3 thoughts on “what is the difference between a Lease option to purchase and a first right of refusal?”
For starters, it’s called "right of first refusal."
An option is an agreement that gives you the right, but not the obligation, to purchase the property at the price and on the terms as provided in the agreement. So, you can have an option to buy for $300,000, anytime before December 31, 2011 for example.
A right of first refusal gives you the right, but not the obligation, to purchase the property by matching a third party’s offer price. So, if you have a right of first refusal, and some guy (let’s call him Joe) comes along and offers to buy the property for $300,000, then the seller must first come to you and give you the opportunity to match that price and buy the home for $300,000, before selling to Joe.
I’m not trying to be funny but , this question just make me want to answer this away.
Seller will allow you to purchase property at the specific time at lease ending date or date specified in lease contract. And if you refuse to buy . First right of refusal. The property goes on the maket for sale.
This is just an "educated guess". I suspect the only significant difference is that with most lease options a percentage of the monthly lease payment is credited toward the down-payment if the property is purchased before the option expires.
Another difference is that a lease option always has an expiration date. A first right of refusal may be "open-ended".
Finally, a lease option usually includes the selling price (the price is negotiated as part of the option). A first right of refusal may not say anything about the actual selling price.
For starters, it’s called "right of first refusal."
An option is an agreement that gives you the right, but not the obligation, to purchase the property at the price and on the terms as provided in the agreement. So, you can have an option to buy for $300,000, anytime before December 31, 2011 for example.
A right of first refusal gives you the right, but not the obligation, to purchase the property by matching a third party’s offer price. So, if you have a right of first refusal, and some guy (let’s call him Joe) comes along and offers to buy the property for $300,000, then the seller must first come to you and give you the opportunity to match that price and buy the home for $300,000, before selling to Joe.
I’m not trying to be funny but , this question just make me want to answer this away.
Seller will allow you to purchase property at the specific time at lease ending date or date specified in lease contract. And if you refuse to buy . First right of refusal. The property goes on the maket for sale.
This is just an "educated guess". I suspect the only significant difference is that with most lease options a percentage of the monthly lease payment is credited toward the down-payment if the property is purchased before the option expires.
Another difference is that a lease option always has an expiration date. A first right of refusal may be "open-ended".
Finally, a lease option usually includes the selling price (the price is negotiated as part of the option). A first right of refusal may not say anything about the actual selling price.
Best wishes and good luck.