A pre-emption agreement, also known as a right of first refusal or ROFR, is a contract between two parties that gives one of them the right to purchase another`s property or assets before they are offered to a third party.
In simpler terms, a pre-emption agreement is a legal document that allows a party to have the first pick of a particular asset before it is offered to someone else. This agreement is often used in real estate transactions, business partnerships, and other property dealings.
The purpose of a pre-emption agreement is to protect the interests of both parties. The party with the right of first refusal is given the opportunity to purchase an asset at the same price and terms that the owner has negotiated with a third party.
If the party with the right of first refusal decides not to purchase the asset, the owner is free to offer it to a third party. In this case, the original party is not entitled to any compensation or reimbursement for their decision not to exercise their pre-emption right.
Pre-emption agreements can be beneficial for both parties. For example, in a business partnership, a pre-emption agreement can prevent a third party from acquiring ownership in the company without the consent of the other partner.
In real estate, a pre-emption agreement can protect a homeowner from being forced to sell their property to someone they don`t want to do business with. It also gives them control over who purchases their property.
In conclusion, a pre-emption agreement is a legal document that provides the right of first refusal to a particular party. This document is essential in protecting the interests of both parties in a property transaction. To ensure that you are protected in your property dealings, it is important to consider using a pre-emption agreement.