What is a Right of First Refusal?
A right of first refusal (ROFR) is a legal provision that gives a person or entity the opportunity to purchase a property or asset before it is offered to anyone else. This means that if the owner of the property decides to sell, they must first offer the property to the person or entity with the ROFR at the same price and terms as the offer they have received from a third party.
ROFRs are often included in contracts or agreements between property owners and tenants or buyers. For example, a landlord may include a ROFR in a lease agreement with a tenant, giving the tenant the right to purchase the property if the landlord decides to sell it.
Similarly, a buyer may include a ROFR in a purchase agreement with a seller, giving the buyer the right to purchase the property if the seller decides to sell it to someone else.
ROFRs can be useful for protecting the interests of parties who have a vested interest in a property, such as tenants or buyers who have made significant investments in the property. However, they can also be controversial, as they may limit the ability of the owner to sell the property to the highest bidder or to negotiate more favorable terms.