Right of first refusal

A right of first refusal is a contractual preemption mechanism that grants a designated party—such as a tenant, co-owner, or investor—the first opportunity to purchase real estate before the owner can offer it to outsiders.

When exercising this right, the beneficiary must purchase on the same terms and conditions the owner intends to offer to third parties. The right is triggered only if the owner decides to sell; it does not force a sale. If the right is not exercised or is waived within the specified timeframe, it lapses and the owner regains full freedom to sell.

In commercial property, this mechanism is commonly used in lease agreements, business premises, and investment structures to protect tenant continuity or secure the interests of minority shareholders.