Right of First Refusal

A contractual agreement that one party will have the first option to meet a predetermined set of conditions in order to conduct a transaction before those terms are offered elsewhere. For example, in a lease-option scenario, the tenant may have right of first refusal if the owner of the property decides to sell. Usually right of first refusal may only be executed if the party in question is able to meet certain predetermined conditions, such as obtaining financing, paying a certain amount for the property, or closing in a certain period of time.