Require Tenant to Offer Same Deal as Third Party for ROFR

Some owners offer a tenant the right of first refusal (ROFR) to buy a building, should they decide to sell the property. If you decide to do this, make sure that you don’t get burned by the current tenant’s lower offer than a third party. When negotiating a lease with a tenant you’re giving a ROFR to buy your building, make sure that the lease specifically says that the tenant can’t exercise that right unless it gives you a signed contract with terms that are identical to those contained in any offer you’ve gotten from a third party. Otherwise, a tenant might try to exercise its right of first refusal by giving you a contract with one or more terms that are different from—and possibly much less desirable than—those in an offer from a third party. And you could have a tough time stopping the sale.

By having the lease require that the tenant’s contract contain terms that are identical to those contained in an offer from a third party, you can protect yourself. The tenant won’t be deemed to have properly exercised its ROFR if it gives you an offer that doesn’t match what’s been presented by a third party. In that case, you can refuse to accept the tenant’s contract if you choose to.