How a Right of First Refusal Affects Selling Property in Ontario

You’ve decided to sell, and then someone reminds you: there’s a right of first refusal on the property. Maybe it’s in an old family agreement, a lease, or a shareholder agreement from a jointly held commercial building. Whatever the source, it changes what you can and can’t do next.

A right of first refusal (often shortened to ROFR) doesn’t necessarily stop a sale — but it does impose steps you have to take before you can accept someone else’s offer, and skipping those steps creates real legal risk.

This article explains what a ROFR grants, how it typically surfaces during a sale, and the process a seller generally needs to follow.

What a Right of First Refusal Actually Grants

A right of first refusal gives a designated person or entity the opportunity to match a bona fide offer the owner is prepared to accept, before the owner can sell to someone else on those terms. It’s triggered by the owner’s decision to sell — it doesn’t let the holder force a sale on their own initiative.

That’s the key difference from an option to purchase: an option lets its holder initiate a purchase whenever they choose, on pre-agreed terms, while a right of first refusal only activates once the owner already has an offer they’re ready to accept.

Where These Rights Come From

Rights of first refusal show up in a variety of Ontario contexts:

• Family agreements involving co-owned cottages, farms, or other shared property
• Commercial or residential leases granting a tenant first opportunity to buy
• Shareholder or partnership agreements involving a jointly owned property-holding entity
• A prior sale agreement where the original seller retained a right on future resales

Some are registered on title as a notice; others exist only as private contractual terms between the parties, with nothing on title to signal their existence.

How It Surfaces During a Sale

If the ROFR was registered, a lawyer’s title and parcel register search during the sale process will typically reveal it. If it was never registered — which is common for family or private agreements — a title search may show nothing at all, and the only way it surfaces is if the seller (or someone else with knowledge of it) discloses it.

This is why it matters to raise the question directly with your lawyer and realtor at the outset, rather than assuming a clean title search means there’s nothing to worry about.

What a Seller Must Do Before Listing or Accepting an Offer

1. Locate the actual document creating the right and review its exact wording — notice requirements, timing, and any exceptions are all defined by that specific document, not by a general rule.
2. Determine whether the document restricts listing or marketing the property at all, or only restricts accepting an offer.
3. Once you have a bona fide offer you’re prepared to accept, give the rights holder formal notice in the manner and form the document requires.
4. Allow the rights holder whatever window the document specifies to decide whether to match the offer — this period is set by the agreement itself, not by a universal default.
5. If the rights holder declines or doesn’t respond within the specified window, you can generally proceed with the original buyer on the same terms that were offered to the rights holder.

What Happens If a Seller Ignores the Right

Selling around a right of first refusal without giving proper notice creates real exposure: the rights holder may be able to challenge the sale, seek to block or delay closing, or pursue damages. A right of first refusal, like other interests in land, can affect marketable title — an unresolved ROFR is the kind of encumbrance that needs to be addressed before or at closing, not discovered by the buyer’s lawyer at the last minute.

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