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.
Full Definition
A right of first refusal (ROFR) gives the holder the opportunity to purchase a property on the same terms as an offer received from a third party before the owner can accept that third-party offer. Unlike an option contract, the holder cannot force a sale — they can only match an existing offer. The owner must notify the ROFR holder when an offer is received, and the holder has a specified time to exercise the right or waive it. ROFRs are commonly found in commercial leases, partnership agreements, HOA governing documents, and between co-owners of property.
Real-World Example
A tenant has a right of first refusal in their lease. When the landlord receives a $500,000 offer from a buyer, the tenant has 10 days to match that offer and purchase the property themselves.
How Right of First Refusal Appears on the Real Estate Exam
Common question types, tested concepts, and what to watch out for
Distinguish between a right of first refusal (holder can only match an existing offer) and an option contract (holder can force a sale at any time during the option period). The ROFR requires an actual third-party offer first.
Related Terms
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