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What is Right of First Refusal?
Right of First Refusal
A Right of First Refusal (ROFR) grants a party the privilege to match or outbid any third-party offer. If an asset owner decides to sell or lease, the ROFR holder can accept on the same conditions before it’s offered elsewhere. This arrangement protects occupant or neighbor interests, ensuring they can preserve usage or expansion potential.
Key Points:
- Preemptive Advantage: Allows immediate acceptance or negotiated modifications.
- Time Limits: Seller typically sets a deadline for the ROFR holder’s decision.
- Ethical Ground: Must disclose genuine third-party proposals fairly.
- Mutual Benefit: Holder gains security, while the owner has a fallback buyer.
ROFR nurtures occupant continuity or collaborative expansions, though it may hamper open-market deals if external parties resent a built-in “first priority” competitor.
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