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The CRE Almanac

Right of First Refusal (ROFR)

Published 2026-08-11

A right of first refusal (ROFR) is a lease or contract provision that gives its holder the chance to match a bona fide third-party offer before the owner can accept it. In commercial real estate, ROFRs most often cover a sale of the property or the leasing of adjacent space, and they make the holder a mandatory first stop in any covered deal.

How a ROFR works

The right stays dormant until a trigger event: the owner receives an offer it is prepared to accept for the property, or a covered suite becomes available and a third party wants it. The owner must then present the deal to the holder, who has a fixed window — often measured in days, not weeks — to match its material terms. If the holder passes, the owner may close with the third party, usually only on terms no more favorable than those the holder declined.

A ROFR is commonly distinguished from a right of first offer (ROFO), where the holder negotiates with the owner before the deal goes to market rather than matching an offer already in hand. ROFOs are generally seen as less of a drag on marketability, since buyers dislike bidding on deals a tenant can take away from them.

Who asks for one, and what varies

Tenants negotiate ROFRs to protect expansion paths — the suite next door, another floor — or to position themselves to buy the building. Investors and ground lessees use them at the asset level. The drafting varies widely:

  • Scope — a sale of the property, a lease of defined space, or both.
  • Whether the right is one-time (extinguished after a waiver) or continuing.
  • Carve-outs for affiliate transfers, portfolio sales, financings, and foreclosure, which typically do not trigger the right.
  • Notice mechanics and the length of the match period.

The classic failure mode is procedural: the response window is short and strictly construed, so a notice that reaches the wrong desk — or a holder who cannot find the operative language in time — can forfeit the right.

In your documents

ROFRs rarely sit where you expect them: they get added in amendments, side letters, and renewal exercises, and across a portfolio no two are drafted alike. Because each one carries a hard response deadline once triggered, teams often treat them as dates to surface rather than clauses to remember — critical-date tracking with source-linked answers lets you check the operative notice language against the lease itself before a window starts running.