right of first refusal

(redirected from Rights of First Refusal)

Right of first refusal

The right of a person or company to purchase some thing before the offering is made to others.

Right of First Refusal

The right of a person or organization to take advantage of a transaction before it is open to other parties. For example, a seller and potential buyer of a house may agree that the buyer has right of first refusal. Then, if the seller receives a better offer from another potential buyer, she must take the offer to the first buyer and, if that buyer accepts, sell to him rather than the second buyer. One party may pay for the right of first refusal, and it may be built into a contract. See also: Earnest money.

first refusal, right of

The right to buy or rent real property if and when the owner decides to sell or lease.The owner is under no obligation to ever sell or lease,though.Contrast this with an option, in which the the person who wants to buy or lease (optionee) has a legal right to require the owner (optionor) to sell or lease,but the optionee does not have any obligation to buy or lease.With a right of first refusal,control is in the owner.With an option,control is in the other person.

Care should be taken when drafting a right of first refusal.The parties should specify an expiration date, a price or method of calculating the price, and what happens if the purchaser-lessee declines to buy or lease at a particular point: Does the right of first refusal end, or does it continue to the next time?

The parties should give particular thought and attention to describing the triggering event.What gives rise to the ability to exercise the right of first refusal? Is it the owner merely soliciting offers, or must there be a bona fide offer from a third party before the party will be notified and given the first opportunity to buy or lease? What if the owner dies? Does the party have a right to buy the property before it passes to the heirs?


right of first refusal

The right to match a third-party's offer and purchase property if it is offered for sale. The owner has no obligation to sell to anyone, however. The term “right of first refusal” is often used interchangeably with option,but an owner who grants an option is obligated to sell if the recipient of the option chooses to exercise it. Contrast right of first offer.

References in periodicals archive ?
Golden Spread filed suit against TCC, OMPA and the board, alleging that neither the board nor OMPA effectively exercised their rights of first refusal and that TCC was obligated to close the sale of TCC's interest to Golden Spread.
Shares were sold to Saifun shareholders, who exercised their rights of first refusal.
Peterbilt Motors Company ("Peterbilt") advised the Company that it does not intend to exercise its rights of first refusal with respect to ATS' pending sale of Dallas Peterbilt or Nashville Peterbilt.
According to these definitive agreements, CSI, JFE and the other Japanese shareholders waived their rights of first refusal under the CST Shareholders Agreement as from October 14th, 2004.
The granting of certain rights of first refusal from the Ashford Group to MAM or Maricor Properties Ltd in connection with certain assets of the Ashford Group;
The transaction is also subject to other MobiFon shareholders' pro rata rights of first refusal, which, if fully exercised, will reduce the actual number of shares to be acquired by TIW to an 11.
Two current owners of STP, Texas Genco and San Antonio City Public Service Board, have indicated their intention to exercise rights of first refusal to purchase this interest.
The transaction is subject to other MobiFon shareholders' pro rata rights of first refusal which, if exercised, will reduce the actual number of shares to be acquired by TIW.
The Company has accepted the offer, which remains subject to certain conditions precedent, including regulatory and other approvals, and has provided its co-shareholders in Hexacom with the required notices to trigger certain rights of first refusal provided for in the Hexacom Shareholders' Agreement.
The by-laws include transfer restrictions in the form of reciprocal rights of first refusal such that Grupo Mexico and Union Pacific have the right of first refusal if the other party decides to sell their stake in GFM to an external party.
BHP Billiton") to waive their respective rights of first refusal with regards to the sale of Hunter Exploration Group's ("Hunter") minority, 14% interest in the Churchill Diamond Project to BHP Billiton.
SWV) announce that, further to their joint press release of May 5th, they have come to an agreement with BHP Billiton Diamonds Inc ("BHPB") to waive their respective rights of first refusal with regards to the sale of Hunter Exploration Group's ("Hunter") minority, 20% participating interests in the Aviat Project to BHPB.