CRE 101 · deweyluong.realtor

Right of First Refusal Explained: How a Georgia Tenant Matches an Offer and Buys the Building

A right of first refusal gives a tenant the right to match a real offer from someone else before the owner can accept it — the tenant does not set the price, the market does, and the tenant's only choice is to step into the buyer's shoes on the same terms or step aside. A tenant in 5,000 SF of a 20,000 SF Gwinnett center gets a notice that a third party has offered $2,600,000 for the center — the value its $182,000 of net operating income supports at a 7.0% cap rate — and has 15 days to match it: same price, same $100,000 earnest money, same closing clock. Under a right of first offer instead, the owner would first have offered the center to the tenant at $2,800,000, and a clause barring a sale below 95% of that price — $2,660,000 — without re-offering sends the same $2,600,000 bid back to the tenant's desk first. Same building, same final price, two different seats at the table. By Túy “Dewey” Luong, CCIM — Founding Broker, SERHANT. Atlanta · 318 closed sales / $281.2M career volume · 678-707-2498 · dewey.luong@serhant.com · https://deweyluong.realtor

The worked example uses made-up, rounded numbers. Real first-refusal and first-offer language varies lease by lease, and these clauses are litigated on their exact words. This page is general education only, not legal advice — both sides should have counsel review a live clause before a notice is sent or answered.

What a right of first refusal is, in plain English

• The basic idea: a right of first refusal — ROFR for short — is a promise written into a lease or a separate agreement: if the owner receives a bona fide offer from a third party that the owner wants to accept, the holder of the right gets to buy the property instead, by matching that offer. Until a real offer exists, the right sleeps. It does not let the tenant name a price or force a sale.
• The right of first offer is the earlier version: a ROFO obliges the owner to offer the property to the tenant first, before marketing it to anyone else. If the tenant declines, the owner may sell to others — usually subject to a floor, covered below, that stops the owner from quoting a high price and then quietly selling lower.
• It is not an option to purchase: an option gives the tenant a fixed price and the tenant's own timing — exercise by a deadline, at a price set when the lease was signed. A first refusal gives the tenant neither: the price is whatever a stranger offered, and the clock starts when that stranger appears. Tenants who want price certainty negotiate an option instead.
• One-time or continuing: some rights are one-time — exercise it or lose it on the first sale, and it never binds the next owner. Others are continuing and survive a sale, binding each future owner until the right expires by its own terms. Which version a lease grants is one sentence of drafting and a career-sized difference in value.

How the clause is usually built

• The trigger: for a ROFR, a bona fide third-party offer the owner is willing to accept. Well-drafted clauses exclude non-sale transfers — gifts, estate transfers, transfers to affiliates or partners, and foreclosure — so the right does not fire on paperwork moves. For a ROFO, the trigger is the owner's decision to sell at all.
• The notice package: the owner must deliver the offer's terms — and the clause should require a complete copy of the offer or contract, not the owner's summary. Price is one line of an offer; earnest money, contingencies, seller financing, and the closing date are the rest, and the tenant must match all of it.
• The election window: the tenant gets a fixed number of days from receipt of the complete notice to elect in writing — 10 to 30 days is the usual range. Silence at the deadline is a waiver for that sale. The window is short on purpose: the owner has a live buyer waiting.
• The matching standard: same price, same terms, same clock. After a valid election, the tenant steps into the buyer's place and closes on the third party's timeline, commonly 30 to 60 days.
• The ROFO floor: after a tenant declines a first offer, many clauses bar the owner from selling below a stated percentage of the offered price — 90% to 95% is common — within a stated period, often six to twelve months, without first re-offering to the tenant at the lower price. The floor is what makes the owner's first price honest.
• Recording and lenders: a first refusal that is not recorded — usually by a short memorandum in the county records — can be cut off when the property sells to a buyer who had no notice of it. Lenders, for their part, commonly require the right to be subordinated to the loan, so a foreclosure does not leave the lender owning a building a tenant can match its way into.

