What is a right of first refusal in a lease agreement?

A right of first refusal in a lease agreement grants the tenant the first opportunity to purchase the property before the landlord can sell it to someone else. This provision is beneficial for tenants who may be interested in buying the property they are renting, allowing them to secure a potential purchase at a predetermined price or on specified terms if the landlord decides to sell.

This right adds a layer of security and potential financial advantage for the tenant. It allows them to avoid competing with other buyers and can help them assess their interest in owning the property without the pressure of a bidding war. Such rights are typically laid out clearly within the lease agreement to avoid ambiguity and to ensure that both parties understand the terms under which the tenant can exercise this option.