What is right of first refusal?

Hi Devon,

A Right of First Refusal (ROFR) is a contractual clause that gives a tenant (or another party) the first opportunity to purchase a property before the owner can sell it to someone else.

A few key points:
• It doesn’t automatically give ownership. Having ROFR in a lease doesn’t mean the tenant can just decide to buy the house whenever they want. Instead, it means if the owner decides to sell, they must first offer it to the tenant on the same terms as any outside buyer.
• If the owner passes away: The property typically transfers according to the owner’s estate plan (will, trust, or state inheritance laws). The heirs (children, for example) would inherit ownership. However, the ROFR stays attached to the property. That means if the heirs later want to sell, the tenant with ROFR still gets the first chance to buy.
• How it works in practice: Let’s say the children inherit the house and choose to sell it. If someone else makes an offer, the tenant with ROFR has the right to either match that offer and buy the home, or decline and allow the sale to move forward.

So in short: ROFR doesn’t override inheritance — the children can still inherit the home. But if they decide to sell after inheriting, the ROFR clause gives the tenant priority in purchasing before it goes to the open market.

Because these clauses can be written in different ways, and inheritance laws vary by state, it’s always wise to have an attorney review the exact lease or estate documents if you’re directly affected.

A right of first refusal means if the owner ever decides to sell the house, you’d get the first shot at buying it. It doesn’t mean you can just buy the home whenever you want, only if the owner puts it up for sale.

If that right is written into your lease, and the owner passes away, the kids would still inherit the house. But if they ever decide to sell, they’d have to give you the same chance their parent would have. If they keep it and don’t sell, your right of first refusal doesn’t come into play.

So in a nutshell, the right of first refusal gives you first dibs to buy if the house is sold. It doesn’t change who owns the house or who inherits it.

Right of First Refusal (ROFR) gives a tenant or another party the first chance to buy a property if the owner decides to sell, but it doesn’t give them the power to force a sale. If it’s written into a lease, the tenant can match another buyer’s offer once the owner chooses to sell. If the owner passes away, heirs inherit the property under estate law, but the ROFR stays attached—meaning if the heirs ever decide to sell, the ROFR holder gets their opportunity.

IN Florida right of first refusal only means that if the owner decides to sell the house the holder of the ROFR has the opportunity to make an offer. There is no pre-arranged price involved. This is often confused with the lease with option to buy which requires money up-front from lease holder.

Right of first refusal in real estate gives a person or group the first opportunity to purchase a property before the seller can accept another offer. If they decline, the seller is free to move forward with other buyers. This clause often comes up in situations involving tenants, family members, or homeowners’ associations, so it is important to understand if it applies when buying or selling a home.

Understanding the Right of First Refusal (ROFR) in Real Estate
If you've ever heard the term "Right of First Refusal" and wondered what it actually means, you're not alone. It's a common clause in real estate agreements, but it's often misunderstood. Let's break it down in straightforward terms.
What is a Right of First Refusal?
Think of ROFR as a "first-dibs to match" pass. It doesn't force the property owner to sell, and it doesn't guarantee the holder will get to purchase the property. However, if the owner does decide to sell or receives an acceptable offer from someone else, the ROFR holder gets the first opportunity to buy on those same terms.
In Plain English
A chance to buy, not a command to sell. The owner maintains full control and can choose to keep their property indefinitely. But if they do decide to sell, they're required to offer the same deal to the ROFR holder before accepting an offer from anyone else.
Match the terms. Whatever a third-party buyer offered—the price, timeline, contingencies, and all other conditions—must be presented to the ROFR holder. They then have a specific time window (defined in the agreement) to accept or decline.
Contract-driven. Everything about how a ROFR works comes from the written agreement and applicable state law. This includes what triggers the ROFR, how notice must be given, and how long the holder has to respond.
ROFR vs. Other Purchase Rights
It's helpful to understand how ROFR differs from similar concepts:
Right of First Refusal (ROFR): First chance to match a legitimate offer from another buyer.
Right of First Offer (ROFO): The holder gets to make the first offer before the owner even markets the property to others.
Option to Purchase: A much stronger right that allows purchase at a predetermined price and terms within a set timeframe, regardless of whether the owner wants to sell.
Common Questions About ROFR
If ROFR is in a lease, can the tenant buy whenever they want?
Not automatically. A ROFR clause in a lease agreement doesn't give the tenant the power to purchase the property at will. It only becomes active if the owner decides to sell or accepts an offer that triggers the ROFR provision.
When triggered, the owner must formally notify the tenant and present the same terms offered by the third party. The tenant must then accept within the contractual deadline and proceed through the normal purchase process—earnest money deposit, inspections, financing arrangements, and closing.
What happens if the owner passes away?
This is an important question that many people wonder about. Here's how it typically works:
Inheritance and ROFR are separate matters. When a property owner passes away, their heirs (such as children) generally inherit the property subject to all existing agreements—including a valid ROFR. The right doesn't simply disappear because of the owner's death.
If heirs keep the property: There's no sale, so the ROFR isn't triggered.
If heirs decide to sell: The ROFR must still be honored. The heirs are obligated to provide notice to the ROFR holder and give them the same opportunity to match any offer, exactly as outlined in the original contract.
Probate considerations: The estate settlement process may add procedural steps, and a court or personal representative might need to approve the sale. However, the ROFR remains in effect unless the agreement specifically states otherwise.
How ROFR Works: Step-by-Step
Understanding the process helps both parties know what to expect:
Step 1 – Trigger: The owner decides to sell or receives a third-party offer (depending on how the contract is written).
Step 2 – Notice: The owner provides written notice to the ROFR holder with complete details of all terms and conditions.
Step 3 – Decision window: The ROFR holder has the agreed-upon timeframe to either accept or decline the offer.
Step 4 – If accepted: Both parties sign a purchase agreement based on those terms and proceed to closing.
Step 5 – If declined or time expires: The owner is free to sell to the third party on substantially the same terms. Many contracts require the owner to re-offer to the ROFR holder if the terms are later improved or changed significantly.
Practical Tips for Both Parties
Whether you hold a ROFR or you're a property owner with one attached to your property, keep these points in mind:
Read the document carefully. Small clauses can have big implications. Many ROFR agreements exclude certain transactions from triggering the right, such as transfers to family members, gifts, or refinancing transactions.
Respect the deadlines. Time limits in ROFR agreements are typically strict and enforceable. Missing a deadline can result in permanently waiving your right to purchase.
Maintain proper documentation. Always use the written notice procedures required by your agreement. If you're a ROFR holder, consider recording a memorandum against the property title if your attorney advises it for protection.
Consult professionals. Real estate laws vary by state, and the specific language in your agreement matters greatly. A qualified real estate attorney can provide guidance tailored to your situation and local regulations.
The Bottom Line
A Right of First Refusal gives you the first opportunity to match a genuine offer if the property owner decides to sell. It's important to understand what it does and doesn't do:

It does NOT force the owner to sell their property
It does NOT automatically transfer the property to you
It DOES give you priority if and when the owner chooses to sell
It DOES survive the owner's death and must be honored by heirs who decide to sell

Think of ROFR as a protective measure that ensures you won't be blindsided if a property you care about comes up for sale. It keeps you in the game without forcing anyone's hand.
If you have a ROFR or are considering entering into an agreement that includes one, take the time to understand exactly how it's structured and what your rights and obligations are. With the right knowledge and professional guidance, a ROFR can be a valuable tool in your real estate strategy.

This article is for informational purposes only and should not be considered legal advice. Please consult with a qualified real estate attorney regarding your specific situation.