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If you ask the family, farm's future lies in earlier agreement

The Montgomery County, Maryland, farm that belonged to Elizabeth Beall Banks is the subject of a dispute between Johns Hopkins University and Banks' family. Banks died in 2005, more than 15 years after she made a pact with the university: She would sell Hopkins the land for far below market value, and Hopkins, in turn, would develop an academic campus there.

Banks, according to her family, considered this a charitable donation. The land's true value was around $50 million at the time of the sale. Clearly, the low price reflected Banks' wishes to donate the 108 acres; furthermore, they say, the contract said as much.

As we discussed in our last post, though, the plans for the property are not for a low-rise academic campus. Rather, Hopkins revealed earlier this year that it is planning a facility at least three times the size of the one Banks agreed to, according to her nephew. The science park will include commercial space, as well, instead of having the university as its only tenant.

The family says Hopkins had treated the sale as a charitable donation until this proposal came up. Now, in order to use the property in a more profitable way, Hopkins is treating the donation as an arms-length transaction. That is to say, Hopkins is backtracking, acting as if the university and the farm's owner had been complete strangers when they made the deal.

Hopkins, as we mentioned, maintains that the whole disagreement can be resolved by the plain language of the contract. Eighteen words spell out the donor's wishes about the land: It is to be used "for agricultural, academic, research and development, delivery of health and medical care and services, or related purposes only." Nothing in the contract says that only the university can use the space.

Regardless of what the family says, Hopkins argues, the contract reflects the result of the negotiations between the university and Banks. It is not a change in position. It is the position both sides have held since the contract was signed.

The matter is in the hands of a court right now, following arguments from both sides for summary judgment. If the court grants neither motion, the trial will start next week.

Source: Gaithersburg Patch, "Judge to Weigh Resolution of Long Dispute Over Belward Farm," Greg Cohen, Oct. 24, 2012

Our firm works with businesses and individuals involved in commercial real estate disputes like the one between Johns Hopkins and the Banks family. You can learn more about our Annapolis, Maryland, firm by visiting our website's real estate litigation page.

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