Right of First Refusal (ROFR) Clause
How ROFR differs from right of first offer (ROFO), trigger mechanics, match-or-walk dynamics, and APAC drafting practice.
Last updated: 2026-05-06
A right of first refusal (ROFR) gives the tenant a defined right to acquire — or in a lease context, lease — additional space within the building or complex on terms equivalent to those a third party has offered to the landlord. The landlord must present the third-party offer to the ROFR holder, who then has a window to match the terms and lease the space themselves, or walk away and let the third party proceed. It is one of the most powerful expansion tools a tenant can negotiate and one of the trickiest to draft correctly.
ROFR vs ROFO
The two are different in substance, even though both are sometimes loosely called "first rights."
A right of first refusal (ROFR) is reactive: the landlord must offer the holder the chance to match a specific third-party deal. The trigger is a bona-fide offer from a third party. The mechanism is "match or walk."
A right of first offer (ROFO) is proactive: before marketing the space to anyone, the landlord must offer it to the holder on stated terms. The holder either accepts those terms or declines, after which the landlord is free to lease to anyone — but with a floor on the rent (typically the rejected ROFO terms).
ROFR is stronger. It guarantees the holder a chance to match any deal. ROFO is more flexible for the landlord — the holder either takes it on landlord-stated terms or loses the right.
What a typical ROFR contains
A workable ROFR clause has five elements.
Defined ROFR space. The clause should specify which space the tenant has the right to. Common: adjacent space (the same floor), specific named suites, the entire floor below or above, the next vacancy on a specific floor.
Trigger event. Most commonly, when the landlord receives a bona-fide third-party offer to lease the ROFR space.
Notice procedure. The landlord must deliver written notice to the tenant containing the proposed terms (rent, term, escalation, options, TI, free rent, security, etc.).
Tenant response window. Common: 10 to 20 business days. The tenant either matches and exercises, or declines.
Substitution rights. If the third-party deal falls through after the tenant declines, can the landlord shop the space to other parties at the same or better terms? At worse terms? At any terms? The clause should specify.
Sample wording
During the Term, if Landlord receives a bona-fide written offer from a
third party to lease the ROFR Space (the "Offer"), Landlord shall deliver
to Tenant a copy of the Offer (or a summary of all material economic
and structural terms) within ten (10) business days of receipt. Tenant
shall have fifteen (15) business days from receipt of such notice to
elect, by written notice to Landlord, to lease the ROFR Space on the
same terms as the Offer. Failure to respond within such fifteen (15)
business day period shall constitute a waiver of Tenant's right with
respect to the Offer.
If Tenant does not exercise its ROFR with respect to the Offer, Landlord
may lease the ROFR Space to the third party on the terms of the Offer
within one hundred eighty (180) days. If Landlord does not lease the
ROFR Space within such period, or if the lease terms differ materially
from the Offer (more than five percent (5%) reduction in net effective
rent or material change in tenant inducements), the ROFR shall reapply.
The ROFR shall not apply during the last twelve (12) months of the
Term unless Tenant has exercised any unexercised renewal option.
What to negotiate — tenant side
A tenant pushing for a strong ROFR wants:
Wide ROFR scope. Adjacent space, plus next vacancy on the same floor, plus named expansion options.
Generous response window. 15 to 20 business days; longer for complex deals.
Match-or-walk on equivalent terms. The tenant must be able to lease the space on the same economic terms as the third-party offer, including tenant inducements (free rent, TI, etc.). If the offer is structured to make matching impractical (e.g., requires a 50,000 sq ft commitment when the tenant only wants 25,000 sq ft), the offer should be unbundled.
Re-trigger on offer changes. If the third-party offer changes materially after the tenant declines, the ROFR re-applies.
Re-trigger on staleness. If the landlord doesn't sign the third party within a defined window after the tenant declines, the ROFR re-applies. Without this, the landlord could shop the space at lower terms knowing the tenant has waived.
No "reasonable approval" requirement. Some landlords require the tenant to demonstrate financial capacity to take the additional space. This should be limited to objective measures (tangible net worth, credit rating).
What to negotiate — landlord side
Landlords want:
Limited ROFR space. Specific named suites only, not "any future vacancy."
Short response window. 10 business days. Long windows kill third-party deals — the third party doesn't want to wait while the tenant decides.
Broad substitution flexibility. The landlord can shop the space at lower or different terms after the tenant declines, without re-triggering the ROFR.
Conditions to exercise. The tenant must demonstrate financial capacity, not be in default, and have continuously occupied the premises.
ROFR survives only during initial term. The ROFR doesn't apply during renewals or holdover.
Cap on number of times triggered. The ROFR is not perpetual; it terminates after a defined number of declines or after a fixed date.
Common drafting traps
"Equivalent terms" ambiguity. What counts as equivalent? Same base rent? Same net effective rent (after free rent and TI)? Same operating-expense treatment? Spell out the comparison method.
Bundled deals. The third party may offer to take 100,000 sq ft (50,000 of ROFR space + 50,000 of other space). Can the tenant exercise on the 50,000 ROFR portion only? The clause should permit unbundling where the ROFR space is severable.
Stale offers. If the landlord receives an offer, declines to deliver to the tenant for some time, then delivers, the offer may no longer reflect current market. The clause should specify a delivery deadline (e.g., within 10 business days of landlord's receipt).
Re-trigger drafting. Material change tests vary; "5% reduction in net effective rent" is concrete; "material change" is not. Use measurable parameters.
Survival on transfer. If the tenant assigns or sub-lets, does the ROFR transfer? Most clauses make the ROFR personal to the original tenant; tenant-favourable drafting allows transfer with the lease.
Conflict with renewal options. If the tenant has renewal options on the original premises and an ROFR on adjacent space, the option exercise might overlap with ROFR space being marketed. Specify hierarchy and timing.
APAC variations
Hong Kong ROFR clauses are common in office leases for tenants with growth plans, especially in landmark Grade-A buildings (IFC, Pacific Place, Cheung Kong Center). The drafting practice is similar to US norms but typically with shorter response windows.
Singapore practice resembles Hong Kong. CapitaLand and Frasers buildings have well-developed ROFR templates in their standard leases.
In Japan, ROFR clauses in international-grade Tokyo office leases follow US-style practice for foreign tenants. Domestic-format leases historically did not include ROFR, treating tenant expansion as case-by-case landlord discretion. The change is driven by international tenant demand.
If you have a portfolio with active expansion plans and need each lease's ROFR space scope, response window, equivalent-terms definition, and re-trigger rules captured per lease with citations, LeaseTrace extracts those fields with page-level references to the source PDF.