What Is Right of First Refusal?

By Matthew Frankel, CFP – Updated Nov 13, 2024 at 9:10 AM

Key Points

ROFR allows entities priority to buy an asset, crucial in real estate to control property transitions.
ROFR is like a stock option, providing a buy-right without an obligation, activated only upon sale.
Vici Properties uses ROFR to maintain dominance on the Las Vegas Strip by securing first buying rights.

Right of first refusal gives an individual, business, or other entity the right -- but not the obligation -- to buy an asset if its owner decides to sell it. There are many different applications of right of first refusal clauses and some important implications for investors, especially in the real estate sector. In this article, we’ll cover what the right of first refusal is, how it works, and how it applies to investing.

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

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Matt Frankel has positions in Vici Properties. The Motley Fool recommends Vici Properties. The Motley Fool has a disclosure policy.