• Right Of First Refusal Form

RIGHT OF FIRST REFUSAL TO PURCHASE REAL ESTATE This Right of First Refusal to Purchase Real Estate is made on this the day of ,20, by and between , hereinafter referred to as the “SELLER” and , and his/her assigns, hereinafter referred to as the “PURCHASER”. WHEREAS, Purchaser desires to obtain a right of first refusal or first option to purchase certain real estate owned by Seller; and WHEREAS, Seller agrees to grant Purchaser a right of first refusal or first option to purchase real estate pursuant to the terms of this agreement; and NOW, FOR AND IN CONSIDERATION of $10.00 and other good and valuable considerations, the receipt and sufficiency of which is hereby acknowledged, it is agreed as follows: I.

GRANT OF FIRST OPTION: The Seller does hereby grant unto the Purchaser the exclusive and irrevocable right, during the term of this agreement, of first refusal and first option to purchase, upon the terms and conditions hereinafter set forth, Seller’s property situated in County, , including without limitation the following described property together with all improvements located thereon: See attached Exhibit “A” II. EXERCISE OF FIRST OPTION: This right of first refusal or first option to purchase may only be exercised by Purchaser within ten (10) days from notification by Seller that Seller desires to sell the subject property. Seller is obligated to provide such notice to Purchaser prior to offering the subject property to a third party. TERMS OF PURCHASE: In the event Seller elects to sell and Purchaser desires to exercise his first refusal rights granted under the terms of this agreement, the terms of purchase shall be as follows: a) $ cash payable at closing, OR b) $1.00 more than any bona fide offer to purchase received by Seller from any third party, whichever is higher. TITLE: Within fifteen (15) days after the Purchaser has exercised his or her right of first refusal, the Seller shall deliver to the Purchaser a Certificate of Title or title abstract covering the property described in paragraph I above which shall reflect that marketable fee simple title to the subject property is vested in Seller and that same is insurable by a title insurance company licensed to do business in the State of. Said Certificate or abstract shall be subject only to taxes for the current year, easements, and rights of way of record, and prior mineral reservations.

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Should said Certificate or Abstract reflect any other excep­tions to the title unacceptable to Purchaser, Purchaser shall notify the Seller in writing of any defects within fifteen (15) days (the title review period) and the Seller shall have a reasonable time (but not more than 25 days) in which to make the title good and marketable or insurable, and shall use due diligence in an effort to do so. If after using due diligence the Seller is unable to make the title acceptable to Purchaser within such reasonable time, it shall be the option of the Purchaser either to accept the title in its existing condition with no further obligation on the part of the Seller to correct any defect, or to cancel this Agreement. If this Agreement is thus cancelled, all money paid by the Purchaser to the Seller upon the execution of this Agreement or upon any extension shall be returned to the Purchaser, and this Agreement shall terminate without further obligation of either party to the other. If title is acceptable to Purchaser, the closing shall occur within fifteen (15) days after expiration of the “title review period”. At closing Seller shall convey title to Purchaser by Warranty Deed subject only to exceptions acceptable to Purchaser. OPTION OR FIRST REFUSAL MONEY: Upon execution of this agreement, Purchaser has paid unto Seller the sum of $ as “First Refusal or Option Money”.

The Option Money shall not be deducted from the purchase price of the property and is paid to Seller as consideration for and to make this agreement valid. TERM AND EXTENSION: The term of this agreement shall be years from that date hereof. This agreement may be extended for an additional years by Purchaser paying unto Seller, in cash, an additional sum of $ prior to the expiration of the initial term. EXPENSES OF SALE: All costs and expenses of the sale including attorney’s fees, recording fees, and any and other costs attributable to the preparation of the Warranty Deed, Title Certificate, abstract and any other closing documents shall be paid by purchaser. POSSESSION: Purchaser shall be entitled to possession of the property at closing. RIGHT OF ENTRY: Upon notification by Seller of his or her desire to sell and Purchaser’s exercise of his or her first refusal, Purchaser shall be entitled to enter upon the property for the purpose of conducting soil tests, engineering studies, and surveys.

TAXES: Taxes shall be prorated as of the date of closing. DEFAULT: This contract shall be binding upon and inure to the benefit of the heirs, administrators and assigns of the parties hereto and upon default in any of the terms of this Agreement the defaulting party agrees to pay all costs of Court and a reasonable attorney’s fee.

XIII GOVERNING LAW: This agreement shall be governed by the laws of the State of. IN WITNESS WHEREOF, the parties have executed this Agreement on this the day of , 20.

SELLER PURCHASER STATE OF COUNTY OF PERSONALLY appeared before me, the undersigned authority in and for the county and state aforesaid, the within named , who acknowledged that he/she signed and delivered the foregoing agreement on the day and year therein stated. GIVEN under my hand and official seal this the day of , 20. NOTARY PUBLIC My Commission Expires: STATE OF COUNTY OF State Specific Real Estate Forms –For State Specific Real Estate Forms you can download in Word format, go to Inside Right of First Refusal.

This article needs additional citations for. Unsourced material may be challenged and removed. (April 2013) Right of first refusal ( ROFR or RFR) is a that gives its holder the option to enter a business transaction with the owner of something, according to specified terms, before the owner is entitled to enter into that transaction with a third party. A first refusal right must have at least three parties: the owner, the third party or buyer and the option holder.

