California Appellate Tracker

Smyth v. Berman

February 27, 2019

A holdover tenant is no longer in contractual privity with the landlord; so although the holdover tenancy is presumed to continue on the same terms as the preceding lease, only essential terms of the preceding lease are presumed to carry forward—and a right of first refusal is not one of these essential terms.

A tenant had a lease with defendant which contained a right of first refusal to buy the premises. Tenant continued in possession after the lease expired and then tried to exercise the right of first refusal when a third party had offered to buy the building from the owner. A holdover tenant is no longer in contractual privity with the landlord, but the holdover tenancy is presumed to continue on the same terms as the preceding lease. However, only essential terms of the preceding lease are presumed to carry forward to the holdover tenancy. A right of first refusal is a separate and distinct right, not an essential term of the lease and so it doesn’t carry forward in favor of the holdover tenant. Also, to hold otherwise would encourage landlords to evict holdover tenants in order to avoid rights of first refusal which would disrupt the stability that a holdover tenancy is intended to provide.

California Court of Appeal, Second District, Division 2 (Hoffstadt, J.); January 10, 2019; 31 Cal. App. 5th 183

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