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For example, a commercial tenant may prefer to lease a location; however, he may buy the premises if it meant that he would be evicted if the property sold to a new owner. In such a case, the tenant would negotiate to have a right of first refusal clause incorporated into his lease.

Basically, an ROFR clause obligates a seller to contact the rights holder with an option to purchase the property before they can accept an alternate third-party offer on the piece of real property.

Disadvantages Of Right Of First Refusal The decision window is limited: ROFR contracts set a time limit on the buyer's ability to purchase the property, so when the seller puts the property up for sale, the buyer has limited time to decide if they are realistically willing and able to enter a purchase agreement.

Cons. A right of first refusal includes a specific timeframe, so you must be ready to move. That could mean coming up with a payment in short order. If the ROFR includes a predetermined selling price, you could overpay in a market where property costs are declining.

A right of first refusal in a lease gives a tenant a right to purchase the leased property if the landlord receives a bona fide offer to sell the property that the landlord wants to accept.

Having a ROFR allows you to hold an essential asset and gives you the option of purchasing the property if you're going to lose access to it. The financial value of the ROFR is the difference between the price agreed upon and the market value or the offer price made by a third party.

The seller can then decide whether to accept or reject the offer and can offer different terms to third parties. Generally, a right of first offer is considered to favor the seller while a right of first refusal is considered to favor the buyer.

If other bidders find out about it, a right of first refusal clause could lower prices or make attracting buyers difficult. For example, a landlord might have trouble finding buyers if a tenant has a ROFR. It also limits the owner's flexibility, especially their ability to sell and seek buyers.

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© Copyright 1997-2025
airSlate Legal Forms, Inc.
3720 Flowood Dr, Flowood, Mississippi 39232
Form Packages
Adoption
Bankruptcy
Contractors
Divorce
Home Sales
Employment
Identity Theft
Incorporation
Landlord Tenant
Living Trust
Name Change
Personal Planning
Small Business
Wills & Estates
Packages A-Z
Form Categories
Affidavits
Bankruptcy
Bill of Sale
Corporate - LLC
Divorce
Employment
Identity Theft
Internet Technology
Landlord Tenant
Living Wills
Name Change
Power of Attorney
Real Estate
Small Estates
Wills
All Forms
Forms A-Z
Form Library
Customer Service
Terms of Service
DMCA Policy
About Us
Blog
Affiliates
Contact Us
Privacy Notice
Delete My Account
Site Map
All Forms
Search all Forms
Industries
Forms in Spanish
Localized Forms
Legal Guides
Real Estate Handbook
All Guides
Prepared for You
Notarize
Incorporation services
Our Customers
For Consumers
For Small Business
For Attorneys
Our Sites
US Legal Forms
USLegal
FormsPass
pdfFiller
signNow
airSlate workflows
DocHub
Instapage
Social Media
Call us now toll free:
1-877-389-0141
As seen in:
  • USA Today logo picture
  • CBC News logo picture
  • LA Times logo picture
  • The Washington Post logo picture
  • AP logo picture
  • Forbes logo picture
© Copyright 1997-2025
airSlate Legal Forms, Inc.
3720 Flowood Dr, Flowood, Mississippi 39232