Rights of first refusal and rights of first offer are frequently used in commercial real estate transactions, establishing rights to acquire property from a seller before it hits the market. The practical effect of these tools is often to exert downward pressure on the price of the property and hamper development of a third-party market.
Rights of first refusal can help hasten a deal among buyers and sellers or landlords and tenants, thereby reducing costs, or they can be a costly waste of time. There are many subtle differences between rights of first refusal and rights of first offer, each with subtle tradeoffs for counter-parties that must be considered in context of a particular transaction.
This program provides a practical guide to drafting rights of first refusal and rights of first offer in real estate.
- How rights of first refusal and rights of first offer work in real estate transactions
- Real-world costs, tradeoffs and risks of each type of right – and drafting tips and traps
- Best circumstances in which these mechanisms are used in property acquisitions, sales, and leasing
- How rights of refusal depress prices &limiting third party interest in the property – and how to mitigate
- Practical strategies for buyers and sellers, landlords and tenants when negotiating these rights