Right of First Refusal
The right of first refusal gives a party the first chance to buy or rent property before it’s offered to others. Understand its use in leases and HOAs.
Definition
A right of first refusal (ROFR) is a contractual right that gives a specified party the opportunity to purchase or lease a property before the owner can sell or rent it to someone else. The holder of the ROFR has the right to match the terms of a bona fide offer that the owner receives. ROFRs appear in condo association documents, ground leases, or shareholder agreements to give existing tenants, co‑owners, or associations control over future ownership changes. These rights can complicate transactions and may deter potential buyers or investors if they must wait for the holder’s decision.
Why It Matters
Right of First Refusal often affects pricing, lending, title, zoning, or escrow procedures. Sellers benefit from understanding it to set clear expectations, while buyers gain confidence in budgeting and due diligence.
Examples
Example 1: A seller references right of first refusal in the listing notes or disclosures.
Example 2: A buyer checks right of first refusal alongside comps, loan terms, or HOA documents before making an offer.
Example 3: Escrow or title ensures right of first refusal compliance before recording the transaction.
Tips
Ask how right of first refusal might influence financing, contracts, or title.
Document related issues clearly to prevent disputes.
Use a flat fee multiple listingto cut costs and still gain MLS exposure.
Additional Context
Right of First Refusal is frequently connected to other real estate steps such as financing, zoning approvals, appraisals, and contract contingencies. Surfacing these issues early and documenting them in writing helps keep both sides aligned.
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