Contracts
In Hawaii, what is the 'right of first refusal' and how does it differ from an 'option'?
AA. They are identical rights
BB. A right of first refusal allows matching a third-party offer; an option grants the right to purchase at a pre-set price without waiting for a third-party offer✓ Correct
CC. An option can be exercised at any time; a right of first refusal can only be exercised once
DD. A right of first refusal requires payment; an option does not
Explanation
A right of first refusal is triggered only when the owner receives a third-party offer, which the holder can match. An option is the proactive right to buy at a fixed price regardless of third-party interest.
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Key Terms to Know
Right of First Refusal
A contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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