In general, the owner must make the same offer to the option holder before making the offer to the buyer. The right of first refusal is similar in concept to a. An ROFR can cover almost any sort of, including, personal, a license, a, or an interest in a business. It might also cover that are not strictly assets, such as the right to enter a joint venture or distribution arrangement. In entertainment, a right of first refusal on a concept or a would give the holder the right to make that movie first. Only if the holder turns it down may the owner then shop it around to other parties. Because an ROFR is a contract right, the holder's remedies for breach are typically limited to recovery of.

In other words, if the owner sells the asset to a third party without offering the holder the opportunity to purchase it first, the holder can then sue the owner for damages but may have a difficult time obtaining a court order to stop or reverse the sale. However, in some cases the option becomes a that may be used to invalidate an improper sale. ROFR also arises in visitation agreements/orders in divorce cases. In such cases, an ROFR may require a custodial parent to offer parenting time to the non-custodial parent (rather than having a child supervised by a third party) any time that the custodial parent or his/her family is unable to exercise his/her right to parenting time (e.g., the custodial parent needs to travel out of town). Under these circumstances a breach may result in a finding of contempt and any remedies for contempt. An ROFR differs from a Right of First Offer (ROFO, also known as a Right of First Negotiation) in that the ROFO merely obliges the owner to undergo exclusive negotiations with the rights holder before negotiating with other parties.

A ROFR is an option to enter a transaction on exact or approximate transaction terms. A ROFO is merely an agreement to negotiate. Contents. Examples ROFR: Abe owns a house and Bo offers to buy that house for $1 million. However, Carl holds a right of first refusal to purchase the house. Therefore, before Abe can sell the house to Bo, he must first offer it to Carl for the $1 million that Bo is willing to buy it for.

If Carl accepts, he buys the house instead of Bo. If Carl declines, Bo may now buy the house at the proposed $1 million price. ROFO: Carl holds a ROFO instead of an ROFR. Before Abe can negotiate a deal with Bo, he must first try to sell the house to Carl on whatever terms Abe is willing to sell. If they reach an agreement, Abe sells the house to Carl. However, if they fail, then Abe is free to start fresh negotiations with Bo without any restriction as to price or terms.

Variations The following are all variations on the basic ROFR:.: The ROFR is limited in time. For example, Abe must make the offer to Carl for any proposed sale only in the first five years. After that, the right expires and Abe has no further obligation to Carl. Exceptions include certain transactions. Abe may sell or transfer the property to a holding company, a trust, family members, etc. Without first offering it to Carl.

However, the new owners remain subject to the right. Transferability: Carl may assign his ROFR to Bo. Abe must now offer Bo an option to purchase the property instead of Carl. Not every ROFR is transferable; some are personal to the original holder.

Extinguished on first sale: if Abe sells the property to Bo because Carl declines the right, the property is no longer subject to the right. Bo may resell it free of the ROFR. Extinguished on declined/failed exercise: if Abe proposes to sell the property to Bo and Carl declines, or if Carl accepts but is unable to complete the transaction, the right is extinguished whether or not Abe ultimately sells the property. Persistent: in contrast to the above two, in this case, the right runs with the property and binds the new purchaser. If Abe sells the property to Bo, Bo must offer the property to Carl first, just like Abe if Bo wishes to re-sell it. Offer and acceptance terms: specific deadlines, procedures, and forms may be required.

For example, Abe must give Carl a 'notice of sale.' Carl has 30 days to accept or reject, with failure to respond counting as rejection. Carl must then close the transaction within that time, or that counts as a failed attempt to exercise. Limited time period to close transaction: Abe offers the property to Carl under the ROFR, and Carl declines. Abe now has 60 days to close the transaction with Bo. If it cannot close within 60 days, Abe must offer it again to Carl before proceeding further with Bo.

Substitute purchaser allowed: Abe offers the property to Carl, who declines. Abe is then free to sell it to Bo but fails to do so. Abe may sell the property under the same terms to Erin instead without reoffering it to Carl. No pending transaction required: Abe wishes to sell the house for $1 million but has not yet identified a purchaser. He prepares proposed sales terms and offers it to Carl on those terms. If Carl declines, he may then shop around for a purchaser.

Right Of First Refusal Form

Slight variations allowed in exercise: Abe enters an agreement with Bo calling for Bo to put down a 30% down payment, conduct certain inspections, and close the transaction in 20 days. He offers it to Carl at those terms. Carl accepts but is entitled to insist on a 20% down payment and a 30-day closing period. Slight variations allowed in sale: Abe offers the house for $1 million to Carl, who declines. Abe then enters a transaction with Bo but during the, Bo discovers a flaw in title and several defects. Abe is entitled to discount the price by $20,000 to close the sale with Bo without having to reoffer the house to Carl at $980,000.

Continuous: a continuous right of first refusal can be worded to continue to live, even upon infinite opportunities that are declined. Many other variations are possible. A fully drafted ROFR addresses all of the types of issues and more, and in the case of valuable or complex transactions it is subject to negotiation and review by business transaction attorneys. However, many ROFR are not completely specified. Even the best drafted ROFR agreements suffer a high risk of dispute and litigation because they are anticipating future transactions and contingencies that are unknowable when the ROFR originates. In venture capital In venture capital deals, the right of first refusal is a provision permitting existing investors in a company to accept or refuse the purchase of equity shares offered by the company, before third parties have access to the deal. University of San Francisco. The main goal of the provision is to allow investors to prevent as the company raises additional capital.

Typically, the provision will exempt certain types of shares, such as those in an employee pool, or shares issued to equipment loaners or lessors. Are advised to attempt negotiating out this right, because it enables existing investors to send stronger (potentially negative) signals to new investors, and consequently drive down the company's valuation. See also. References.