Court Opinion

ID: 9659445
Source: CourtListenerOpinion
Date Created: 2023-08-23 21:46:06.649097+00
Date Added: 2024-06-11T18:14:08.300749
License: Public Domain

FOSHEIM, Chief Justice
(dissenting).
The majority concludes the unsigned lease addendum and the listing agreements between lessor and the real estate agent are sufficient to satisfy the statute of frauds. I disagree. Because it is, by nature, an agreement to sell real estate, a right of first refusal provision does not extend beyond the original lease term unless evidenced by a writing capable of satisfying the statute of frauds. See SDCL 53-8-2; Skjoldal v. Myren, 86 S.D. Ill, 191 N.W.2d 809 (1971) (oral agreement to extend written option to purchase real estate held unenforceable under statute of frauds unless significant part performance occurs).
The listing agreements do not help the lessees. They were not in privity to those agreements and thus had no power to enforce any representations of the lessor as to their right of first refusal. The unsigned lease addendum is similarly ineffectual. Unlike our decisions which have permitted subsequent written and signed memoranda to be consolidated into the original contract, Drake v. Sample, 279 N.W.2d 685 (S.D.1979); Townsend v. Kennedy, 6 S.D. 47, 60 N.W. 164 (1894), this unsigned addendum was agreed to orally at or about the time of lease expiration. It altered the terms of the original lease and, in effect, created a new lease. It purported to extend the lease three years. This was clearly unenforceable under SDCL 53-8-2(3) which requires that an agreement for lease of real estate for a period longer than one year be in writing and signed by the party to be obligated. No valid lease renewal was achieved and the lessees must therefore be deemed to have held over.
The right of first refusal provision did not survive into the holdover period. The majority recognizes that our holdover statute, SDCL 43-32-14, focuses on the terms of hiring, i.e., of temporary possession, and is silent as to any option provision which might affect title. It also cites persuasive authority that a purchase option is not a term of tenancy, but is separate and independent from any leasehold interest. A purchase option therefore does not extend into a holdover period.
The majority goes astray in concluding that a right of first refusal is not a purchase option. A right of first refusal is admittedly a conditional purchase option which must await the appearance of a third-party purchaser and a willing lessor-vendor, but, be it conditional or absolute, it is nevertheless a purchase option. Annot., 15 A.L.R.3d 470, § 4[b] (1967); Annot., 34 A.L.R.2d 1158 (1954). As such, the right of first refusal provision was neither explicitly nor implicitly extended into the holdover period by SDCL 43-32-14.
I would affirm the summary judgment.