Can Rights Of First Refusal Help Lower The Cost Of Rental Housing?

Rental apartment buildings are bought and sold regularly. To try to promote affordable housing, some jurisdictions have enacted legislation to give government authorities, nonprofit entities, or tenants a “right of first refusal” whenever a rental apartment building is about to trade. Rather than allow an evil capitalistic landlord to buy the building, a white knight could buy it instead for the same price and then keep the rents affordable.

This all sounds great. As a practical matter, however, nothing stops this or any other white knight from participating in the ordinary real estate investment sales process just like any other purchaser. If the white knight has the financial wherewithal to buy a building at its market price, then they can call a real estate investment sales broker just like any other purchaser. That broker will be delighted to tell the white knight about suitable properties that are on the market and just waiting for offers. A white knight can participate in any bidding process just like anyone else. If the white knight offers the highest price—even just a hundred dollars higher than the next bidder—it can buy whatever it wants.