Can a Mississippi city return donated land to the donor for free if the city decides the donation was a mistake?

Plain-English summary

A Petal resident donated six parcels of land to the City of Petal. The board of aldermen accepted them, and a real estate attorney handled the transfer deeds. The deeds did not contain a reverter clause (a contractual hook that would automatically send the property back to the donor under specified conditions). The donor later went back to the city and asked for three of the six parcels back, saying the donation of those three was a mistake. Could the city deed them back at no cost?

The default Mississippi rule is no. Once a municipality accepts a donation of real property, it becomes municipal property and must be disposed of through statutory channels. Lawrence (June 9, 2006) and Sorrell (Aug. 20, 2004) settled this years ago: "A municipality may re-convey real property to an original donor without cost only if the instrument by which the property was originally conveyed to the municipality contained a proper reverter clause." Emerson (Oct. 21, 2016) reinforced the same rule with the operating principle: "once donated property is accepted by a municipality, it becomes municipal property and must be expended or disposed of in the same manner as other municipal property."

But the City of Petal had two arguments for treating the situation differently:

1. Mistake. The donor said the donation of these three parcels was a mistake. Mississippi recognizes a path to fix a deed that contained a drafting error: reformation. The Supreme Court in Johnson v. Consolidated Am. Life Ins. Co. held that "[t]he mistake that will justify a reformation must be in the drafting of the instrument, not in the making of the contract." The Court of Appeals in Dilling v. Dilling added: "[a] scrivener's error may be sufficient to warrant the reformation of an instrument." So if the mistake was in how the deed was drafted (e.g., it included parcels the parties did not actually intend to convey), the parties may be able to reform the deed and effectively undo the transfer of those parcels. Whether this particular mistake qualifies is a fact question outside the AG's scope.

2. Surplus property. Section 21-17-1(3)(a)(i) lets a municipality donate surplus lands to "a bona fide not-for-profit civic or eleemosynary corporation organized and existing under the laws of the State of Mississippi and granted tax-exempt status by the Internal Revenue Service" or to the public school district where the land is situated. So if the city declares the parcels surplus and the original donor happens to qualify as a tax-exempt nonprofit, the city could donate the parcels to the donor under § 21-17-1(3). Whether the donor qualifies is a factual question.

The cleanest path remains the reverter clause, which has to be in the original deed. Cities that want flexibility to reverse a donation if circumstances change should put a reverter in at the time of acceptance.

What this means for you

If you are a Mississippi mayor or city council member accepting a donation of real property

If there is any chance the donor might want the property back, or any chance the city might decide the property does not fit its needs, ask the donor's attorney to include a reverter clause in the deed. A reverter is a specific contractual provision saying the property reverts to the donor if certain conditions occur or fail to occur. Without it, the city is stuck with the property, and unwinding the transaction later requires either deed reformation (which is hard) or qualifying for surplus disposal (which depends on the recipient).

If you are a Mississippi resident who donated land to a city and wants it back

Three paths, in order of difficulty:

1. Was there a reverter clause? If yes, and the conditions for reverter have been met, the property comes back automatically (or with a clean re-deed under the clause). Get a copy of your original deed and look for the reverter language.

2. Was there a scrivener's error in the deed? If the deed conveyed parcels you and the city did not actually agree to transfer (an error in drafting, not in the underlying agreement), reformation might be available. This requires litigation or an agreed reformation, plus court approval. Talk to a real estate attorney about whether the facts support this path.

3. Are you a tax-exempt nonprofit? If you (or an entity you can have receive the property) are a 501(c)(3) Mississippi nonprofit, the city can declare the property surplus and donate it to your nonprofit under § 21-17-1(3)(a)(i). This is a common path used in practice.

If none of those works, the city can sell the property under regular surplus property procedures (which generally require a public offering and fair-market price), but it cannot just deed it back to you for free.

If you are a real estate attorney drafting deeds for donations to a Mississippi municipality

Reverter clauses are easy to draft and low-cost insurance against later changes of mind. Discuss with your donor client whether they want one. Common reverter triggers include: city no longer using the property for the stated purpose, city attempting to convey the property to another party, condemnation, change in zoning use. The clause should be specific about the trigger event, the procedure for reversion, and any cleanup obligations.

