What Is A Right Of First Refusal In Real Estate?

Right of first refusal
Do you know what a right of first refusal is?

When looking to buy a home, it is not uncommon to encounter some terms that may be unfamiliar to you. An example of this would be the “right of first refusal” (ROFR). It is also referred to as the “first right of refusal”. Although your real estate agent should be knowledgeable with what these terms mean, it is always best to be familiar with these terms and clauses. Whether you are a buyer or a seller, it is important to understand how a right of first refusal works.

What is a ROFR and when is it utilized?

In short, a right of first refusal provision gives someone the ability to buy a home before the seller accepts any other offers. Perhaps the most common example of a right of first refusal being utilized is when a tenant renting a home expresses to the landlord/owner that he/she is interested in purchasing the home upon the expiration of the lease agreement. In this scenario, instead of having a rent to own agreement, the landlord could grant the tenant a right of first refusal. At this point, the landlord could then list the home for sale as normal in an effort to obtain the best sales price, terms, and conditions for the property. Once an offer is received by the landlord, he/she would be obligated to notify the tenant holding the right of first refusal.

At this point, the tenant holding the right of first refusal would need to make a decision on whether or not to make an offer on the property. If an offer is not made, then the landlord/seller would be able to negotiate with any other potential buyers.

Another common occurrence for a right of first refusal takes place when a property is owned between family members. In these cases, there may be a family member or even several members that would prefer to keep a property within the family. In these cases, they may list the home for sale but implement a right of first refusal to any of the family members.

Lastly, we also see right of first refusals utilized with condo associations. This language is commonly found in the association’s governing documents stating that any unit that comes up for sale will have an right of first refusal by the board. The purpose of this clause is to protect the association and its members from a homeowner that may be experiencing financial hardship and is having to sell his/her unit under market value. Needless to say, this could negatively impact property values for other units in the building.


In closing, a right of first refusal typically is not beneficial to the seller as it adds time and complexity to the negotiations. Oftentimes, time is of the essence for buyers looking to purchase a home so this could sour any potential negotiations. With this said, a right of first refusal could put the seller in a better position to negotiate a higher sales price since they may have a built in bidder for the property. As a seller, if you are considering implementing a right of first refusal, it is advisable to consult with a real estate attorney. In addition to how long a right of first refusal will last, other terms and conditions will need to be specified at the onset.

As always, having a local and knowledgeable real estate will be your most important first step when buying or selling property. If you are in the South Florida area, contact Natasha at Live South Florida Realty, Inc. Don’t forget to also download the free Florida Home Search app for your smartphone or tablet as well.

By natasha moore

REALTOR® with Live South Florida Realty, Inc.