Right of First Refusal (ROFR)
A right of first refusal gives the holder the right to match a bona fide third-party offer to purchase or lease a property before the owner can accept the third-party offer.
What it means
ROFRs are common in ground leases, sale-leasebacks, and some joint venture agreements. When the owner receives a third-party offer, the ROFR holder must be notified and given a specified period (often 30 days) to match. If the holder matches, the property transfers to them at the third-party's terms. If not, the owner can sell to the third party.
ROFRs can significantly affect marketability — a property with a ROFR typically trades at a modest discount because buyers know the holder could match and take the deal. Sophisticated buyers evaluate ROFR language carefully before bidding.
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