The worked example: a made-up Gwinnett center and its tenant

• The setup: a made-up neighborhood center of 20,000 SF in Gwinnett County producing $182,000 a year of net operating income. At a 7.0% cap rate, that income supports a value of $182,000 divided by 7.0%, which is $2,600,000. One tenant occupies 5,000 SF at $22.00 a square foot, $110,000 a year, with six years left on its lease and 3% annual increases. The rent still owed over those six years totals about $711,525. The tenant's lease carries a right of first refusal on a sale of the center.
• The trigger: an investor offers $2,600,000 for the center: $100,000 of earnest money, a 30-day due diligence period, closing 30 days after diligence ends. The owner wants to accept. Before signing, the owner delivers the complete offer to the tenant. The tenant's 15-day election clock starts on receipt.
• The match, in numbers: matching means $2,600,000 on the same terms — the same $100,000 earnest money posted on the same schedule, the same diligence and closing dates. A typical financed match at 25% down means $650,000 of equity plus closing costs, raised inside the third party's timeline, not the tenant's. The framing: the tenant is already committed to paying about $711,525 of rent over the next six years. Ownership converts that outflow into a building whose $182,000 of income the tenant would then control — including the rent of every other tenant in the center.
• The same building under a ROFO: suppose instead the lease carried a right of first offer. Before marketing the center, the owner offers it to the tenant at $2,800,000. The tenant runs the same cap-rate math — $182,000 of income at a 7.0% cap is $2,600,000 — and declines at $2,800,000. The clause bars a sale below 95% of the offered price within nine months without re-offering: 95% of $2,800,000 is $2,660,000. When the investor's $2,600,000 offer arrives — $60,000 under the floor — the owner must offer the center to the tenant at $2,600,000 before accepting it.
• The trap inside the terms: matching is hardest when the third-party offer carries terms money cannot simply copy — a 1031 exchange accommodation, a seller note at a below-market rate, or a leaseback the buyer granted the owner. The complete-copy requirement, negotiated at signing, is the clause's most valuable sentence.
• Silence is an answer: if the tenant lets the 15 days run without a written election, the owner may close with the investor. If the tenant's right was one-time, it is gone for good; if it was continuing and properly recorded, it survives against the new owner and sleeps until the next offer.

How a tenant makes the right worth something

1. Negotiate the mechanics at signing. The election window, the complete-copy notice, the floor percentage on a ROFO, the carve-outs, and one-time versus continuing status are all set on day one. A first refusal with a 10-day window and a summary notice is close to no right at all.
2. Get the memorandum recorded. An unrecorded right risks disappearing in the very sale it was meant to govern. Recording a short memorandum of the lease or the right itself puts later buyers on notice.
3. Keep the financing warm. A match is funded on the third party's clock. A tenant who starts lender shopping on day one of a 15-day election window has usually already lost. The preparation is the same discipline as a letter of intent on any purchase: a lender who already knows the business, equity identified, an entity ready to sign.
4. Calendar the deadline the day the notice lands. The election window is measured from receipt of the complete package. Docket it like a renewal notice deadline, because there is no extension built into a stranger's deal.
5. Decide with the math, not the fear of loss. A first refusal tempts a tenant to buy a building to avoid moving. Price the match against the income, the remaining rent commitment, and the cost of relocating the business. Sometimes matching is the best deal the tenant will ever be offered; sometimes the right answer is to negotiate the next lease early with the new owner.

For owners: what a first refusal does to a sale

A live first refusal is a priced feature of the asset, and diligence reads it that way. Bidders know a match right can cost them the deal after they have spent money on diligence, so some discount their offers or demand a waiver before bidding; the election window also stretches the timeline to closing. The right is often the price of landing a strong anchor tenant, but an owner should grant it narrowly: one-time rather than continuing, a short election window, clean transfer carve-outs, and subordination language a future lender will accept. Sellers should expect the right to surface in every serious buyer's due diligence and in the estoppel the tenant is asked to sign — one more reason the clause, the memorandum, and the lease file should already agree before the property is marketed.

