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Right of First Refusal
Do you need help understanding the “Right of First Refusal” provision in your timeshare contract? Get in touch with Timeshare Defense Attorneys. We can help.
What Is the Right of First Refusal (ROFR)
Typically, right of first refusal (ROFR) clauses are included in real estate contracts so that a prospective tenant is able to match a prospective buyer’s offer. The ROFR clauses serve as an incentive for renters to purchase the property they were renting from their landlord in a real estate transaction.
The ROFR is a contractual clause in a timeshare contract that gives the developer the first option to purchase the interest at a later date. By signing a ROFR, a timeshare owner commits to presenting any offers to the developer before selling the property. Consequently, the timeshare developer has priority when it comes to repurchasing the property.
The right of first refusal is a mechanism designed to maintain control over the resale market price by the developer. This ensures that timeshare units are not sold at prices below market value. The process, timeline, and parties involved vary according to the contract.
Read your contract if you are a timeshare owner and intend to sell your timeshare. It would be best to establish whether the timeshare contract has a right of first refusal clause.
If you want to get rid of your parent’s timeshare, you need to know whether it is subject to a ROFR. You may need someone to review your timeshare contract to help you to exit it. Our team of skilled and dedicated timeshare defense attorneys is here to assist.
How a Right of First Refusal Works
In the context of timeshare, many timeshare owners tire of the ever-increasing annual maintenance and other fees. They try to exit their timeshare contracts for these and many other reasons.
As a result, they begin to examine their aging timeshare contracts. They realize that finding a buyer is a challenging task at this point. In shock and horror, they discover that the purchase price they offered for their timeshare is nowhere near what they had expected. There are low prices in the second-hand timeshare market due to saturation.
First-refusal clauses are standard in timeshare agreements. This means that once they have found a buyer and have signed an offer to buy at an agreed price, they still have an additional hurdle to overcome before they can sell the timeshare.
The timeshare property owner must offer the property back to the developer. This is done on the same terms as negotiated with the other potential buyers or buyers. The developer then has time to decide whether to repurchase the property. If they elect to do so, they can buy it on the same terms and price as the third party offered.
If they pass up the opportunity, the owner can sign the deal with the interested buyers.
Five Steps to Exercising the Right of First Refusal
There are five simple steps in the exercise of a first refusal:
- The timeshare owners decide to sell and list their property on the open market.
- A prospective buyer makes an offer, and they negotiate and finalize the terms of the sale.
- Once the offer is accepted and closed, the closing documents are presented to the timeshare resort developer for review.
- Depending on the contract, the property developer reviews the timeshare resale terms, including points, weeks, unit size, and outstanding balances.
- Lastly, the resort either exercises or waives the ROFR provision. This is typically to be done within a time limit. The resort can decide whether the resale transaction happens or not. It decides whether it would rather interrupt the sale to buy back the timeshare.
Benefits of ROFR
ROFR clauses benefit both the timeshare developers as well as the timeshare owners. The clause allows developers to maintain more control over the ownership and resale of timeshare units.
Timeshare developers use ROFRs to prevent undesirable or unqualified buyers from buying the timeshare. Thus protecting the overall quality and experience of the resort.
While this protects the remaining timeshare owners, it does little for the timeshare seller trying to sell the property. The potential buyers may not be interested in the sale due to a ROFR clause. Due to the first refusal agreement clause, sometimes sellers lose out because their sale is delayed.
Timeshare Defense Attorneys and ROFRs: We Can Assist
We can help you navigate the process so that your rights are protected as much as possible if you want to exit your timeshare or need help understanding contractual provisions before signing the contract.
Our firm has the necessary skills and experience to assist you with your timeshare needs. We provide a free initial consultation to evaluate your case. Our goal is to level the playing field between timeshare developers and timeshare owners.
We fight passionately for our clients and are not intimidated by timeshare developers. We would love to help you. Call us today.
Frequently asked questions
How Much Does a Timeshare Lawyer Cost?
We are often asked, “How much do timeshare lawyers cost?” There is no definite answer to this.
Every case is different and has different nuances and facts. Some cases are sorted within a few short phone calls, and others go to trial, which can take years.
Generally, you will pay more for an attorney who has many years of timeshare exit experience. You can pay a lot less for an attorney who does not have the experience required to handle your case with confidence.
The best way to evaluate the potential costs is to book an appointment with us for a free case evaluation.
Can ROFR Be Negotiated or Modified in Timeshare Contracts?
As with any clause in a contract, the ROFR can be negotiated or modified in a timeshare agreement. Both parties need to agree on the final clause, and both need to sign if it is to form part of the agreed-upon way.
Can the ROFR Be Waived?
The ROFR clause can only be waived by the timeshare developer. Once the developer waives, the timeshare owner can continue the deal with the potentially interested party.
Is The Right of First Refusal a Good or Bad Concept?
In the context of timeshare ownership, the ROFR is to the benefit of the timeshare developer. The remaining timeshare owners will benefit to the extent that the quality of the new buyer is maintained. In this way, the holiday experience is maintained. In that sense, the ROFR is good.
However, for a timeshare owner trying to sell their property, the ROFR can complicate the sale and even lose the sale.
