What is a "right of first refusal" in real estate?

A "right of first refusal" is a legal agreement that grants a specific party the opportunity to purchase a property before the owner sells it to any other party. This arrangement ensures that the party with the right of first refusal gets the first chance to buy the property under specified conditions, often at a predetermined price or within a certain timeframe.

This concept is commonly utilized in various real estate transactions, including residential and commercial leases. For example, if a tenant has a right of first refusal, they would be notified if the landlord decides to sell the property, and they would have the option to buy it before the landlord can consider offers from other potential buyers. It's a way to provide security and first choice to a party who may have a vested interest in the property.

In contrast, the other options do not accurately represent the nature of a right of first refusal. An agreement to sell at a discount refers to a pricing strategy rather than purchasing preference. A clause preventing the sale of a property indicates restrictions rather than offering rights. A contract to lease a property relates to renting rather than buying, thus missing the essence of purchase rights.