Future Rights in Real Property, Part II: Practice Pointers


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In Part 1 of my series on future rights, I described the 4 primary future rights with respect to commercial real estate as follows: (i) Option; (ii) Right of First Refusal; (iii) Right of First Negotiation; and (iv) Right of First Opportunity.  Anytime, my clients indicate an interest to either grant or receive a future right, I always try to critically discuss the following issues: First, are there competing interests for the relevant real property that makes up the subject matter of the future right?  In other words, the grantor of such a right should make sure that it has not given the same right or conflicting rights to multiple beneficiaries.  For example, in the case of office space, one tenant may be entitled to an expansion option to certain space while another tenant may possess a right of first refusal that is pre-conditioned upon the first tenant not exercising […]

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Future Rights in Real Property, Part I: Options, Right of First Refusal, Right of First Negotiation, and Right of First Offer


[social_warfare]

Whether as part of a lease or purchase and sale transaction or otherwise, real estate professionals often negotiate future rights with respect to real property. Sophisticated parties have varying motivations that lead them to focus on one right or another, but generally these rights are meant to decrease uncertainty and increase flexibility for the beneficiary. Part I of this two part series on future rights will focus on the the four primary types of future rights: I. Option: Example: In consideration of receipt of a $1 million option fee, Wes is hereby granted the option to purchase all, but not less than all, of Seam’s building located at 999 Peachtree Street, Atlanta, Georgia, legally described on Exhibit A attached hereto, for a price of $150 million in cash, exercisable at anytime within 24 months after the date of this agreement. The parties will have 60 days to close after the […]

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