Dartmouth College has Rights of First Refusal and Repurchase Options on various properties in Hanover. Generally, the Right of First Refusal will give Dartmouth the option to match a bona fide offer from a third party, and the Repurchase Option will eventually provide Dartmouth with an option to purchase the property at a specified price. Following are frequently asked questions relating to these Rights of First Refusal and Repurchase Options (collectively referred to here as "RPOs").
With only a few exceptions, RPOs were either retained by the College when it originally sold the property or were granted by an employee-owner when the College assisted with a previous mortgage financing.
Homeowners may have records which will confirm the existence of an RPO and may have title information sufficient to document that an RPO doesn't exist. Occasionally the Dartmouth College Real Estate Office (646-2446) may be able to confirm whether a property is subject to an RPO. If neither the homeowner nor Dartmouth has definitive evidence, the only way to conclusively determine whether a property is subject to an RPO is to conduct a title search.
Homeowners, brokers and real estate agents are encouraged to contact the Dartmouth College Real Estate Office to discuss Dartmouth's potential interest prior to placing the house on the market. In most cases, Dartmouth will be able to fairly immediately indicate whether it would a) consent to a permanent release of the RPO, b) consent to a transfer of the property subject to receiving a similar RPO from the new buyer, or c) have interest in negotiating a potential purchase (which would make the RPO moot) prior to the homeowner's receipt of a bona fide offer. In a limited number of cases, Dartmouth will indicate its potential interest in purchasing the property but that it will need to postpone any more formal response until the homeowner has a bona fide offer.
Approximately 150 RPOs have been permanently released (i.e., no new RPO from the new buyer) since 1995. Many of these were included in blanket releases covering multiple properties in specific areas of Hanover (click here for a map showing areas covered by such releases); others were released by individual action.
Typically referred to as "rolling over" the RPO, this is the most common outcome when sale of a property subject to a Dartmouth right of first refusal is proposed. Repurchase Options designed to limit appreciation and maintain long term affordability (largely in the Grasse Road neighborhoods of Hanover) are typically exercised by the College assigning a specified employee its right to repurchase under the RPO (effectively rolling over the RPO and passing on to the new buyer the right to purchase at a reduced price).
In the past 10 years, Dartmouth has only twice exercised its right to purchase by matching an offer. In one case, the property was immediately adjacent to campus and was put under contract before the College became aware of the RPO. In the other case, the College exercised its right to purchase because the prospective buyer was unwilling to do a rollover (the College subsequently sold the house to an employee subject to a new RPO.)
Whether or not Dartmouth would be more likely to release or to exercise its RPO will depend at any given time upon Dartmouth's current needs, the location of the home, and the sale price. Still, properties farther away from campus are more likely to be released. The College typically will exercise its Repurchase Option on a Grasse Road home prior to the property being marketed by the homeowner.
Most RPOs give the College the option to buy the house at a price net of any commission. As a result, we encourage homeowners subject to an RPO to contact the College before listing the property.
In all cases a copy of the signed Purchase and Sale Agreement should immediately be delivered to the Dartmouth College Real Estate Office. Unless the College has previously consented to permanently release the RPO, the process will be more efficient if the Purchase and Sale Agreement confirms that the prospective buyer is willing to give the College a new RPO containing the same terms. RPOs usually give the College 30 days to decide whether it will exercise its option to purchase, but as a matter of policy, the College does its best to limit any delay and typically will respond within 1 - 3 days. The College may respond that it will either a) consent to a permanent release of the RPO, or b) match the offer and purchase the property. Often, however, the College's initial response will be to confirm a willingness to consent to the proposed sale subject to receiving a similar RPO from the new buyer, in which case, the College will also forward a confirmation to this effect for all parties to sign and will prepare the necessary documents for the closing.
There is no evidence that the existence of an RPO has any impact on a property's value (other than in the case of RPOs which specifically allow the College to purchase at a calculated value, e.g., a Consumer Price Index-adjusted price). If the College's option only allows it to match a bona fide offer, the market's perception of the property's value governs.
The existence of an RPO shouldn't discourage a buyer from making an offer. While past experience doesn't warrant concern about the time for a response, buyers may want to make an offer contingent on resolving the RPO (whether by consent, rollover or exercise) within a specified period of time.
