At its essence, the Right of First Refusal (ROFR) is a contractual agreement between a property owner and a potential buyer. This agreement allows the potential buyer the option to purchase the property before the owner sells it to someone else. In other words, if the owner decides to sell the property, the individual with the ROFR is given the "first shot" at the deal.

How Does ROFR Work?

Notification: When a property owner receives a valid offer from a third party, they must notify the holder of the ROFR, typically in writing, about the terms and conditions of the offer.

Decision Time: The ROFR holder usually has a specific time frame (stipulated in the agreement) to decide whether they will match the third party's offer.

Matching the Offer: If the ROFR holder chooses to match the offer, they step into the shoes of the third party, and the original transaction proceeds with the ROFR holder instead.

Declining the Offer: If the ROFR holder decides not to match the offer or fails to respond within the stipulated timeframe, the property owner is then free to sell or lease to the third party.