Hi, Patrick here from Selling Timeshares. In this video we are going to explain the all too often misunderstood: Right of First Refusal. Later in the video, I’ll be giving you some closely guarded tips on successfully navigating right of first refusal with any developer, so stay tuned.
What is ROFR?
Right of First Refusal is a developer right, in which, they have the option of refusing the sale of ownership to a third party. Any seller and prospective third party buyer must give the developer the opportunity to refuse the purchase of the ownership on the open market by purchasing the ownership directly from the owner.
How It Works
At the time of the sale, the seller is required to send the developer the purchase agreement for review. The developer has 30 days to review the agreement and decide if they are going to refuse the sale and purchase the ownership for at least the conditions of the purchase agreement. In the rare case that the 30 days pass without an answer, the contract goes through and the buyer takes over the ownership.
Maintain Resale Value
Right of First Refusal helps the developer control the market value of their ownerships. Typically, a developer will buy back an ownership if the sale price is too low.
What Does This Mean For You?
Process for Seller
As a seller, you will be waiting up to 30 days to see if the developer elects to purchase back your timeshare. If they do, you’ll still be paid according to your original agreement, but it will be from the developer directly. Rather than being paid from escrow.
Process for Buyer
If you’re a buyer, you’re on the other end of that 30 day waiting period as well. If the developer does buy back the timeshare, you’ll have to start over with a new purchase. If you’re working with a closing company through Selling Timeshares, Inc., you won’t lose any money and you’ll be refunded your earnest money deposit in full.
Using A Broker
An experienced resale broker can create a purchase agreement that will be the lowest possible price without the developer buying back the ownership. As the buyer, starting the buying process over again can be a ti me-consuming setback. So using an experienced resale timeshare broker can be a good way to purchase a timeshare on the resale market.
Click and Subscribe
I hope we’ve helped clear up some of the confusion surrounding Right of First Refusal. If you want to learn about how timeshare points systems work, make sure you have annotations turned on, and click the video on the right, or for mobile users, can find a link in the description just below that ‘like’ button.
Thank you for watching and happy travels!