Right of First Refusal
What Is Right of First Refusal?
The right of first refusal (ROFR) is a contractual right that gives a specific party the opportunity to purchase a property or asset before the owner can sell it to someone else.
Why It Matters
ROFR protects interested parties by giving them priority in a transaction. It is commonly used in real estate, business agreements, and rental arrangements.
How Right of First Refusal Works
The process typically includes:
• owner receives an offer from a third party
• holder of ROFR is notified
• holder can accept or decline the same terms
• if declined, the owner may proceed with the third party
Example
A tenant has the right of first refusal to purchase the home they are renting if the owner decides to sell.
Right of First Refusal vs Option to Buy
- ROFR requires matching a third-party offer.
- Option to buy allows purchase at predetermined terms.
FAQs About Right of First Refusal
Is ROFR legally binding?
Yes, if included in a contract.
Can the holder negotiate different terms?
Typically must match the offer.
Does ROFR limit sellers?
Yes, it adds an extra step before selling.
Related Terms
