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| The Real Estate Encyclopedia |
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| What does Right of First Refusal mean? |
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| Category - Home Ownership FAQ's - Lease & Renting
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Right of first refusal is the right of a person to have the first opportunity either to purchase or lease real property.
If you are leasing a property you might be interested in purchasing, you may discuss the possibility with the property owner at the time you negotiate the lease. A right of first refusal may be included as part of the terms of the agreement, granting you the right to refuse the purchase of the property, should the property owner decide to sell.
Unlike an option, the holder of a right of first refusal has no right to purchase the property until the owner actually offers the property for sale. In a lease situation, a right of first refusal might give the tenant the right either to purchase the property, if offered for sale or to renew the lease or lease adjoining space.
If the tenant refuses to buy the property, the property owner has the right to offer the property for sale to a third party. Once the property is sold, the tenant will have to negotiate a new contract with the new property owner or vacate the premises. |
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