What is a Right of First Refusal Agreement Review?
A right of first refusal agreement is a legal contract that gives a right holder the chance to purchase an asset before the owner tries to sell it to anyone else.
This contract needs to identify key aspects of the arrangement, such as how much time the right holder has in which to accept the purchase. Clarifying all the details is important to ensure the deal goes ahead without challenges.
Read the rest of this article to review key terms in a right of first refusal agreement, tips for reviewing the entire document, and how a qualified lawyer can help you with the contract review process.
What are Key Terms to Review in a Right of First Refusal Agreement?
A right of first refusal agreement usually contains the following essential information that you should review:
- Parties. Identify the parties (grantor and grantee) involved in the agreement.
- Trigger event. The specific action that requires the owner to notify the right holder prior to accepting the deal, such as a third-party offer, must be defined.
- Notice requirement. Ensure that how and when the owner must inform the holder about outside offers is clearly defined.
- Match price and conditions. Check that the holder matches the price and conditions that are offered by the outside buyer.
- Time limit. There should be a deadline by when the holder must either accept or reject the purchase once notice has been given.
- Duration. This section must clearly state how long the right is in effect to prevent confusion between parties.
How Should You Review a Right of First Refusal Agreement?
When reviewing a right of first refusal agreement, you should consider some important tips so that you don’t miss anything important that could put you at risk.
Check the Response Time
Third parties might not want to make an offer if they know that there’s another party (the right holder) who can close the deal. This situation can have the effect of decreasing the asset price. To protect the owner selling the asset, you could include a shorter time limit the right holder has in which to decide to accept the purchase.
Verify a Valid Offer
You should avoid any vague or ambiguous language in the agreement when explaining what counts as a valid offer. Define how notice is given and what steps or processes parties must follow. For example, list all the requirements to close the deal, such as closing dates and proof of funds to purchase the asset.
Consider Failure to Exercise
If the right holder doesn’t exercise their right of first refusal, the agreement should specify that the owner has the right to sell the asset to another party. This provides clarity that prevents confusion or disputes between parties.
Describe the Asset
If the owner is selling property, they will include the property address in the agreement. Assets must always have a clear and specific description to make the contract and deal valid.
Should You Hire a Lawyer to Review Your Right of First Refusal Agreement?
If you don’t have a legal background or experience in contract drafting and review, it’s advisable to hire a lawyer to look over your right of first refusal agreement before you agree to its terms.
A lawyer will conduct various activities during a review to protect your interests, such as:
- Analyzing if the right of first refusal is legally enforceable. It has to meet certain legal requirements and formalities, which a lawyer will know about, to assist you.
- Checking the precise triggering event when the right becomes effective. They’ll clarify any confusion surrounding the trigger event so that parties enter into the agreement knowing what to expect.
- Verifying what matching an offer means. A lawyer will check if the right holder must match the purchase price alone or if there are other things to meet, such as specific warranties or conditions.
- Identifying any vague wording. They’ll carefully review the entire agreement to ensure that details are specific.
- Adding important information. To protect both parties’ interests, a lawyer will suggest additional clauses to include in the agreement, should this be required. They’ll customize the document to the specific arrangement.
Where to Find a Lawyer for a Right of First Refusal Agreement Review
If you need to hire a lawyer to review your right of first refusal agreement, you don’t have to struggle to find one who’s experienced and can assist you with checking all the contract terms.
By using an online legal platform, you’ll connect to professional lawyers who have the expertise and experience you require. ContractsCounsel is an example.
ContractsCounsel is one of the largest online legal marketplaces that connects clients to a curated network of vetted lawyers. They all have experience in contract drafting and review, providing you with an agreement that you feel confident to sign.
Here are the steps to follow if you’d like to hire a lawyer to review a right of first refusal agreement for clarity.
- Go to the ContractsCounsel marketplace.
- Select ‘One-time project.’
- Select ‘Contract review.’
- Post your project for free. Try to include a few details of what you need to help you match with the best lawyers for your specific query.
- Wait for bids. Lawyers directly on the platform will send you bids to work on your project.
- Review the lawyer information. The platform provides a range of lawyer data you can access, such as the lawyers’ location, expertise, years of experience, credentials, and client ratings for previous projects.
- Based on the lawyer data, you can choose a lawyer to hire. They’ll review your right of first refusal agreement for a flat fee.
