My recent rent agreement had a cause mentioned as tenant right of first refusal. This phrase was something new to me. I started thinking, is this a Pagdi property where I am a co-owner? To clarify my doubts I started searching for its meaning. I asked a colleague and got to know its definition. The right of the first refusal refers to a term/clause or contract between two parties where the second party has a right to take an opportunity and accept or decline an offer. Let me explain it to you with an example for your better understanding.
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What does right of first refusal mean?
To answer what is right of first refusal mean, let me cite an example. Suppose A is the owner of property “C” and you are the tenant, named B. In the leave licence agreement, there is a clause stating that B would have the first right to purchase, refuse or accept the offer when A provides it. Suppose A wants to sell a property, B will have the first right to purchase it. If B turns the offer down, then only A can sell it to someone else. So B enjoys the first refusal opportunity here.
How to find the value of the right of first refusal?The value of the right of first refusal can be calculated by using a formula which is:
The value of the right of the first refusal = the difference between inherent value as per the assignee and the offering price of the third party
I hope the concept of
what is right of first refusal is all clear to you now.
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Authors Of The Question
What is Right of First Refusal Mean?
Nisha
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1 Answers
2 Year
2022-12-22T19:02:23+00:00 2022-12-22T19:02:24+00:00Comment
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