Rights of First Refusal, Rights of First Offer, Options to Purchase: Key Provisions for Clarity and Enforceability

Recording of a 90-minute premium CLE webinar with Q&A

Conducted on Tuesday, May 28, 2019

Recorded event now available

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Program Materials

This CLE webinar will examine and compare rights of first offer (ROFO), rights of first refusal (ROFR), and options to purchase commercial property (collectively, the purchase rights). The panel will discuss key drafting points and issues of interpretation which can arise due to a lack of clarity or unforeseen circumstances. The panel will also address title, financing and subordination issues to consider when granting a purchase right.


Real estate lawyers use ROFOs, ROFRs and purchase options in some contexts, including office and retail leases, ground leases, condominiums, planned developments, franchise agreements, and joint ventures. Purchase rights can have far-reaching effects on the grantor, holder and subject property but are often an afterthought in the underlying transaction. They must be drafted with care, taking into account potential changes in parties and circumstances which may occur years later.

The agreement should state the conditions for exercising the right to purchase and include a "time is of the essence" clause. All notices and other documentation must be in writing, and the parties should be identifiable. The parties should specify whether the preemptive right is a one-time right or a continuing right, whether the agreement requires strict compliance in exercising the right, and whether it is assignable.

The grantor should consider the burden on the title to the property. The grantor may have difficulty financing, selling or leasing the property as a result of the purchase right. Lenders typically require subordination of an existing right before making a mortgage loan. Purchase rights should contain precise subordination language that addresses financing and foreclosure contingencies so that no further subordination is required.

Listen as our authoritative panel discusses the nuances of ROFOs, ROFRs and purchase options, and key provisions to include in each. The panel will also review title ramifications of preemptive purchase rights and their impact on future financing and sales transactions.



  1. Distinguishing between different types of purchase rights
    1. Right of first refusal
    2. Right of first offer
    3. Option to purchase
  2. Key provisions
    1. Triggers, notice, other requirements to exercise purchase right
    2. Time of the essence, strict compliance
    3. Valuation
    4. Identification of parties: assignment provisions
  3. Common points of misunderstanding and dispute


The panel will review these and other critical issues:

  • What distinguishes a ROFR from a ROFO or an option to purchase?
  • Why might "time of the essence" and strict compliance provisions be particularly relevant when drafting purchase rights provisions?
  • What are some of the pitfalls in drafting ROFRs, ROFOs and purchase options?
  • What are the factors when drafting purchase price provisions?
  • How might purchase rights impact future transfers and financings of property? Is a purchase right insurable under a title policy?


Allen, Kathryn
Kathryn E. Allen
The Law Office of Kathryn E. Allen

Ms. Allen is an attorney providing legal services covering Business Litigation and General Litigation, Oil and...  |  Read More

Simoneaux-Cuaso, Maggie
Maggie R. Simoneaux-Cuaso

Simoneaux Law Firm

Ms. Simoneaux-Cuaso dedicates her practice exclusively to real estate law. She delivers aggressive representation...  |  Read More

Siesta, Victoria
Victoria J. Siesta

Ballard Spahr

Ms. Siesta focuses her practice on real estate finance transactions, working directly with commercial banks,...  |  Read More

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