• Paul Peter Nicolai

Losing Your Right of First Refusal

Updated: Nov 16, 2020

A party held a right of first refusal on a commercial property . When the owner wanted to sell, it sent a letter asking if the holder was interested in purchasing. When the holder said it was, the owner sent a letter with the terms and conditions including a confidentiality agreement. The holder rejected the confidentiality agreement but not the offer. The owner sold the property to someone else saying the right of first refusal was terminated. The holder sued saying that signing a confidentiality agreement was not a necessary part of purchasing the property. The court ruled for the owner.

Why This Is Important... The court said the only condition on the owner’s ability to sell was it had to offer it to the holder before anyone else. As long as the conditions the owner offered to the holder, including the confidentiality agreement, were the same terms the owner was using with others, the right of first refusal had been fulfilled. By rejecting the confidentiality agreement, the holder terminated its rights.

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