Cho nhà đầu tư và chủ doanh nghiệp người Việt

Quyền ưu tiên mua (right of first refusal) là điều khoản cho phép người thuê được mua lại bất động sản bằng cách khớp đúng đề nghị của một bên thứ ba, trước khi chủ đất chấp nhận bán cho bên đó. Người thuê không quyết định giá — thị trường quyết định giá — người thuê chỉ chọn đứng vào vị trí của người mua, với cùng điều kiện, hoặc nhường bước. Điều khoản liên quan là quyền được chào mua trước (right of first offer): chủ đất phải chào bán cho người thuê trước, trước khi đưa ra thị trường. Trong ví dụ của trang này, một trung tâm thương mại 20.000 SF ở Gwinnett có thu nhập ròng $182.000/năm, trị giá $2.600.000 ở mức cap rate 7,0%. Người thuê 5.000 SF có 15 ngày để khớp đề nghị $2.600.000 của nhà đầu tư — cùng số tiền đặt cọc $100.000, cùng lịch trình closing. Nếu là quyền được chào mua trước, chủ đất đã chào giá $2.800.000 cho người thuê trước; khi người thuê từ chối, điều khoản cấm bán dưới 95% giá đã chào — tức $2.660.000 — trong 9 tháng mà không chào lại, nên đề nghị $2.600.000 sau đó phải quay lại bàn của người thuê trước.

Bài học quan trọng nhất cho chủ doanh nghiệp người Việt: quyền này chỉ có giá trị nếu đàm phán kỹ ngay khi ký hợp đồng — thời hạn trả lời đủ dài, yêu cầu chủ đất gửi bản sao đầy đủ của đề nghị (không chỉ tóm tắt giá), quyền còn hiệu lực sau khi bán hay chỉ một lần, và ghi memorandum vào hồ sơ quận để người mua sau không thể phớt lờ. Khi nhận được thông báo, thời hạn tính từ ngày nhận đủ hồ sơ, và việc khớp giá nghĩa là khớp mọi điều kiện, kể cả tiền cọc và ngày closing. Đây là thông tin giáo dục chung, không phải tư vấn pháp lý.

Frequently asked questions

What is the difference between a right of first refusal and a right of first offer?

A right of first refusal is triggered by a real third-party offer: the owner brings the tenant a deal someone else made, and the tenant may match it or step aside. A right of first offer works earlier in the sequence: before marketing the property, the owner must offer it to the tenant first, at the owner's stated price and terms. If the tenant declines a first offer, the owner may sell to others, usually subject to a floor — commonly 90% to 95% of the offered price for a stated period — below which the owner must re-offer to the tenant first.

When a tenant matches, does it only have to match the price?

No. Matching means the same price on the same terms: the same earnest money, the same diligence and closing deadlines, and the same material conditions, including any seller financing or exchange accommodation inside the third-party offer. A tenant who matches the price but asks for more time or different contingencies has made a counteroffer, not a match, and the owner may refuse it and proceed with the original buyer.

What happens if the tenant misses the response deadline?

Silence at the deadline is treated as a waiver for that sale: the owner may close with the third-party buyer on the noticed terms. Whether the right survives afterward depends on its drafting. A one-time right is extinguished by the sale; a continuing right, properly recorded, binds the new owner and can be triggered again by a future offer. The window commonly runs only 10 to 30 days from receipt of the complete offer, so the deadline should be calendared the day the notice arrives.

Does a right of first refusal survive a sale of the property?

It depends on two things: whether the clause says the right is continuing or one-time, and whether a memorandum of it was recorded so the buyer had notice. A continuing, recorded right generally runs with the property against later owners; a one-time right dies at the first sale, and an unrecorded right risks being cut off by a buyer who purchased without notice of it. Lenders also commonly require the right to be subordinated to their loan, which can end it in a foreclosure.

Quyền ưu tiên mua (ROFR) là gì và người thuê cần nhớ điều gì nhất?

Quyền ưu tiên mua cho phép người thuê khớp đúng đề nghị mua của một bên thứ ba — cùng giá, cùng tiền cọc, cùng điều kiện — trước khi chủ đất bán cho bên đó. Điều quan trọng nhất là đàm phán cơ chế ngay khi ký hợp đồng: thời hạn trả lời, yêu cầu gửi bản sao đầy đủ của đề nghị, quyền còn hiệu lực sau khi bán hay chỉ một lần, và ghi memorandum vào hồ sơ quận. Trong ví dụ của trang này, người thuê có 15 ngày để khớp đề nghị $2.600.000; im lặng đến hết hạn được coi là từ bỏ quyền đối với lần bán đó. Đây là thông tin giáo dục chung, không phải tư vấn pháp lý.