What is the Right of First Refusal?

By now, you might have realized that selling a timeshare is not as simple as it sounds. When we get an offer on your timeshare, you might start jumping for joy, but the wait is still not over. Now, we must go through the Right of First Refusal (ROFR) with the resort. 

To put it simply, the Right of First Refusal is the resort’s “right” to step in as the buyer in the sale of any timeshare property at their resort. Every timeshare resale must go through the ROFR process, giving the resort the option to recollect their timeshare units. 

How Does a Right of First Refusal Work?

When the original purchase of a timeshare takes place from the developer, the contract will have a clause for the Right of First Refusal. Each developer will include their own terms and the length of time they have to review the ROFR. It can be anywhere from 30 to 45 days.

When the owners timeshare is for sale and an offer is accepted, the buyer and seller sign the purchase agreement and contracts, the property must go through the Right of First Refusal process.

There are two possible outcomes when we enter the ROFR process. The ROFR is either exercised, or waived. 

When the ROFR is Exercised

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What This Means for the Buyer

If you are a buyer and the resort exercises the ROFR, this means that the resort has stepped in as the buyer and taken over the sale. This can be a huge bummer, but we have some options when this happens.

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What This Means for the Seller

Not much, actually. When the ROFR is exercised by the developer, they are accepting all of the terms of sale of the signed contracts and agreements.  

When the ROFR is Waived

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What This Means for the Buyer

If the developer waives the ROFR, you’re in luck! The developer will not be stepping on as the buyer and taking over the sale. We will then move into the final stages of the closing process.

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What This Means for the Seller

The sale of your timeshare will continue with the same buyer and the same stipulations that were agreed in the original agreements. We’ll move into the final stages of the closing process!

1.

For every timeshare contract, a clause is included called the Right of First Refusal (or ROFR). Each developer has their own stipulations and time granted to review a timeshare in ROFR.

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A buyer may make an offer on a timeshare for sale on the resale market. When an offer is made, this is when we start negotiations and defining the terms of sale.

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Once the offer is accepted, the terms are agreed upon and the contracts are signed, the agent facilitating the sale will send the closing documents to the resort to begin the ROFR process.

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The resort will evaluate the entire contract during the ROFR process. From the terms agreed upon, points or weeks for sale, unit size, or outstanding loans.

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If the ROFR is exercised, this means that the resort is accepting all of the terms of sale and stepping in as the buyer.

There are times when the developer is exercising all ROFRs that come in for a particular resort. If you’re a buyer and the ROFR is exercised, be aware that making an offer for a different unit at the same resort may have the same outcome.

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If the resort waives the ROFR, the sale can continue between both buyer and seller. In the original contract clause, the resort has a specific amount of time to respond and exercise their right. If the resort doesn’t act on the ROFR in the allotted time they receive contracts, the ROFR is waived.

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Right of First Refusal FAQ

ROFR stands for Right of First Refusal. To put it simply, it is the resort’s “right” to refuse the sale and purchase the timeshare back as the buyer.

If the resort steps in and exercises their ROFR, this means that they are now taking the buyer’s place in the sale of the timeshare. When the ROFR is exercised, the resort is now responsible for buying the timeshare back from the owner at the offer price. 

The seller does not have to make any adjustments, while the original interested buyer is no longer eligible to purchase the specific unit. The escrow deposit is refunded, or it can be used towards the cost of another sale.

ROFR exercised means that the resort is exercising their right to take over the sale of the owner’s timeshare. The resort is now the buyer and has the right to do so.

More commonly, the resort will waive the ROFR. This means they are allowing the sale between buyer and seller to go through, and the resort will not be stepping in. 

It is illegal to look for loopholes out of the Right of First Refusal. The only way the ROFR is avoided is when the timeshare is “gifted” to a family member or friend. This means no funds are exchanged, but the unit is simply transferred to a new owner as a gift.

It’s common for the resort to not respond at all when they receive ROFR requests. This is called non-performance, and unfortunately all we can do is wait for their allotted time to be up (based on the ROFR clause in the original contract). After the set amount of time has passed and the resort has failed to respond, the ROFR is automatically waived and the sale process can continue.

Contact Fidelity Real Estate Experts

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Our Licensed Real Estate Agents pride themselves on providing outstanding service and support. We’re here to guide timeshare buyers and sellers through every step of the resale process.

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1-800-410-8326

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