated by an official grant of easement.

On the other hand, very few of these access roads are disputed. The land seldom changes hands, so the owners are known to other landowners along the route. Good neighbor policy is to leave reasonable people alone and not create a Hatfield’s and McCoy situation.

In our case, most of the property along our access road is owned by the City and County of San Francisco. This is a situation with both good and bad implications.

We do however, have a portion of our road that passes through a privately owned piece and this has become a problem. Recently the owners of this small parcel have decided that we do not have the right to pass and locked the gate. Doing what we could to make it clear that we believe the route is our legal access, we enforced our rights by cutting the chain (we used our giant master key, the bolt cutter) and placed our own lock on the gate.  The property owner promptly removed our lock, and thus the battle of LaCosta Ridge. (Juan LaCosta was one of the early landowners in the area.)

When seeking to have the owners sign a grant deed that could be recorded to validate our rights, we were told they could not do that as they were planning to sell their piece and the purchasers were not interested in buying if a right-of-way existed. Thus we sued to establish our right.

For the early years of my life, I dreaded law suits and therefore avoided legal action at almost all cost. Now, after having courtroom experience, I’ve concluded that when you believe you’re right, court is a good place and having concluded that we’re right, it looks like that’s where we’re headed.

This battle of LaCosta Ridge has motivated me to learn about the history of the road and it’s very interesting. The earliest inhabitants were Ohlone Indians. They gave way to Spanish Missionaries in the late eighteenth century. The area down stream of our ranch became known as Rancho El Valle de San Jose and a Spanish Mexican land grant turned most of the bottom land over to the Bernal family – soon to become also known as the Sunols (by marriage). Thus leading to the name for the railroad town at the head of Niles Canyon – Sunol.

When California became a state, there was some debate about the validity of their Land Grant ownership, so a land commission was formed to validate the Spanish Mexican land grants and validate they did. Shortly thereafter the upstream area, now best described by the Public Property Survey System, was surveyed with the intent by the U.S. Government of selling. The Township in which our ranch is located is Tier 4 South, Range 2 East, Mount Diablo Base and Meridian. And, the parcels within this township were created by surveys that took place about the time of the Civil War.

Not long after the Civil War, the properties of this township were sold and the land transfers took place by U.S. Land Patents. In most cases the Homestead Act.

During this time, the homesteaders utilized the land by grazing cattle, sheep and horses.

Learning about the history of our ranch has been enjoyable, but it also makes us realize that there were many before us. The first recorded documents related to road access to the area occurred in 1882 when a group of about twenty people petitioned the County of Alameda to make the access road a County Road, which they did. But the County Road was abandoned in 1922.

One thing we’ve learned while preparing for this law suit is that right-of-way law is very complex. Fortunately for us, it looks like the story of our rights is simple.

The Homesteaders

Wooden cross at John Rodriguez's cabin.

Our hill ranch has given me a new sense of appreciation for history. I’ve recently been investigating the history of our property for reasons that I’ll explain in later posts. It turns out that the first owners of our ranch were immigrants that purchased land created by the Homestead Act of 1862. Before that, it was owned by the U.S. Government. 

I’ve still got a way to go, but here is some of the information I’ve learned. Our ranch is section land and section land was created by government survey. In this case, the survey of Township 4 South, Range 2 East was recorded in May of 1875. The survey was started by a surveyor named Sherman Day in 1853 and it was completed by a surveyor named W.H. Carlton. In between it was worked on for many years by E.H. Dyer. 

A Township is 6 miles square and most Townships have 36 sections. In our Township, nearly a third of the land is Rancho Land, which means that it was created by a grant of the Mexican Government prior to California statehood and it was then blessed by a U.S. Government Land Commission in 1863. The remainder of the Township was subject to Homestead Acts. It was deeded out by the Bureau of Land Management as Land Patents. Some of these created warrants which helped the government pay of its debt to soldiers. Some of these debts remained from service during the War of 1812. 

Land Patents authorized under the Homestead Act of 1862 were most common, along with land given to railroad companies to incentivize them to build railroads. One of our Sections (27)was railroad land owned by Western Pacific Railroad. 

Some of our quarter sections are refered to by the names of former owners and a few of these were the original homesteaders. For example a quarter section in Section 26 is often called “The Logan” for the individual who purchased the original homestead. 

One of the homesteaders in Section 34 was Antonio Silva. According to the Land Patent, he purchased his parcel on September 10, 1886. Then he built on a north-facing slope under a group of large white oaks overlooking a stream later named LaCosta Creek, but only called “deep canyon” on the original survey map. Directly across the canyon was a huge rock bluff where the Ohlone Indians sat and pounded acorns. They also created bowls on the rocks with the stone pedestals used to crush the acorns. The top of the rock bluff is a pleasant place to spend time, especially when doing simple work. Oak trees shade the rocks and the view is inspiring. 

The cabin and barn on the quarter section homesteaded by Marcelino Maciel.

The next quarter section downstream was purchased by Marcelino Maciel on November 4, 1889. Maciel’s parcel is where Fritz’s cabin sits today. The building records state that it was built in 1908. Myron Harris purchased the property from the estate of Dick Marciel in 1954 or 55. Somewhere along the line, the name must have evolved from Maciel to Marciel. 

Local folk-lore is that a Portuguese immigrant named John Rodriguez appeared at Antonio Silva’s cabin one night. I have no way of knowing what year it was. Rodriguez had worked in a blacksmith shop in Mission San Jose, which was a major hub of commerce. When a man spit on him, Rodriguez went to his boss to ask what it meant. His boss explained that this was a sign of disrespect. The man later returned and spit on him a second time. Rodriguez buried the axe, he had been sharpening, in his tormentor’s chest. 

Then, knowing he was in trouble, Rodriguez fled to the hills and ended up at Antonio Silva’s cabin. Later, Silva went to town and located Rodriguez’s relatives. Apparently they helped him build a cabin and barn on the NE quarter of Section 28, another parcel we now own. His nieces purchased the property and Rodriguez apparently lived out his life there. The cabin was burned down when he died, but a cross sits in a dead oak tree next to the spot where his cabin stood.  All that remains is a rusted box spring and shell of an ancient Wedgewood stove. 

Wedgwood Stove at the Rodriguez cabin site.