🏠 What Is Right of First Refusal in Real Estate?

A Right of First Refusal (ROFR) gives a person or entity the first opportunity to purchase a property before the seller can accept another buyer’s offer. This right is typically granted in leases, family arrangements, HOA rules, or partnership agreements.

How Right of First Refusal Works

A ROFR clause requires the property owner to present any bona fide offer to the holder before selling to someone else. The holder then has a defined period—usually 24 to 72 hours—to match the offer.

Key elements include:

  • Triggering event — usually receiving an offer from a third-party buyer.
  • Matching rights — the holder can buy on the same price and terms.
  • Decision window — the allowed time to accept or decline.
  • Release requirement — if declined, the seller may proceed with the outside buyer.

ROFR protects the holder by ensuring they get the first chance to purchase the property before anyone else.

Why Right of First Refusal Matters

Benefits for Buyers (ROFR Holders):

  • Guarantees the chance to buy before the property is offered to the public.
  • Allows buyers to secure desirable properties with less competition.
  • Offers time to prepare financing before the property hits the market.

Benefits for Sellers:

  • Creates certainty and clarity in special arrangements (tenants, family, partners).
  • Can simplify negotiations with known potential buyers.
  • May reduce marketing and showing obligations.

Example of Right of First Refusal

Here’s a common ROFR scenario:

  • A tenant has ROFR in their lease agreement.
  • The landlord receives an offer from a third-party buyer.
  • The landlord notifies the tenant of the offer terms.
  • The tenant has 48 hours to choose whether to match the offer.
  • If the tenant declines, the landlord can move forward with the outside offer.

This ensures the tenant has priority without preventing the seller from accepting other offers if the tenant declines.

Why ROFR Matters for FSBO Sellers

FSBO sellers may encounter ROFR when selling condos, tenant-occupied properties, or homes with family agreements. Understanding ROFR avoids delays and contract disputes.

  • Helps sellers confirm whether a ROFR holder must be notified.
  • Prevents invalid contracts caused by overlooked ROFR clauses.
  • Ensures a smooth sale by following HOA or lease rules.
  • Protects sellers from legal challenges by ROFR holders.

Listing with Flat Fee MLS through Brokerless helps sellers disclose ROFR requirements clearly.

Frequently Asked Questions

Is Right of First Refusal the same as an option?
No. ROFR lets a person match another buyer’s offer. An option contract gives exclusive buying rights regardless of outside offers.

Can ROFR delay a sale?
Yes. Sellers must notify the ROFR holder and allow time for them to respond before accepting another offer.

Does ROFR guarantee the holder gets the property?
No. It only guarantees the first opportunity to match an offer—not automatic ownership.

Do HOAs often have ROFR?
Some condo associations include ROFR in their bylaws, especially in older buildings.