Sample Right Of First Refusal Clause Real Estate
Introduction
Real estate transactions can be complicated, with many moving parts to consider. One important aspect of buying or selling a property is the right of first refusal clause. This clause provides a potential buyer with the opportunity to match or exceed an offer made by another party. In this article, we’ll discuss what a right of first refusal clause is, how it works, and provide a sample clause for real estate transactions.
What is a Right of First Refusal Clause?
A right of first refusal clause is a legal provision that gives a party the opportunity to purchase a property before the seller can accept an offer from another buyer. This clause is typically included in a purchase agreement or lease agreement, and it gives the party with the right of first refusal the chance to match or exceed the terms of any offer made by another party.
For example, let’s say you are a tenant renting a commercial space. Your lease agreement includes a right of first refusal clause, which means that if the landlord receives an offer to purchase the property, you have the right to match or exceed that offer and purchase the property yourself.
How Does a Right of First Refusal Clause Work?
A right of first refusal clause typically works like this: if the property owner receives an offer from a third party, they must notify the party with the right of first refusal of the offer. The party with the right of first refusal then has a certain amount of time to decide whether they want to match or exceed the offer.
If the party with the right of first refusal decides to match or exceed the offer, they will typically have a set amount of time to complete the purchase. If they fail to do so, the seller can then accept the offer from the third party.
Sample Right of First Refusal Clause for Real Estate
Here is a sample right of first refusal clause for real estate:
If the Seller receives a bona fide offer from a third party to purchase the Property, the Seller shall give written notice of the offer to the Buyer. The Buyer shall have the right to purchase the Property on the same terms and conditions as those contained in the offer, provided that the Buyer gives written notice to the Seller of the Buyer's intent to exercise this right within [number of days] days after receipt of the Seller's notice.
If the Buyer exercises this right, the closing of the sale shall take place within [number of days] days after the date of the Buyer's notice. If the Buyer fails to give notice within the time specified, or if the closing does not take place within the time specified, the Seller may sell the Property to the third party on the terms and conditions contained in the offer.
Conclusion
A right of first refusal clause is an important legal provision in real estate transactions. It gives a party the opportunity to match or exceed an offer made by another party, and can be included in a purchase agreement or lease agreement. If you are considering including a right of first refusal clause in your real estate transaction, be sure to consult with a qualified real estate attorney to ensure that the clause is properly drafted and enforceable.