Right of First Refusal

An agent has a commercial listing, and a buyer made an offer. The seller wants to negotiate a right of first refusal if the buyer decides to sell it in the future. Can the listing agent counter the offer to negotiate a right of first refusal?

Answer:

If the seller wishes to obtain a right of first refusal to buy back the property if the buyer were to sell it in the future, the seller may counter the offer to include a contingency providing that the parties are to enter into a right of first refusal drafted by the parties` respective legal counsel.

The right of first refusal most often given in real estate transactions provides that the potential purchaser has the first right to buy the particular property upon the terms and conditions offered by another buyer. The person given the right of first refusal has the right to match the price, terms and conditions offered by the other buyer. This presumably includes the timing. This presumes that the terms of the offer made by the other buyer must be given to the person holding the right of refusal so that they can decide whether to match those terms and buy the property or let the other prospective buyer purchase the property.

Real estate licensees should not draft rights of first of refusal and instead should encourage their party to contact legal counsel.

To find an attorney, a person may contact the State Bar of Wisconsin’s Lawyer Referral Service (LRS). When calling the LRS, a legal assistant helps determine the nature of the potential dispute and can refer attorneys in the caller’s area who have practice in matters related to the potential dispute. They can visit the LRS online, or they may call 800-362-9082, Monday through Friday, from 8:00 a.m. to 5:00 p.m.

For more information, see page 16 of the February 2013 Legal Update, "Contract Law Drafting Pointers," and the previous WRA Legal Hottips that discuss the topic of right of first refusal. Please note that you must be signed into your myWRA account to access the hottips...