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Right of First Refusal Real Estate Addendum

Right of First Refusal Real Estate Addendum

The Almost Option to Buy

Right of First Refusal Real EstateOften, rental prospects ask questions like, "Will you give me an option to buy?". In today's economy they are also asking, "Is this home currently for sale?" or "Is this home in foreclosure?" They may ask these questions for a few different reasons. The right of first refusal in real estate is bound to come up.

I find the question, "Will you give me an option to buy?" is asked for two different reasons, depending on the prospect.
a. The prospect may really intend to rent your property and then purchase it, or
b. the prospect wishes to build credibility with the landlord (you) by posing as a potential purchaser, in order to pass your screening process.

The question, "Is the home for sale or in foreclosure?" is asked because we are all hearing horror stories in this economy about people who move into a property and are forced to move out of it again in a short time. Your tenant prospects may worry that you might sell the property out from under them or lose the house.

How the First Right of Refusal Helps Tenants

You can assure your tenants that they don't have to worry, by giving them a "First Right of Refusal" addendum with their lease contract. It tells the tenant that they will be given the opportunity to purchase your property first, before making it available to the rest of the market.

Having the First Right of Refusal as an actual addendum rather than a clause in the lease brings special attention to it and makes the tenant feel the value of the opportunity and the gesture.

Good Intentions and A Vested Interest

Let's face it. Most people have good intentions and most tenants intend to buy someday. When you have a tenant who thinks he might own the home someday, you can bet he'll take better care of the property.

Some landlords have asked, "Am I obligated to sell to the tenant if I give them the first right of refusal?"
You are not obligated to sell your rental property, but if you decide to sell, you agree to offer it to the tenant before selling it to anyone else. The tenant would have to meet your price and your selling requirements within a reasonable timeframe that you and/or your attorney specify.

Part of the Essential Forms Package

This form is a part of the Essential Forms package along with 100+ other forms. You can access all of our landlord forms with an LPA membership.

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