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- In an ordinary sale, a tenant's right to buy first comes from the lease or another written agreement, as a right of first refusal or an option to purchase.
- California courts treat a right of first refusal as a conditional option that comes alive when the owner decides to sell and has a bona fide offer from someone else.
- At a foreclosure sale of a one-to-four unit property, Civil Code section 2924m lets a tenant who lives there buy by matching the last and highest bid.
- A July 2026 County motion asks for a recommended community opportunity to purchase ordinance, with a tenant program as a possible later phase.
Does a tenant get the right to buy before you sell?
A tenant gets that right when a lease or another written agreement gives it, so read every lease and side letter before you list. A right of first refusal or an option to purchase in a lease is a contract term, and a right of first refusal becomes enforceable against the owner once the owner decides to sell and has a bona fide offer from someone else.
A few rules outside the lease matter too. Civil Code section 2924m adds a tenant purchase right at a foreclosure sale of a one-to-four unit property. Government Code section 65863.11 gives qualified entities, which can include a tenant association, the chance to offer on a subsidized building before its subsidy or its rent restrictions end. And in July 2026 a County supervisor moved for a draft local purchase ordinance.
How a right of first refusal in a lease works
A right of first refusal does not let a tenant buy whenever the tenant likes. California courts call it a conditional option. It sits unused until the owner voluntarily decides to sell and receives a bona fide offer from a third party, and then it becomes an option, so the tenant can make an offer that meets or beats the outside one. The line comes from Campbell v. Alger, a 1999 Court of Appeal decision, and a published 2019 Court of Appeal opinion restates it.
That 2019 opinion also says the right can be exercised without matching the outside offer term for term. The holder steps into a deal somebody else negotiated, so a court looks at commercial realities and allows changes that fit what the parties meant when they created the right. A tenant's answer that differs from the outside offer on some terms is therefore not automatically a refusal.
The lease sets the rest, and it is the first document to read. Look for:
- what counts as a sale, and whether the right covers the whole building or only the tenant's unit
- how you must give notice of an offer, and what the notice has to include
- how long the tenant has to answer, and in what form
- whether the right ends with the lease term or carries on while the tenant stays month to month
- whether the right survives a sale in which the tenant declines to buy
A right of first refusal changes the order of the sale as well. Accept an offer subject to the tenant's right, give the tenant the notice the lease calls for, and let the response period run out before the buyer's escrow deadlines start.
An option to purchase in the lease
An option to purchase does not wait for your decision to sell. Where a lease grants one, the lease sets the terms on which the tenant may buy and the period for deciding, and putting the building on the market changes neither. The leases pass to the buyer at closing, so an option in one of them is a matter for your attorney and the buyer's before anyone signs a purchase contract.
The foreclosure rule for one to four units
State law gives some tenants a way to buy at a foreclosure. Under Civil Code section 2924m, when residential property of one to four units goes to a trustee's sale, an eligible tenant buyer may buy it by matching the last and highest bid. The statute defines that buyer as a natural person who occupies the property as a primary residence at the time of the sale.
When the winning bidder is not a prospective owner-occupant, the sale becomes final 15 days after it is held, unless an eligible tenant buyer or another eligible bidder submits a bid or a nonbinding written notice of intent to bid. When a prospective owner-occupant wins, finality follows section 2924h instead. SB 1146 extended section 2924m until January 1, 2031.
None of that touches an ordinary sale. It applies at a trustee's sale, and it stops at four units, so a five-unit building sold at foreclosure is outside it.
Subsidized buildings and qualified entities
Government Code section 65863.11 reaches a different kind of property, an assisted housing development of five or more units. Its owner may not end a subsidy contract or prepay the mortgage without first giving qualified entities an opportunity to submit an offer to buy the development, and the same duty arises when the development's rental restrictions are due to expire. Those entities can include tenant associations, local nonprofits, public agencies, and profit-motivated organizations or individuals. The state Department of Housing and Community Development publishes a template for the notice.
The duty is tied to ending the subsidy, prepaying the mortgage or an expiring restriction. Read your subsidy contract and any recorded regulatory agreement for those dates before you set a listing date.
What Los Angeles is considering
A motion by Supervisor Hilda L. Solis, dated July 7, 2026, asks the Board of Supervisors to direct the County's Department of Consumer and Business Affairs, with County Counsel, LACDA and other departments, to return within 180 days with a recommended Community Opportunity to Purchase Act ordinance. It describes a phased approach, with a Tenant Opportunity to Purchase Act program as a possible later step. In November 2024 the Los Angeles City Council voted to have its departments report on a framework for both kinds of program, as local news reported at the time. A motion and a request for a report are not rules you can plan a sale around, so ask your attorney where each stands when you are ready to list.
Some rights in the City's rules sound like purchase rights and are rights to rent. After an Ellis Act withdrawal of RSO units, LAHD describes a tenant's right to return for 10 years, and the Resident Protections Ordinance gives a tenant of a demolished protected unit a right to return to the replacement building at the prior rent. Neither is a right to buy the building.
What to check before you list
- Read every lease, addendum and side letter for words like first refusal, first right, option and right to purchase.
- Ask in each estoppel certificate whether the tenant holds or claims any right to buy, so the answer is in writing before closing.
- If a lease has such a clause, have a real estate attorney read it before you sign a purchase contract, and write the contract subject to it.
- Put the tenant's notice and response period on the sale calendar.
- If the building carries a subsidy contract or recorded rent restrictions, find the dates that bring in section 65863.11 before you choose a listing date.
Whether a clause is still in force, what notice it needs and when its deadline runs are questions of contract law. Shaya is not an attorney and does not answer them, but he can plan the listing and the buyer's timeline around the answer your attorney gives.