A right of first refusal is a limitation on a property owner's ability to sell the property to a third party, requiring the owner to first offer the property to the holder of the right at the third party's offering price and terms.
The defendant submitted a purchase offer that called for the closing on a piece of property to occur in 33 days. The offer also provided that the closing had to happen in a short period of time. The lessee of the property submitted an offer as well - it matched the price and down payment terms of the defendant's offer, proposed a closing date 56 days after the date of the defendant's offer and over 45 days after the offer's proposed closing date. The defendant sought a declaratory judgment determining whether the lessee had properly exercised his right of first refusal.
Did the lessee's offer constitute a validly exercised right of first refusal where it offered a later closing date than a differing sale agreement?
In finding that the lessee did not exercise the right of first refusal and reversing the lower court's ruling, the Court found that the lessee's offer materially deviated from the closing terms of the defendant's offer, the lessee did not validly exercise its right of first refusal. If the owner had wished to preserve his freedom to contract with the lessee to sell the property for the same price but on different terms, he could have deferred his acceptance of the defendant's offer until after the lessee had an opportunity to submit an offer. However, once the owner accepted the defendant's offer, he became bound to the defendant subject only to a valid exercise by the lessee of its right of first refusal.