The right of first refusal (ROFR) is a contractual promise giving one party the option to buy a property before the owner can sell to someone else. When the owner accepts a third-party offer, they must first present that offer to the ROFR holder, who can match it or waive the right.
ROFR clauses are common in:
A ROFR is “triggered” when the property owner receives a bona fide third-party offer. That offer’s key terms—price, contingencies, closing date—set the benchmark the ROFR holder must meet.
The owner must notify the ROFR holder in writing, typically by certified mail, email or another specified method. The agreement defines the response window—often 5–30 days—to exercise or waive the right.
If the holder exercises, they sign a purchase contract on the same terms as the third-party offer. If they waive or miss the deadline, the owner is free to sell to the third party under those original terms.
With a first offer right, the holder sees or negotiates a deal before the owner markets broadly—but isn’t guaranteed matching terms. A ROFR waits for a fully negotiated third-party offer.
A right of first negotiation obligates the owner to negotiate exclusively with the holder before talking to outsiders. If talks fail, the owner can then solicit other bids.
Homeowners associations and co-op boards often include preemption or ROFR clauses to control ownership changes and maintain community standards.
Specify exact deadlines (e.g., “10 business days”) and approved delivery methods (email with read receipt, certified mail) to avoid disputes.
Require the holder to match the full third-party terms or use an independent appraisal process if the holder disputes the offer’s validity.
Clarify whether the ROFR can be assigned, whether affiliates qualify, and carve-outs for transfers to heirs or corporate subsidiaries.
Some jurisdictions view ROFRs as restraints on alienation and may demand a legitimate business purpose. Confirm local statutes and case law.
Failure to comply with notice or deadline rules can waive the ROFR or expose the owner to damages or specific performance claims.
Spell out which party pays appraisal, attorney or transfer fees. Hidden costs can erode the benefit of matching an offer.
Only if the clause expressly permits assignment. Otherwise the right typically stays personal to the original holder.
The holder may treat the right as waived or seek to enforce it in court, depending on the agreement’s remedies clause.
Agreements often rank holders (first, second, third) or allocate proportional interests to resolve competing claims.
Yes—unless the ROFR clause allows variations or requires an appraisal-based valuation instead of strict matching.
• The neighbor submits a $500,000 offer to the board, triggering the shareholder’s ROFR.
• The board mails a notice by certified mail; the shareholder has 15 days to respond.
• The shareholder elects to match the offer, signs the contract and closes as buyer—blocking the external sale.
A ROFR gives a party the right to match a third-party property offer before the owner can sell to anyone else.
Engage professional counsel when drafting or enforcing a ROFR to navigate local laws, avoid forfeiture of rights and ensure smooth closings.
