What is meant by the "right of first refusal" in real estate?

The "right of first refusal" refers to a contractual right that gives a specific individual or entity the opportunity to purchase a property before the seller can sell it to other potential buyers. This means that if the property owner decides to sell the property, they must first present the offer to the holder of the right of first refusal, allowing them the chance to match or exceed any competing offers. This provision is often included in leases or agreements and serves to protect the interests of the potential buyer by ensuring that they have the first opportunity to acquire the property before anyone else.

This concept is particularly valuable in competitive real estate markets, as it provides the holder with leverage and the assurance that they won’t be bypassed in favor of other buyers without having a chance to negotiate. The other options describe different aspects of real estate transactions but do not capture the essence of what a right of first refusal entails.