right of first refusal

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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 ?
During this auction of spectrum in Singapore, M1 picked up 20MHz in the 700MHz frequency band and a right of first refusal to 10MHz in the 900MHz band for SGD208 million, while the mobile newcomer TPG Telecom purchased 10MHz in the 2.
Back then, selectmen assigned their right of first refusal to the Land Bank Committee, established by town meeting.
Additionally, the Trust stated that Softvest can rightfully reduce the purchase price in the event of defects in title to the Royalty NPI, pursuant to the Softvest Agreement, though related to its exercise of its right of first refusal, ECA noted that it will not require any review of the status of title to the Royalty NPI and therefore, the Trust does not expect lowering of the price for title issues.
How Ronson's option on the property expired is unclear, however, some real estate executives speculate that the developer went to Saudi Arabia after he learned of the Saudi Arabia after he learned of the Bear Steams deal and persuaded the Al-Babtain family, CS First Boston's partners in the site, to exercise their right of first refusal and develop the project with him.
The right of first refusal clause that appears in the lease agreements of some laundry service companies is a constraint and violates the spirit of trust and customer satisfaction that underlies the contract.