Definition of Right of First Refusal

“Right of First Refusal” is a clause in a lease which gives the tenant the first opportunity to buy the property or lease more space if it becomes available for lease.  When the clause gives a right to purchase the property, it usually must be at the same price and on the same terms and conditions as those contained in an offer made by a third party, that the lessor/landlord is willing to accept.  When the clause gives a right to lease more space, it usually pertains to adjacent space, and the rent is often specified in advance to be the same per square foot as the space that the tenant is already leasing.