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Is a purchase option the same as the right of first refusal?

On Behalf of | Jun 2, 2022 | Real Estate Law

The decision to invest in a new home is personal and dependent upon your financial situation. Many people that want to buy but have limited resources at any given time may consider either a purchase option or the right of first refusal.

Although they resemble one another in a couple of ways, the right of first refusal is not the same as a purchase option. If you are looking to buy residential real estate in Connecticut, it is vital to understand these two terms.

What is a purchase option?

A purchase option is an agreement between the seller and a single buyer of residential property. The potential buyer has an exclusive right to purchase the property at a fixed price, and the seller agrees to reserve this right. If the potential buyer has lost interest in the property or can no longer afford it, they release their claim on the home, allowing the seller to offer it to other interested parties.

What is the right of first refusal?

The right of first refusal is also an agreement between a potential buyer and the owner of residential real estate. Under such an agreement, the owner (seller) must offer the property to the other party before anyone else. The potential buyer can agree to the purchase or pass on it, enabling the owner to sell it elsewhere.

When handled properly, it is possible to secure residential real estate and save a few dollars at the same time with either of these agreements. Consider learning more about these agreements and the laws governing residential real estate closings to ensure your rights as a buyer (or seller) remain protected.