If you are a city attorney advising on disposing of donated property

Run through the three paths in order: reverter clause first (read the original deed), scrivener's error second (look at the underlying donation correspondence to see if the parcels actually deeded match the parcels actually agreed), surplus property third (qualify the recipient and follow § 21-17-1 procedures). Document the chosen path on the minutes and run any close calls past the State Auditor.

Common questions

Q: What is a reverter clause?
A: A contractual provision in a deed that causes the property to automatically return to the original grantor (or grantor's heirs) when specified conditions occur or fail to occur. Common in donations conditioned on continued use for a particular purpose ("must be used as a public park" or "must remain in city ownership").

Q: What is reformation of a deed?
A: Reformation is a court-recognized remedy for a written instrument that does not match what the parties actually agreed to. The mistake has to be in the writing, not in the underlying deal. So if you and the buyer agreed to sell parcel A but the deed mistakenly conveyed parcels A and B, reformation can fix the deed to convey only A. If you intended to sell both and now regret it, that is a different problem and reformation will not help.

Q: How does the surplus property path work for a private donor?
A: It does not, unless the donor is a Mississippi nonprofit with IRS tax-exempt status (and the donation fits the educational/civic/eleemosynary purposes contemplated by the statute). Most private individual donors will not qualify. The path works for things like donating land to a Habitat for Humanity affiliate, a community development corporation, or a public school district; it does not work as a vehicle for returning land to a private individual donor.

Q: Can the city sell the property back to the donor at fair market value?
A: Yes, that is a different transaction. The city can dispose of surplus real property under § 21-17-1 procedures, generally through public offering. If the donor is the highest bidder at a fair market price, the donor can buy the property back. But this is a sale, not a free reconveyance, and it follows surplus property procedures.

Q: What if the donor is deceased?
A: The reverter clause path runs through the donor's heirs or estate. The scrivener's error path requires showing the original mistake. The surplus path requires a current qualifying recipient. The donor's death does not change the legal framework, but it can complicate the practical execution.

Q: Does it matter that the donor is a "citizen" of the city?
A: Not really. The legal framework applies the same way regardless of the donor's identity. The surplus disposal path has eligibility criteria (tax-exempt nonprofit) that apply to recipients, not to donors.

Background and statutory framework

The default rule is the conversion of donated property into municipal property:

• Sorrell (Aug. 20, 2004) and Lawrence (June 9, 2006) established the reverter-clause rule for re-conveyance without cost.
• Emerson (Oct. 21, 2016) reinforced the rule and added the framing: once accepted, donated property is treated like other municipal property.
• Eaton (May 20, 2024), the present opinion, applies the rule with two refinements: (1) scrivener's-error reformation may be available where the deed itself contained a drafting mistake; (2) surplus disposal under § 21-17-1(3)(a)(i) is available if the recipient qualifies.

Reformation cases:

• Johnson v. Consolidated Am. Life Ins. Co., 244 So. 2d 400, 402 (Miss. 1971): "The mistake that will justify a reformation must be in the drafting of the instrument, not in the making of the contract."
• Dilling v. Dilling, 734 So. 2d 327, 335 (Miss. Ct. App. 1999): "A scrivener's error may be sufficient to warrant the reformation of an instrument."

Section 21-17-1(3)(a)(i):

[The municipality's] governing authority may donate [surplus] lands to a bona fide not-for-profit civic or eleemosynary corporation organized and existing under the laws of the State of Mississippi and granted tax-exempt status by the Internal Revenue Service and may donate such lands and necessary funds related thereto to the public school district in which the land is situated for the purposes set forth herein.

The default is that surplus property must be sold; subsection (3) creates the limited donation pathway.

Citations

• Miss. Code Ann. § 21-17-1
• Miss. Code Ann. § 21-17-1(3)(a)(i)
• Miss. Code Ann. § 7-5-25
• Johnson v. Consolidated Am. Life Ins. Co., 244 So. 2d 400 (Miss. 1971)
• Dilling v. Dilling, 734 So. 2d 327 (Miss. Ct. App. 1999)
• MS AG Op., Lawrence (June 9, 2006)
• MS AG Op., Sorrell (Aug. 20, 2004)
• MS AG Op., Emerson (Oct. 21, 2016)
• MS AG Op., Eubanks (Apr. 15, 2005)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2024/05/R.Eaton-May-20-2024-Citys-Ability-to-Return-Donated-Land.pdf

Original opinion text

May 20, 2024
Rocky W. Eaton, Esq.
Attorney, City of Petal
Post Office Box 564
Petal, Mississippi 39465
Re: City's Ability to Return Donated Land

Dear Mr. Eaton:
The Office of the Attorney General has received your request for an official opinion.

