The Right Of First Refusal – When Does It Apply?

What is the 'Right of First Refusal'?

When a landlord is planning to sell the freehold of a building that contains residential flats -whether by 'normal' sale or by auction – it is usually legally obliged to first (before entering into a contract with the buyer) give the flat-owners ('leaseholders') an opportunity to purchase the building on the same terms as the proposed sale. This is a legal obligation on the landlord under the Landlord and Tenant Act 1987 – in certain circumstances they must serve a notice on each of the leaseholders setting out the terms of the proposed sale and offering them a 'Right of First Refusal' (RFR). The leaseholders then have a set period of time in which to take up this offer.