Burk

The trial court confused a tenant’s right of first refusal to purchase leased property with an option agreement and, based upon the wrong law, rendered judgment against the tenant and in favor of the party whose offer to purchase the leased property triggered the tenant’s exercise of the right of first refusal. We reverse.

Facts

In 1973, Jack and Wanda Burk purchased an existing gas station (including three underground tanks) from Shell Oil Company and, at about the same time, leased from Caroline Fabbro the real property on which the station was located. Fabbro gave the Burks the right to extend the lease at five-year intervals for twenty years and the right of first refusal if Fabbro decided to sell the property. The Burks installed two more tanks, extended the lease at the end of each five-year period and, as contemplated by the parties, continued their tenancy and continued to operate a gas station on the property.

In July 1992, Arden Group, Inc. (the owner of the Mayfair and Gelsons grocery store chains) became interested in Fabbro’s property for use as a parking lot next to a Mayfair store. Following a period of negotiations, Arden made a formal offer to Fabbro…