Right of First Refusal

A right of first refusal (ROFR) is a contractual clause that gives one party the right to match any offer made by a third party to buy or sell an asset. The party with the ROFR has the first right to buy or sell the asset at the same price and terms as the third-party offer.

ROFRs are often used in real estate transactions, where the seller may want to give the current tenant the first chance to buy the property before it is listed on the open market. ROFRs can also be used in business transactions, where the seller may want to give a key employee or customer the first chance to buy the company before it is sold to a third party.

There are two main types of ROFRs:

• Unconditional ROFRs: These ROFRs give the party with the right to match any offer, regardless of the price or terms.
• Conditional ROFRs: These ROFRs give the party with the right to match only certain offers, such as offers that are above a certain price or that meet certain other conditions.

ROFRs can be a valuable tool for businesses and individuals who want to control who owns their assets. However, it is important to understand the terms of any ROFR before agreeing to it, as they can have significant implications for the future sale or purchase of an asset.

Here are some additional things to keep in mind about ROFRs:

• ROFRs can be difficult to enforce. If the party with the ROFR does not exercise their right to match the third-party offer, the third party may be able to purchase the asset without any further obligation.
• ROFRs can also be time-consuming and expensive to negotiate. It is important to have an experienced attorney review any ROFR before agreeing to it.
• ROFRs can be used to block a sale or purchase of an asset. If the party with the ROFR is unable to match the third-party offer, the sale or purchase may be delayed or even prevented altogether.

Overall, ROFRs can be a valuable tool for businesses and individuals who want to control who owns their assets. However, it is important to understand the terms of any ROFR before agreeing to it, as they can have significant implications for the future sale or purchase of an asset.