What you Need to Know About a Right of First Offer

Tenants try to ensure that their commercial leases provide them with rights that will allow them to acquire more space as their enterprise grows. These rights often come in the form of options to lease additional designated space, a right of first refusal (ROFR), and a right of first offer (ROFO). These provisions attempt to strike a balance between the tenant’s interest in future expansion and the landlord’s interest in having flexibility to lease the designated expansion space as it sees fit.

A recent article by the team at Daoust Vukovich LLP entitled “What You Need to Know About a Right of First Offer” provides a discussion on the nature and importance of a ROFO in the context of the leasing of commercial space. It provides insight into why landlords do and should prefer the inclusion of a ROFO to other rights in their commercial leases, what tenants should know about the impact of a ROFO on expansionary rights, and considerations relating to the drafting of ROFO clauses.