Property Management
A commercial tenant has a 'right of first refusal' clause in their lease. This means:
AThe tenant has the right to refuse rent increases
BIf the landlord decides to sell, the tenant has the right to match any offer before the property is sold to a third party✓ Correct
CThe tenant can refuse to renew the lease without penalty
DThe tenant has priority over other tenants for additional space
Explanation
A right of first refusal gives the tenant the right to match any bona fide purchase offer before the landlord can sell to a third party. It does not guarantee the tenant can purchase at a predetermined price — they must match an actual offer.
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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.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
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.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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