What is a right of first refusal in real estate?

A right of first refusal in real estate specifically refers to a contractual provision that grants an individual or entity the first opportunity to purchase a property before the owner can sell it to someone else. This right is crucial as it allows the holder, often a tenant or an adjacent landowner, to have priority over other potential buyers, providing them the chance to acquire the property under agreed-upon terms.

This concept is often implemented in real estate contracts and can be a valuable tool for individuals who may wish to purchase a property but want to secure the option to do so before it is made available on the open market. It serves to protect the interests of the option holder and can play a significant role in real estate transactions, particularly in competitive markets where properties may sell quickly.

The other options do not capture the essence of what a right of first refusal is. For example, a legal obligation for an agent to inform clients is more about transparency and duties in agency relationships, while an agreement to lease a property or a financing option for home buyers pertains to different aspects of real estate transactions and financing, rather than the rights related to property purchase.