What is a Right of first refusal

What is a Right of first refusal

By HouseFurb, Sep 15, 2018

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A right of first refusal is a provision in a lease or other agreement. It gives a potentially interested party the right to buy a property before the seller negotiates any other offers. It's typically written up before a seller puts a property on the market. This clause allows the seller to market the home at will, but before any offers can be accepted, the seller must notify the original interested buyer who has the right of first refusal. At that point, the person with the right of first refusal can decide whether or not to buy the property. If this person declines, the seller is free to negotiate with other people who are interested.

There are a few reasons why a right of first refusal would be put on a leasing agreement


  • Between a tebabt and landlord - If a tenant is interested in buying his rental property and has a right-of-first-refusal clause written into the lease, the landlord must consider his offer before negotiating with other potential buyers.
  • Between family members - Usually, this clause is used when another family member wants to buy the home.
  • When dealing with a homeowners association/body corporate - Sometimes a homeowners association or body-corporate will put a right-of-first-refusal clause into its governing documents. It allows the board to vet potential buyers before a seller can accept an offer. Many communities use the clause to prevent situations like discount sales that would lower their value. In some cases, it even gives the board the option to reject an offer entirely.

There is no specific formula when it comes to a right-of-first-refusal clause. Although a buyer gets the first option to buy a property, the terms of each right-of-first-refusal clause can vary. Some set rules on things such as how long the contingency can last, proof the interested party must provide in order to move forward with purchasing the property, or any exceptions based on a cash offer. To determine if a right-of-first-refusal agreement is right for you, make sure all of the details suit you. Consult with a property professional like HouseFurb and an attorney before entering into a right-of-first-refusal agreement. And as with any contract, read your contingency thoroughly to get an idea of the deadlines, limitations, or obligations it entails before signing on the dotted line

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