Encyclopedia
First right of refusal (ROFR)
A right to match another party's offer before the owner can accept it.
For example: A tenant has a right of first refusal on space next door, so the landlord must offer it to them first on the same terms. (Illustration only, not a real deal.)
This is a general industry term with no single official definition. Your lease or contract wording controls.
Example only, not a real client. Say you run a bakery and your lease gives you a right of first refusal on the unit next door. A restaurant offers to lease it, so the landlord sends you the offer and you have ten business days to match it. You match, knock through the wall a few months later and expand without moving your customers.
What I’d tell a friend
A right of first refusal can be very valuable, but it only works if you can act fast. Know your response window and keep your finances ready.
Why it matters to you
It can give you the chance to match an offer on space or a building. For owners, it can slow a sale and scare off buyers.
How to use it in your deal
Holders should make the ROFR clear: what triggers it (a bona fide third-party offer), how notice is given, how long you have to match (often a short window), what happens if the offer includes other property, and whether it survives if you don't exercise it once. Register it on title so a buyer is bound. Get financing pre-approved so you can act fast.
Owners should know a ROFR can discourage buyers, who may not want to spend time and money on an offer that can be matched; that can reduce price. Buyers should check title and leases for ROFRs before offering, and ask the seller to confirm the holder has waived or declined. Lenders review them before lending.
Disputes often arise when offers are packaged with other assets or have unusual terms, so draft for those cases.
Mistakes I see
Vague triggers. Short match windows with no financing ready. Not registering. Owners ignoring the ROFR and selling anyway.
In BC and Vancouver
ROFRs are contracts, registrable under the Land Title Act. BC courts have decided many ROFR disputes.
Official sources: Land Title Act (BC Laws) · CanLII (court decisions)
How it works
A right of first refusal gives you the chance to match an offer the owner has received from someone else. It can apply to nearby space in a building or to the whole property if the owner decides to sell.
When the owner gets an offer it is willing to accept, it must give you notice and a set time to match the same terms. If you decline or miss the deadline, the owner can usually go ahead with the other party.
What to check in the wording
Look at how notice is given, how long you have to respond and whether the right comes back if the first deal falls through. A short window can make the right hard to use.
For a right on a whole property, terms like how a package sale is handled matter a lot. Have a BC lawyer review how the right is worded, registered and enforced.
Questions to ask before you sign
- What triggers it?
- How long do I have to match?
- Is it registered?
- What if the offer includes other properties?
- Does it continue after I decline once?
ROFR timing can chill a deal
A right of first refusal (ROFR) lets the holder match a third-party deal. It can protect a tenant—and it can scare future landlords, lenders, or buyers who dislike the delay and the uncertainty.
If you grant one, require a clear response period, keep it personal to the named tenant where appropriate, and say what happens on default. If you hold one, diary the clock the day notice arrives.
Your lawyer should fit ROFR mechanics to the offer and any lender requirements.
Keep reading
Related terms: Option to purchase, Renewal option
- Commercial due diligence checklist for BC buyers
- Sale-leaseback for BC business owners
- Leasing commercial space in BC: a tenant's guide
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General information for British Columbia only. It isn’t legal, tax, accounting or financial advice, laws and rates change, and reading it doesn’t make you my client. Any numbers or scenarios are hypothetical. Check the linked official source and talk to a lawyer, accountant or other qualified professional before you act or sign anything. See the terms and disclaimer.