Right of First Refusal Clause

A Right of First Refusal Clause is a contractual provision that gives an individual or entity the first opportunity to purchase or lease property before the owner can offer it to others. This clause is commonly found in real estate transactions, business partnerships, and other agreements where asset transfer is involved.

In a Right of First Refusal Clause, if the property owner decides to sell or lease the property, they must first notify the individual or entity holding the right, allowing them an exclusive chance to make an offer. If the holder of the right declines or fails to respond within a specified timeframe, the owner is free to negotiate with other potential buyers or lessees.

For example, in a real estate context, if a homeowner includes a Right of First Refusal Clause in a contract with a neighbor, the neighbor would have the first chance to buy the house if the homeowner decides to sell. This can be advantageous for the potential buyer, as it provides them with a degree of control over the property market.

This clause can also impact negotiations and property values, as it may limit the pool of potential buyers or affect the owner’s ability to sell. In Houston and surrounding areas in Texas, such clauses might be included in residential leasing agreements or commercial property contracts, reflecting local practices in real estate transactions.