What Is A Right Of “First Refusal?”
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A right of first refusal typically allows a buyer to purchase a home by matching another bid. For instance, if Green has a right of first refusal to purchase the Smith house, and Smith receives an offer of $100,000, then Green will be able to buy the property for $100,000.
A right of first refusal raises some important issues. For instance: When the Smith house is offered for sale, Smith must tell potential buyers about the right of first refusal — and this may make the property less attractive and lower its value. Green may want to record the right of first refusal with the public records office so all buyers are on notice with regard to Green’s rights.
Because of the complexities involved, it is suggested that a right of first refusal should be drawn up by an attorney and that such an offer should not be accepted without a legal review.
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