What is a "right of first refusal"?

A "right of first refusal" is specifically defined as a contract that grants a party the opportunity to purchase a property before the owner is able to sell it to another buyer. This agreement outlines that the property owner must first offer the sale to the holder of the right before considering other potential buyers.

This concept is particularly advantageous for the party that holds the right, as it allows them to secure an opportunity to buy the property, often at a predetermined price, or under specified terms without competition from other buyers.

In contrast, the other options do not encapsulate the meaning of a right of first refusal. For example, a clause allowing tenants to renew their lease early relates to rental agreements and does not involve purchasing rights. A legal document that prohibits the sale of a property is also unrelated, as it deals with restrictions rather than permissions to buy. Similarly, a type of mortgage agreement is focused on financing rather than the rights associated with purchasing property. Understanding these distinctions highlights the specific nature and importance of the right of first refusal in real estate transactions.