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

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

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Conducted on Monday, December 12, 2022

Recorded event now available

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


Real estate lawyers use ROFOs, ROFRs, and purchase options in several contexts, including all commercial leases (office, retail, industrial, warehouse), ground leases, condominiums, and planned developments. Purchase rights can have a far-reaching impact 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.

We will discuss best practices for drafting purchase rights, including the following considerations. The agreement that includes a purchase right 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 or 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 due to 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, purchase options, and key provisions to include in each. The panel will also review the 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, and 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 pitfalls in drafting ROFRs, ROFOs, and purchase options?
  • What are the factors to consider 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

McPhelin, Hannah
Hannah Dowd McPhelin

Vice President, Real Estate and General Counsel
Harristown Enterprises

Ms. McPhelin is the Vice President of Real Estate and General Counsel for Harristown Enterprises Inc., a non-profit...  |  Read More

Martin, Kelly
Kelly L. Martin

Corporate Counsel - Real Estate
Ollie's Bargain Outlet

Ms. Martin leads the legal team that supports the retailer's meteoric real estate expansion. She manages...  |  Read More

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