SCHOOL DISTRICTS ‑- BOARD OF DIRECTORS - AUTHORITY TO PURCHASE OPTIONS TO PURCHASE REAL ESTATE ‑- TIME LIMITATION

SCHOOL DISTRICTS ‑- BOARD OF DIRECTORS ‑- AUTHORITY TO PURCHASE OPTIONS TO PURCHASE REAL ESTATE ‑- TIME LIMITATION 

1. The board of directors of a first class school district is authorized to purchase and hold either real or personal property without a vote of the district electors and may purchase options to purchase real estate if it has provided for such expenditures in its budget.  The board of directors of asecond class school district is authorized to purchase real estate contiguous to a school site upon which a schoolhouse is situated by unanimous vote of the board, but to purchase real estate non-contiguous [[noncontiguous]]requires a vote of the majority of the electors of the district, and the board of directors of a third class school district is authorized to purchase additional sites either contiguous or non-contiguous [[noncontiguous]]only when authorized by a majority of the vote of the electors of the district. 

2. There is no statutory limitation on the time for which an option to purchase real estate may run.

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                                                                   April 30, 1956 

Honorable Hugh H. Evans
Prosecuting Attorney
Spokane County
Court House
Spokane, Washington                                                                                              Cite as:  Amended AGO 55-57 No. 211

 Attention:  !ttMr. Leo J. Driscoll
            Civil Deputy

Dear Sir:

            AGO 55-57 No. 211 [[to Hugh Evans, Prosecuting Attorney, Spokane County]]is amended to read as follows:

              [[Orig. Op. Page 2]]

            By letter previously acknowledged you have submitted for an opinion from this office two questions as follows:

             1. Are school districts authorized to purchase options to purchase real estate for future use in an area which is expanding and where additional school facilities may soon be necessary?

             2. How long may such options run?

             In your letter you have failed to state the class of the school districts involved.  We shall accordingly attempt to answer your questions on the basis of the law as it applies to all districts, first, second, and third class.

                                                                      ANALYSIS

             The law as it applies to all districts and defining the powers of the district is found in RCW 28.58.010, and reads as follows:

             "A school district shall constitute a body corporate and shall possess all the usual powers of a corporation for public purposes, and in that name and style may sue and be sued, purchase, hold, and sell personal property and real estate, and enter into such obligations as are authorized by law.  The board of directors of the school district shall have exclusive control of all school buildings and other property, real or personal, owned by the district."  (Emphasis supplied.)

             It is our opinion that under this general provision of law the board of school directors is entitled to purchase options to purchase real estate for future needs if, in making such purchases, they comply with the special laws that apply to first, second, and third class districts.

             In our view an option to purchase constitutes personal property.  An option to purchase is not a contract in the true sense.  It is rather a unilateral contract.  As defined inOlson v. Burgwell, 204 Minn. 450, 283 N.W. 770, an option is an offer to sell, coupled with an agreement  [[Orig. Op. Page 3]] to hold the offer open for acceptance for a specified time.  It secures the privilege to buy and is not of itself a purchase.

             In the case of Hopkins v. Barlin, 31 Wn. (2d) 260, the same substantial definition of an option to purchase realty is stated.  Such an option imposes no obligation upon the part of the optionee.  The optionee may exercise the option at any time within the limited period stated and upon the terms and conditions stated in the option.

             The next question is, does such an option constitute property, and, if so, is such property interest personal or real.  In 73 C.J.S. 140, § 1, the following definition of property is given:

             "The word 'property' embraces everything which is or may be the subject of ownership, . . . and the term is legally understood to include every class of acquisitions which a man can own or have an interest in; . . . and thus the term includes everything, every species of valuable right or interest, and every species of a state, corporeal or incorporeal, tangible or intangible, choate or inchoate, . . . "

             In 73 C.J.S. 170, § 8, personal property is defined as follows:

             "The terms 'personal property' . . . in their broad and general sense include everything which is the subject of ownership not coming under the denomination of real estate, . . ."

