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12/1/2025

ROFR vs ROFO: Rights of First Refusal/Offer in Commercial Leases

ROFR vs ROFO: Rights of First Refusal/Offer in Commercial Leases

If you’re growing, you might want the ability to expand into adjacent space or grab another suite in the building. Leases sometimes offer that flexibility through:

  • ROFR: right of first refusal
  • ROFO: right of first offer

They sound similar, but they operate differently and create different risks for tenants.

This guide explains ROFR vs ROFO in plain English, common traps, and what to negotiate so the right is actually usable. (Not legal advice.)

ROFR (Right of First Refusal): how it works

A ROFR generally means:

  • the landlord negotiates with a third party for the space
  • when there’s a bona fide offer the landlord is willing to accept, the landlord must offer you the chance to match it

Tenant upside: you can match a market-tested deal.
Tenant risk: you may have very little time to decide, and the landlord controls the timeline.

ROFO (Right of First Offer): how it works

A ROFO generally means:

  • before the landlord offers the space to others, it must offer it to you first
  • if you don’t accept (or don’t respond in time), the landlord can market the space

Tenant upside: you get the first look.
Tenant risk: you might be asked to decide without knowing the market price.

Common traps that make ROFR/ROFO worthless

1) Short response windows

If you get 5 business days to make a major expansion decision, the right may be unusable.

2) Landlord can bundle terms

Some clauses let the landlord require you to accept:

  • new lease forms
  • additional guarantees
  • different operating expense structures

Try to require that expansion space uses a defined term sheet or “substantially similar” lease form.

3) Space is excluded through carve-outs

Carve-outs often include:

  • existing tenants
  • anchor leases
  • storage rooms or non-retail areas

Make sure the right is tied to a specific space (e.g., “Suite 110”) if adjacency matters.

4) “Bona fide offer” is not defined

In ROFR clauses, define whether the offer must be:

  • written
  • signed
  • from an unrelated third party

This reduces the risk of “manufactured” offers.

What tenants should negotiate (practical improvements)

  1. Define the premises covered by the right (adjacent suite, any space on the floor, etc.).
  2. Set realistic notice/response periods (often 10–20 business days).
  3. Clarify deal structure (term length, rent type, TI, operating expense basis).
  4. Avoid escalation of guarantees just because you expand (see /blog/personal-guarantee-burnoff).
  5. Coordinate with assignment/sublease rights so you can exit if growth plans change: /blog/assignment-sublease.

If your business depends on exclusivity, expansion rights can also interact with use definitions and radius restrictions:

  • /blog/exclusive-use-radius

How BizLeaseCheck helps

BizLeaseCheck flags ROFR/ROFO/expansion option language and highlights:

  • short deadlines and landlord-controlled triggers
  • hidden changes to lease form or guarantee terms
  • vague definitions that make the option hard to enforce

Upload a lease for a fast first-pass review:

  • /analyze

Not legal advice

This article is for informational purposes only and is not legal advice. Expansion rights vary widely by lease and market. Use this guide as a checklist and consult qualified professionals for your situation.