A California seller agrees to give a neighbor a right of first refusal on her property. When the seller receives an offer from a third party for $620,000, what must the seller do under California law before accepting the third-party offer?
Correct Answer
B) Notify the neighbor of the third-party offer and give the neighbor the opportunity to match or exceed the terms
Under California law, a right of first refusal (also called a preemptive right) requires the property owner to offer the right-holder the opportunity to purchase the property on the same terms as any bona fide third-party offer before selling to the third party. The neighbor must be given reasonable notice and time to decide.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
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