If you are looking to buy or sell a property, you might come across the term “right of first refusal” in a real estate contract. This provision is often included in contracts to protect the buyer or seller`s interests in case of future offers. In this article, we will discuss what right of first refusal means, how it works, and provide a sample of this real estate contract provision.
What is a Right of First Refusal in Real Estate Contracts?
A right of first refusal in a real estate contract is a clause that allows the buyer or seller to have the first opportunity to purchase the property if the other party decides to sell it. This provision is often included in contracts to protect the interests of both parties. For example, if a property owner wants to sell their property, they may want to ensure that the new owner shares their vision for the property and will maintain its value. On the other hand, a buyer may want to ensure that they have the option to purchase the property if the seller decides to sell it in the future.
How Does a Right of First Refusal Work in Real Estate Contracts?
If a right of first refusal clause is included in a real estate contract, the buyer or seller who has this right will be given the first opportunity to purchase the property if the other party decides to sell it. If the seller receives an offer from a third party, they must provide the buyer or seller with the right of first refusal notice. The party then has a predetermined amount of time to decide if they want to purchase the property before the third party`s offer can be accepted. If the buyer or seller decides not to purchase the property, the seller is free to sell the property to the third party.
Right of First Refusal Real Estate Contract Sample
Below is an example of a right of first refusal clause that can be included in a real estate contract:
Right of First Refusal: In the event the seller receives an offer for the sale of the property, the buyer will be given the right of first refusal. The seller must provide written notice to the buyer of the terms of the offer, and the buyer will have [insert number] days to accept or reject the offer. If the buyer chooses to exercise their right of first refusal, they agree to purchase the property under the same terms and conditions as the third-party offer.
Conclusion
In conclusion, a right of first refusal is a beneficial clause to include in a real estate contract, as it provides both parties with protection and ensures that the property`s value is maintained. As a professional, I hope this article has been informative and helpful in understanding what a right of first refusal is and how it works in a real estate contract.