Right of First Refusal and Consideration for the Right of First Refusal
Have you dealt with a right of first refusal?
“A right of first refusal is a right to elect to take specified property at the same price and on the same terms and conditions as those continued in good faith offer by a third person if the owner manifests a willingness to accept the offer.” A contractual right of first refusal must be supported by consideration to be enforceable.”
Raj v. Sutherlin, 51 Fla.L.Weekly D73a (Fla. 4th DCA 2026) (internal citations omitted).
In a recent case, an owner and buyer and into an addendum to a contract where the owner gave the buyer the right of first refusal to purchase an adjacent parcel. The owner and buyer recorded a notice in the public records memorializing this intent. Many years later, the owner sold the parcel to a third party without honoring the right of first refusal. During a lawsuit, the original owner argued, and the trial court agreed, that the right of first refusal was invalid as it was not supported by consideration because the addendum that gave the right of first refusal was not supported by separate consideration, or consideration separate from the original contract to purchase the property. The appellate court disagreed that the addendum needed to contain separate consideration to be valid:
We find the trial court erred in granting summary judgment because it misapplied the law in finding that consideration for the right of first refusal must be separately allocated. The trial court found no separately allocated consideration in the contract for sale and purchase or in the addendum. However, the addendum, which contained the right of first refusal for the 1850 property, incorporated by reference the contract for sale and purchase of the 1860 property. The addendum began by specifically referencing the sale and purchase contract between [the buyer] and [original owner] for the 1860 property. The addendum then expressly stated that [the original owner] and [buyer] made the right of first refusal to purchase the adjacent 1850 property “part of the Contract” for the sale and purchase of the 1860 property.
Because the addendum was part of the sale and purchase contract, the $6,400,000 paid by [buyer] could be consideration covering both the purchase of the 1860 property and the right of first refusal to purchase the adjacent 1850 property. Thus, no separate consideration would have been needed. This conclusion is further supported by the fact that in May 2005, [original owner] and [buyer] signed a document entitled “Notice of Right of First Refusal,” which was then recorded in the public records. The notice stated that [original owner] “granted [to buyer], for valuable consideration offered and accepted,” the right of first refusal to purchase the 1850 property.
Raj, supra.
Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.
