Law Office of Kimberly A. Abrams & Associates, P.A.

Florida real estate transactions and the right of first refusal

Real estate contracts may include a right of first refusal provision. This provision allows the holder the opportunity to match purchase term agreement offered by a third party.

What to include: Two specific examples

A properly drafted provision must address a number of factors, including:

  • Define the property. The provision should apply to a specific piece of property. This can be particularly difficult if the property at issue is a small portion of a larger building, such as an office space within a multi-office building or a retail space within a mall. Ensure the language clearly defines the applicable property.
  • Have a specific trigger. The provision should also state what would trigger the right of refusal. Is an executed purchase contract required, or would a letter of intent suffice?

The sale of the property to the third-party can generally proceed if the offer is not met.

What could go wrong: Common disputes

Disputes often involve provisions that do not clearly state a trigger. Another example involves an offer that has a unique term, like the seller being able to secure financing.

Mitigate risks: Get legal counsel

It is important to discuss the full impact of this term. A right of first refusal provision generally has an adverse effect on the owner's future ability to sell the property. Issues can also arise involving the title. A preemptive right like the right of first refusal generally results in a burden on the title.

A failure to properly draft a right of first refusal provision can result in future issues. Mitigate this risk by seeking legal counsel experienced in Florida real estate transactions.

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