A Right of First Refusal is a contract term given to a buyer from a seller that allows the buyer the first chance at entering a purchase contract on a home, prior to other potential buyers.
In a real estate transaction, a seller may receive an offer from Buyer A to purchase their home. They have previously granted Buyer B a “right of first refusal,” usually requiring them to match the terms of the other buyer. Buyer B now has the opportunity to match the purchase terms of Buyer A and enter into a purchase contract with priority over Buyer A.
Rights of refusal are not that common in real estate transactions, though they may exist with certain homeowners associations or with properties that sellers want to remain in their family. For example, parents may grant a right of first refusal to their children on a vacation home that they own.