Right of First Refusal Ended When Tenant Held Over

A lease gave a Delaware tenant the right of first refusal. The tenant held over after the lease ended. During the holdover, the owner sold the space to a third party without telling the tenant. The tenant asked the court to undo the sale so it could exercise its first refusal right. The tenant claimed that its right was still in effect because a Delaware holdover law said that if a tenant holds over, the term would be by the month “and all other stipulations” of the “rental agreement” would continue in effect during the holdover period.

A Delaware court ruled that the tenant wasn't entitled to exercise its first refusal right because the right terminated when the lease ended. The Delaware holdover law didn't define “stipulations.” But “rental agreements” meant “all agreements … which establish or modify the terms, conditions … or any other provisions concerning the use and occupancy of a rental unit.” The court said this meant that only those lease provisions concerning the use and occupancy of the space would remain in effect during the holdover period—and a first refusal right didn't fit into that category [Bateman v. 317 Rehoboth Ave., LLC].