Background
According to your request, a citizen of Petal ("City") contacted City officials to donate six parcels of land to the City. The board of aldermen authorized the acceptance of said property, and a local real estate attorney effectuated the transfer of these parcels to the City. The deeds transferring the ownership of property did not contain a reverter clause. The donating citizen later requested the board of aldermen return three of the six donated parcels due to their donation being a mistake.

Question Presented
May the City return (at no cost) three of six parcels of land donated to it after finding that the prior donation was a mistake and that the three parcels are surplus property?

Brief Response
"A municipality may re-convey real property to an original donor without cost only if the instrument by which the property was originally conveyed to the municipality contained a proper reverter clause." MS AG Op., Lawrence at 1 (June 9, 2006) (citing MS AG Op., Sorrell at 1 (Aug. 20, 2004)). However, the parties may be able to reform the underlying instrument if a mistake is found in the drafting of such. Johnson v. Consolidated Am. Life Ins. Co., 244 So. 2d 400, 402 (Miss. 1971); see Dilling v. Dilling, 734 So. 2d 327, 335 (Miss. Ct. App. 1999) (explaining that "[a] scrivener's error may be sufficient to warrant the reformation of an instrument.").

Applicable Law and Discussion
To begin, this opinion concerns matters of state law only and does not address any contractual considerations.

You ask whether the City may return three parcels of land donated to it after finding: (1) the prior donation was a mistake, and (2) the three parcels are surplus property. You note that you are aware of our prior opinions Lawrence and Emerson.

In Lawrence, this office opined that "[a] municipality may re-convey real property to an original donor without cost only if the instrument by which the property was originally conveyed to the municipality contained a proper reverter clause." MS AG Op., Lawrence at 1 (citing MS AG Op., Sorrell at 1). We reached the same conclusion in Emerson, explaining that "once donated property is accepted by a municipality, it becomes municipal property and must be expended or disposed of in the same manner as other municipal property." MS AG Op., Emerson at 1 (Oct. 21, 2016). That is to say, "the municipality must comply with the provisions of Mississippi Code Annotated Section 21-17-1 or some other statutory provision when disposing of the subject real property." Id. at 2.

Your request states that this matter is distinguishable from Lawrence and Emerson because, here, the City found that the donation was a mistake. While state law does not indicate that a municipality's finding that a donation was a mistake would allow the municipality to return the donated parcels at no cost to the original donor, the parties may be able to reform the underlying instrument. As stated by the Mississippi Supreme Court, "[t]he mistake that will justify a reformation must be in the drafting of the instrument, not in the making of the contract." Johnson, 244 So. 2d at 402. This requirement was reiterated by the Mississippi Court of Appeals in Dilling, where it went on to note that "[a] scrivener's error may be sufficient to warrant the reformation of an instrument." Id. at 335. This said, whether a mistake is of the type contemplated in these opinions is a question of fact upon which this office may not opine. See Miss. Code Ann. § 7-5-25.

Finally, you provide that the City also found that the subject parcels were surplus property. Pursuant to Section 21-17-1(3)(a)(i), a municipality's:

governing authority may donate [surplus] lands to a bona fide not-for-profit civic or eleemosynary corporation organized and existing under the laws of the State of Mississippi and granted tax-exempt status by the Internal Revenue Service and may donate such lands and necessary funds related thereto to the public school district in which the land is situated for the purposes set forth herein.

(emphasis added); see also MS AG Op., Eubanks at *1 (Apr. 15, 2005) (noting same in relation to disposal of real property donated to a municipality). Whether the subject donor would be a proper recipient of surplus property pursuant to Section 21-17-1(3) is also a factual determination upon which this office may not opine. See Miss. Code Ann. § 7-5-25.

Otherwise, "[a] municipality may re-convey real property to an original donor without cost only if the instrument by which the property was originally conveyed to the municipality contained a proper reverter clause." MS AG Op., Lawrence at 1 (citing MS AG Op., Sorrell at 1).

If this office may be of any further assistance to you, please do not hesitate to contact us.

Sincerely,
LYNN FITCH, ATTORNEY GENERAL
By: /s/ Maggie Kate Bobo
Maggie Kate Bobo
Special Assistant Attorney General