I have had the same tenant for the last five years. The current lease is about to expire and a potential tenant expressed interest in leasing the apartment.

Q: Do I have an obligation to negotiate with my current tenant before negotiating with the new potential tenant?

A: Before answering your question, we must review some of the laws of bar metzra (loosely, a neighbor’s right of first refusal). Chazal granted neighbors the first option to purchase adjacent land. This enactment is rooted in the principle of yashar vatov, and since two contiguous properties are more advantageous than two noncontiguous properties, we tell the buyer that it is yashar vatov for him to find another property for sale and allow the neighbor to purchase the land adjacent to his.

If someone purchases a field subject to this law, one of the adjacent neighbors can exercise his rights as a matzran — a neighbor. Once invoked, the “buyer” is considered to have acted as the agent of the matzran to purchase the field and the “buyer” must vacate the property, provided that the matzran reimburses the “buyer” the cost of purchasing the field (C.M. 175:5-6). 

This enactment applies whether the “buyer” contacted the seller or whether the seller contacted the “buyer” (Maharshag 3:117). Even if the seller does not want to sell the property to the matzran, the property is transferred to him (C.M. 175:6). Although this enactment is directed toward the buyer because the seller can always decide not to sell the property (Sema 175:7, 38, 63, 67), nevertheless there are authorities who write that the seller should first inquire whether any of the matzranim are interested in purchasing the property (Divrei Malkiel 3:156; Aruch Hashulchan 175:7).

Poskim debate whether a tenant is considered a matzran to purchase the property of his tenancy (C.M. 175:62-63). 

Therefore:

If the current tenant bought the property, the matzran cannot force him to vacate. 

If someone else bought the property, even if he is not a matzran, he cannot be forced by the tenant to vacate the property. 

However, if the question arises before the sale, the tenant has priority ahead of a non-matzran. 

If the tenant and matzran ask who has priority, the matzran has, since his claim is certain whereas the tenant’s claim is subject to debate (Shevus Yaakov 3:165, cited by Pischei Teshuvah 175:28).

Conversely, all opinions agree that a tenant during the period of his tenancy who wants to renew his lease has matzranus rights and has priority over another potential tenant (Taz, Nesivos 237:1). 

However, if the landlord prefers the new tenant — for example, if the current tenant has more children than the potential tenant (Ketzos 175:3) or he has greater confidence that the new tenant will pay his rent on time (Mishpat Shalom 175:59) — the current tenant cannot demand matzranus rights to take priority ahead of the second tenant.

Similarly, if the new tenant is willing to pay a higher rent, the current tenant has no matzranus rights. However, beis din would need to determine whether the landlord’s reasoning is sufficient grounds to replace the current tenant (Divrei Chaim, C.M. 2:19). Once the lease with the current tenant expires, he has no matzranus rights (Mishpat Shalom ibid.).