Property Ownership
What is 'right of first offer' versus 'right of first refusal' and how do they differ?
AA. They are identical rights with different names used in different parts of Hawaii
BB. Right of first offer requires the owner to offer the property to the holder before marketing it; right of first refusal requires presenting any third-party offer to the holder before accepting it✓ Correct
CC. Right of first offer only applies to commercial properties; right of first refusal to residential
DD. Right of first refusal is stronger for the holder; right of first offer is stronger for the seller
Explanation
A Right of First Offer (ROFO) requires the owner to approach the rights holder first before marketing to others—the holder makes an offer, and if rejected, the owner can seek other buyers. A Right of First Refusal (ROFR) activates when a third-party offer exists—the holder can match it.
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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.
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
Joint TenancyCo-ownership where two or more people hold equal, undivided interests with the right of survivorship — when one owner dies, their share passes to the surviving owners.
Tenancy in CommonCo-ownership where two or more people hold undivided interests that need not be equal and pass to each owner's heirs — no right of survivorship.
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