Can a tenant claim a right of first refusal as an equitable interest?
Full Question:
Answer:
Tenants who are renting real estate either under a written or oral lease do not typically have a claim against the property itself either under a legal or equitable claim to the property. However, many lease agreements create a right of first refusal in the event the landlord wishes to sell the property to a third party. Typically these lease provisions provide a specific procedure for the tenant to exercise his/her option to refuse.
Many property owners deem a right of first refusal for a tenant as a potentially bad idea as it offers little benefit to the owner, potentially devalues the property and complicates a sale to a third party.
However, it is possible to record an Affidavit of Equitable Interest when there is an agreement between a Buyer and Seller that verifies the Equitable Interest. Recording the Affidavit would encumber the property until the issue is resolved.
If an Affidavit of Equitable Interest is used, the Kansas statutes provide specific requirements for it to be recorded:
Article 14: Property Valuation, Equalizing Assessments, Appraisers And Assessment Of Property
Statute 79-1437c: Real estate sales validation questionnaires; required to accompany transfers of title; retention time; use of information. No deed or instrument providing for the transfer of title to real estate or affidavit of equitable interest in real estate shall be recorded in the office of the register of deeds unless such deed, instrument or affidavit shall be accompanied by a real estate sales validation questionnaire completed by the grantor or grantee or the agent of such grantor or grantee concerning the property transferred. Such questionnaire shall not be filed of record by the register of deeds but shall be retained for a period of five years at which time they shall be destroyed. The register of deeds shall in conjunction with the county clerk use the information derived from such questionnaires in cooperating with and assisting the director of property valuation in developing the information as provided for in K.S.A. 79-1487, and amendments thereto.
In order to properly determine the best options and course of action for the tenant, it is recommended that he/she seek the advice of a local real estate attorney.
