El Dorado Land Company, L.P. v. City of McKinney, 395 S.W.3d 798

In 1999 El Dorado sold land to the City of McKinney for a park, with a deed restricting use to a Community Park.
The deed reserved an option/right of entry for El Dorado to purchase if the City ceased park use, with price tied to City paid or current value, whichever is less.
The City later built a library on part of the land; El Dorado attempted to exercise the option, seeking acknowledgment of its rights.
The City did not acknowledge El Dorado’s rights; El Dorado sued for inverse condemnation; the City moved to dismiss based on governmental immunity and lack of a compensable taking.
The trial court and court of appeals rejected El Dorado’s claim, holding the interest was not a compensable property right under the Texas Takings Clause.
The Supreme Court held that the deed-created right of reentry constitutes a reversionary interest that can be compensable under the Texas Takings Clause and remanded to determine if a taking occurred.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Is El Dorado’s reversionary interest a compensable taking?	El Dorado retains a reversionary interest via right of reentry.	Option is a contract right, not a real property interest; immunity applies.	Yes; the interest is compensable; remand for takings determination

Leeco Gas & Oil Co. v. Nueces County, 736 S.W.2d 629 (Tex. 1987) (recognizes reversionary interests as compensable takings when conditioned by use restrictions)
Davis v. Vidal, 151 S.W. 290 (Tex. 1912) (defines right of reentry as contingent reversionary interest)
Steele v. City of Houston, 603 S.W.2d 786 (Tex. 1980) (Takings clause waives immunity for taking, damaging, or destruction of property)
Westgate, Ltd. v. State, 843 S.W.2d 448 (Tex. 1992) (inverse condemnation framework and standards; similarity to condemnation procedures)
James v. Dalhart Consol. Indep. Sch. Dist., 254 S.W.2d 826 (Tex. Civ. App.—Amarillo 1952) (reversions and rights of entry are freely assignable and property interests)