Why a Right of First Refusal Can Derail a Real Estate Transaction

You’ve negotiated the price. The contract is signed. Inspections are underway. Everything feels like it’s finally moving forward—until you hear four words that can change the entire transaction: “There’s a right of first refusal.”

For many buyers and sellers, a right of first refusal (often shortened to ROFR) comes as an unpleasant surprise. It can slow down a closing, inject uncertainty into the deal, and in some cases completely replace the buyer you thought you had.

If you’re buying or selling property and a right of first refusal is involved, understanding how it works—and how it affects timing and pricing—is critical.

What a Right of First Refusal Actually Means

A right of first refusal gives a specific person or entity the legal right to match the terms of a proposed sale before the property can be sold to someone else.

It does not allow that party to force a sale, set the price, or negotiate new terms. Instead, the right only becomes relevant after the seller and a third-party buyer have already agreed on a deal.

In practical terms, the process usually looks like this:

A seller negotiates and signs a contract with a buyer. That contract is then presented to the party holding the right of first refusal. The holder is given a defined period of time to decide whether they want to step into the buyer’s shoes and purchase the property on the exact same terms. If they decline or fail to respond in time, the original buyer can proceed with the purchase.

That waiting period—and the uncertainty that comes with it—is where most problems arise.

Where Buyers and Sellers Commonly Encounter ROFRs

Buyers and sellers most often encounter rights of first refusal in two situations:

In both cases, the right exists before the sale is negotiated, but it often isn’t fully appreciated until a deal is already underway.

How a Right of First Refusal Affects Sellers

For sellers, a right of first refusal does not prevent you from selling—but it does affect how you sell.

One of the biggest impacts is timing. Even after you’ve accepted an offer, you may be required to pause while the ROFR holder reviews the contract. This can add weeks to a transaction and complicate scheduling with lenders, movers, and buyers who are trying to plan around a closing date.

ROFRs can also affect buyer interest. Some buyers are hesitant to invest time and money into inspections, appraisals, and financing when there’s a chance they could lose the deal at the last minute. That hesitation can translate into fewer offers or more conservative pricing.

It’s also important for sellers to understand that attempts to structure a deal to discourage the ROFR holder—such as inflating the price or adding unusual terms—can backfire. Courts generally look closely at whether the ROFR holder was given a fair opportunity to match the deal.

What Buyers Should Know Before Making an Offer

For buyers, a right of first refusal introduces a layer of risk that doesn’t exist in a standard transaction.

Even with a signed contract, the deal is not fully secure until the ROFR period expires. That means buyers should be cautious about incurring non-refundable costs too early and should understand exactly when the ROFR decision window opens and closes.

Buyers should also pay close attention to whether the ROFR holder must match all terms, not just price. Financing terms, closing timelines, contingencies, and other details can matter. A mismatch between the buyer’s offer and the ROFR holder’s ability or willingness to meet those terms may determine whether the deal survives.

Knowing this upfront allows buyers to negotiate intelligently and manage expectations.

How ROFRs Affect Pricing—Even Indirectly

While a right of first refusal doesn’t allow the holder to dictate price, it can influence pricing dynamics in subtle but real ways.

Sellers may worry that a strong offer will simply be matched, discouraging buyers from offering aggressively. Buyers, in turn, may factor that risk into their offers, sometimes resulting in lower initial pricing or added contingencies.

In commercial settings, ROFRs can dampen competitive bidding altogether, which can impact value. In residential transactions, the effect is usually more psychological but still meaningful.

Common ROFR Pitfalls That Cause Disputes

Disputes involving rights of first refusal often arise from technical missteps rather than bad intent.

Common issues include failing to provide proper notice, missing response deadlines, disputes over whether the terms truly match, or disagreements over whether a particular transaction even triggers the ROFR.

Because ROFRs are strictly enforced according to their written terms, even small mistakes can invalidate a sale or delay a closing significantly.

Why the Exact Language Matters So Much

Not all rights of first refusal are the same. The governing document or lease controls everything: who holds the right, how notice must be given, how long the holder has to respond, and what happens if they decline.

Some ROFRs apply only to outright sales. Others apply to transfers, assignments, or even certain financing arrangements. Understanding the scope of the right before listing or making an offer can prevent costly surprises later.

How Buyers and Sellers Can Protect Themselves

For sellers, the best protection is transparency and planning. Knowing a ROFR exists, disclosing it early, and building realistic timelines into the contract helps keep deals on track.

For buyers, protection comes from understanding the risk and structuring the contract accordingly—whether that means adjusting timelines, managing deposits carefully, or clarifying when costs are incurred.

In both cases, legal review can help ensure the ROFR is handled correctly and that the transaction complies with the governing documents.

Final Thoughts

A right of first refusal doesn’t have to kill a deal—but it does change the rules of the game.

For buyers, it means patience and careful planning. For sellers, it means managing expectations and timing. When handled correctly, transactions involving ROFRs can still close smoothly. When handled poorly, they often lead to delays, disputes, or lost deals.

At DuFault Law, we help buyers and sellers throughout Florida and Georgia navigate rights of first refusal so transactions move forward with clarity and confidence.

Worried a Right of First Refusal Could Delay Your Closing? We can help.

Don’t wait until the deal stalls. Contact DuFault Law now for clear guidance before deadlines and pricing are affected.

• Call us at (239) 422-6400
• Email us at contact@dufaultlaw.com
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