Published on November 24, 2024

In Texas real estate, the term “right of first refusal” (ROFR) can appear in contracts, deeds, and lease agreements—but many buyers and sellers misunderstand its scope. A ROFR grants someone the opportunity to purchase property before the owner can sell it to someone else. This contractual right can significantly affect how and when a property is sold. Understanding what it means is essential for both property owners and potential buyers.

1. What Is a Right of First Refusal?

A right of first refusal gives a specific party—often a tenant, business partner, or family member—the first opportunity to buy a property if the current owner decides to sell. The owner must notify the holder of the right and offer them the chance to purchase on the same terms as a third-party offer.

This right doesn’t force a sale, nor does it guarantee a particular price—it simply gives the holder a right to match an offer before the seller can proceed with another buyer.

2. Common Situations Where ROFR Is Used

  • Leases: Tenants often negotiate a right of first refusal in their lease, especially in commercial or long-term residential leases.
  • Family Transactions: In family-owned real estate, one sibling or relative may get the right to buy out another before a sale to outsiders.
  • Business Ventures: Co-owners or investors in real estate may agree to ROFR clauses to prevent third-party sales without first offering it internally.

3. Legal Requirements in Texas

To be enforceable, a right of first refusal must be in writing and should clearly define:

  • The party who holds the right
  • The triggering event (usually an offer from a third party)
  • The timeframe in which the holder must respond
  • The process for matching the offer

Ambiguous ROFR terms can lead to legal disputes. Courts in Texas typically enforce clearly worded rights, but vague or outdated clauses may be deemed unenforceable.

4. What Happens When the Owner Receives an Offer?

If the property owner gets a third-party offer they’re willing to accept, they must notify the ROFR holder of the offer terms. The holder typically has a set number of days—often 10 to 30—to match the offer and proceed to closing.

If the holder does not match the offer in time, the owner is free to sell to the third party under those same terms. If the terms later change materially, the ROFR may be re-triggered.

5. Can ROFR Rights Be Waived or Released?

Yes. A holder can waive the right in writing, either temporarily or permanently. Additionally, the right may expire after a set time period or be terminated by agreement of the parties.

It’s common practice in Texas to record a release of ROFR in the county property records once it has been waived or fulfilled to prevent title confusion.

6. Risks and Complications

  • Delays in Sale: Sellers must wait for the ROFR process to play out, which can frustrate buyers or cause deals to fall through.
  • Financing Confusion: Lenders and buyers may be wary of making offers on properties with ROFR clauses, fearing potential delays.
  • Disputes: Misunderstandings about timing, notice, or matching terms can lead to legal disputes or even litigation.

7. How Guerra Days Law Group Can Help

If you’re buying or selling a property with a right of first refusal attached, or want to add one to a contract, Guerra Days Law Group can help. We draft and review ROFR clauses to ensure they’re clear, enforceable, and aligned with your goals. We also represent clients in disputes over ROFR rights and missed opportunities.

Contact our Texas real estate attorneys today for a consultation.