Right Of First Refusal - Why Would an Ottawa Residential Home Seller Want This?

Posted on January 19, 2009 
Filed Under Buying Your New Home, Listing and Selling Your Home, Valerie Zinger

From time to time a seller may want to counter an offer to purchase his or her home with a clause that allows the Seller to continue to offer the home for sale and accept offers with the condition that, before accepting an offer from a third party, the first Buyer has the opportunity to waive or complete all conditions on the sale of the home.  Here is an example of how this works:

Bill and Sue have their home for sale.  Melinda, the Buyer, loves the home and puts in an offer.  Included in Melinda’s offer is the condition that she must first sell her home before completing the offer on Bill and Sue’s home.  Melinda has included a time frame of four months to have her home sold.  If Bill and Sue accept this offer as stated, they will have their home conditionally sold for up to four months without knowing if Melinda actually will be able to sell her home during this period.  Bill and Sue want to continue to try to sell their home and insert a clause in the Agreement for Purchase.  This clause will state that Bill and Sue will continue to sell their home.  If during the four months, they receive an offer that is acceptable to them, they will provide Melinda with a predetermined amount of time (say 48 hours) to complete the Purchase Offer (likely by waiving her conditions) or the deal with Melinda will die.  Bill and Sue will then be free to accept the new offer.  Melinda has been given the Right of First Refusal on the purchase of Bill and Sue’s home.

The Offer to Purchase is a contract, covered by contract law.  The clause on First Refusal is a legally binding clause that ties all parties (Seller(s) and Buyer(s)) to a condition of sale. 

If you are in a similar situation as Bill and Sue, discuss your counter offer options with your real estate sales representative and/or your lawyer.   

Photo credit:  Treasure 8: my Montblanc pen @ http://www.flickr.com/photos/shaun/3004998013/sizes/s/

Valerie Zinger ~ Ottawa, Canada ~ 613-723-5300 ~ vzinger@royallepage.ca

 

Comments

Leave a Reply