Case Law Update: A right of first refusal (pre-emption) in a lease

CASE LAW UPDATE: A RIGHT OF FIRST REFUSAL (PRE-EMPTION) IN A LEASE

A right of pre-emption is a contractual right, affording the holder the first opportunity to purchase property, before it can be offered to another buyer.  In other words, it is a right of first refusal.  The right usually exists for an agreed period.

A recent Constitutional Court judgment, Mokone v Tassos Properties CC and Another 2017 [ZACC] 25, dealt with a right of pre-emption that was contained in an agreement of lease.  One of the questions that was answered in this case was whether the period for a right of pre-emption in a written lease agreement was automatically extended when the lease was extended.

The facts of the case were the following: In 2004 Ms Mokone, the tenant, entered into a written 12-month lease agreement with the landlord, Tassos Properties. The agreement granted the tenant a right of pre-emption. The parties thereafter orally renewed the lease for another year and later extended the agreement for a further period until 2014, which renewal was endorsed on the front page of the lease agreement.
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