             A definition of personal property, not substantially different from that included in the quotation above cited is found in RCW 9.01.010 (11).

             It thus appears that from established law the optionee in an option to purchase real estate assumes no obligation whatsoever but does, by the execution of the option, acquire a valuable right which can only be defined as personal property.

             Under the statutory provisions describing the corporate powers of  [[Orig. Op. Page 4]] school districts it would appear that a board of school directors has a general right to purchase and hold options to purchase real estate subject only to the limitations prescribed as to first, second, and third class districts.

             RCW 28.59.130 applies to first class districts and, in so far as material to this opinion, provides:

             ". . . The board of directors shall make no expenditures nor incur any liability for any purpose not provided for in the budget. . . ."

             This section further provides that the budget as finally adopted shall constitute the appropriations for the district and that the directors shall be limited in making expenditures and incurring liabilities to the grand total of such appropriations.  It would thus appear that as regards first class districts the board of directors is empowered, if it has made provision therefor in its budget, and subject to the limitations of such budget, to purchase options to purchase real estate for future needs of its district.

             However, as regards second class districts, a different rule prevails.  Section 1, chapter 289, Laws of 1927, which is the last amendment to the act, reads as follows:

             "The board shall build or remove schoolhouses and teachers' cottages, purchase or sell lots or other real estate when directed by a vote of the district to do so and where the district shall possess a schoolhouse upon a site owned by such district the board may by unanimous vote of all the members thereof purchase or lease additional real estate adjacent to such site; . . ." (Emphasis supplied.)

             It is our opinion that this section authorizes the school board of a second class district to purchase sites or lots that are not contiguous when it has been directed so to do by a majority vote of the electors of the district.  If the directors desire to purchase a contiguous site  [[Orig. Op. Page 5]] upon which a schoolhouse of the district is already situated, they may do so by unanimous vote of the board without authorization by a vote of the district, provided, of course, that they have included in their budget a sum of money to cover such purchase.

             Section 2, chapter 289, Laws of 1927, applies to third class districts and provides:

             "The board shall build or remove schoolhouses and teachers' cottages, purchase or sell lots or other real estate, when directed by a vote of the district to do so; . . . "

             It is to be noted that this section authorizes the purchase of an additional site by third class districts only upon a vote of a majority of the electors in the district.  This is true regardless of whether or not the site so purchased is adjacent to or separate from any existing school site.

             Referring to the section of the statute first cited in the opinion, it is our conclusion that the board would have a right, conditioned upon a meeting of all the obligations herein set forth, to purchase personal property consisting of an option to purchase real estate.  This would apply only to first class districts.

             As to second class districts, if the site to be purchased were adjacent to a site already owned by the district and upon which a schoolhouse existed, such purchase could be authorized by a unanimous vote of the board of directors.

             In the purchase of a non-contiguous [[noncontiguous]]site, the purchase would have to be authorized by a majority vote of the district at a regular or special election, and as to third class districts, the purchase of a site which was either contiguous or non-contiguous [[noncontiguous]], the purchase would have to be authorized by a majority vote of the district at a regular or special election.

             The option as above stated is personal property, but since the only purpose of the option is to pave the way for the purchase of real property we feel that authorization to make such purchase should be secured before this option is taken.

              [[Orig. Op. Page 6]]

            Confirming this opinion to the effect that in a first class district a board of directors may purchase an option that has been provided for in their budget without a vote of the electors of the district, we enclose herewith an opinion of this office, No. 51-53-187 [[to Don G. Abel, Prosecuting Attorney, Grays Harbor County, on December 7, 1951]].

            Regarding your second question, we find no law of this state which limits the time for which an option may be either taken or granted.  Generally speaking, we believe that a board of directors cannot bind a school district for a period beyond one year, but in the taking of an option such as we are considering the district is not in any way bound.  It acquires a right which it may or may not exercise in the discretion of the board of directors.

             We trust the foregoing analysis will prove helpful to you.

 Very truly yours,
DON EASTVOLD
Attorney General

ROY C. FOX
Assistant Attorney General