Right of First Refusal in Ontario Real Estate: Before You Sell, Ask Me First
What a ROFR actually is, how it is triggered, and how it differs from a right of first offer and an option to purchase — for GTA buyers, sellers, tenants and co-owners
What is a Right of First Refusal (ROFR) in Ontario real estate?
A Right of First Refusal (ROFR) is a contractual right: once an owner decides to sell and receives an acceptable third-party offer, the owner must first present those same terms to the right-holder — a tenant, co-owner, neighbour or family member — giving them the first chance to buy on the same price and conditions, and may only sell to the third party if the holder does not exercise the right within the agreed window. It is a passive, contractual right: the Supreme Court of Canada in Canadian Long Island Petroleums v. Irving Industries (1974) confirmed the holder cannot compel a sale — the right only wakes up when the owner elects to sell and receives an acceptable offer.
Source: Canadian Long Island Petroleums Ltd. v. Irving Industries Ltd. (SCC, 1974); Pallett Valo LLP on the legal nature of a ROFR in Ontario (2024)
After years working across the GTA, I have learned that the phrase right of first refusal tends to surface at the worst possible moment. The owner is ready to sell, the buyer is all but done, and then the lawyer runs a title search before closing and pulls up a ROFR buried in a co-ownership agreement or a commercial lease signed years ago. The whole deal stops while everyone circles back to the person holding that right and asks, do you want to buy. A ROFR is not an offer and it is not a contract of sale — it is a quiet key sitting inside the property. It protects the holder, but it can weigh down the owner and any third-party buyer. Here is how it really works, how to tell it apart from its close cousins, what triggers it, where it shows up, and how to draft and register it so it does not bite the very person it was meant to help.
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ROFR, ROFO and Option to Purchase — three cousins, not the same
These three get blurred together, but who holds the switch differs completely. A Right of First Refusal (ROFR) is passive: only when the owner decides to sell and receives an acceptable third-party offer does the holder get woken up to match — the owner is in control. A Right of First Offer (ROFO) reverses the sequence: once the owner wants to sell, they must first offer the property to the holder on terms the owner sets, and only if the holder declines can it go to the open market. An Option to Purchase is the strongest: the holder can unilaterally compel the owner to sell at an agreed price during the option period, whether or not the owner wants to sell — which is why an option is treated as an interest in land. Shorthand: option means the holder decides, ROFO means the owner offers first, ROFR means the owner sells first but the holder can match and step in.
💡 An option to purchase hands the decision to convey to the holder; a ROFR and a ROFO leave it with the owner. That is precisely why an option is treated as an interest in land, while a ROFR is only a personal contractual right until it is exercised. In practice: an option burdens title, valuation and financing more directly; a ROFR sits quietly until the owner decides to sell, then tends to detonate at the last minute of a deal. If you remember one thing, remember the switch — because it changes everything downstream: how the right shows up on title, how a lender views it, and how much leverage each side really has when a sale is on the table.
⚠️The notice that triggers a ROFR must include the full material terms of the third-party offer. A bare price figure is often not enough, and courts may find the notice defective and the owner in breach.
How a ROFR actually plays out when an offer comes in
The devil in the matching: how identical is ‘same terms’
The core of a ROFR is strict compliance. Courts require the holder to match the very same terms set out in the third-party offer, and they will not let the owner escape through wordplay. Ontario courts show little tolerance for schemes to bypass a ROFR, especially where bad faith is in the air — bundling the property into a larger portfolio sale, loading in conditions the holder cannot meet, or quietly reducing the price afterward can all be found to breach the obligation. The flip side is just as demanding on the holder: exercise must be in writing, on time, and satisfy every condition. A day late or one condition short, and the right can evaporate. It is an exacting rule on both sides. What this means in a live deal is that both the owner and the holder should treat the notice-and-match sequence like a closing checklist, not a courtesy. Owners who want a clean sale document every step — the offer, the notice, the delivery, the deadline — because if the holder later claims they never got a proper notice, the sale can be unwound. Holders who want to exercise should reply in writing, reference the exact terms, and beat the clock, because a court that would otherwise protect them cannot rescue a right that was exercised out of time or on different terms.
Where you meet it: tenants, co-owners, commercial leases, family
Tenant ROFR: common in private contracts, where a tenant negotiates a right to buy before the property goes to anyone else. Separately, Ontario has a statutory version under section 53 of the Residential Tenancies Act — when a landlord serves an N13 to end a tenancy for major repairs or renovation, a tenant who gives written notice has the right to move back after the work at the rent the landlord could lawfully have charged with no interruption (note: this does not apply to demolition). Co-owners: partners buying an investment property almost always write a ROFR into the co-ownership agreement so no one sells their share to a stranger. Commercial leases: long-term tenants often negotiate a ROFR over the whole building to protect the ground they operate on. Family: parents may write one in so a particular child gets first chance at the family home. Different settings, same logic — giving a specific person a place at the front of the line.
🚨Before you buy, take the title search seriously and check for any registered ROFR or option. If a valid ROFR sits on the property, your closing can be matched and snatched at the same price by the holder.
💡 A ROFR exists between the parties even unregistered, but once registered — Ontario allows notice registration under section 71 of the Land Titles Act to protect unregistered rights — it sits on title where any future buyer sees it on a search. A loosely drafted ROFR that fails to state the timeline, the trigger, or whether it survives a transfer can spook buyers and stall or kill a deal, because no one wants to buy a property that another party can match and snatch at the same price. That is what lawyers mean by a clog on title. I have seen the practical fallout more than once: a buyer walks because their lawyer cannot get comfortable that the ROFR is dead, or a sale stretches out for weeks while the parties chase down a holder to sign a release. Even a ROFR that has expired on paper can slow a deal if it was never formally discharged from title. The lesson for owners is simple — an old, forgotten clause is not harmless just because you have stopped thinking about it.
Drafting and registration: a few details that save the deal
If you hold the right and want it to actually work, nail down the trigger event (what counts as deciding to sell), the notice method, the matching window, whether it captures a bundled or portfolio sale, and whether the right survives a change of owner; and consider registering notice on title so later buyers have constructive knowledge, preserving your shot at specific performance. If you are the owner, you want the opposite — a short window, a termination clause, and clear carve-outs for family transfers or refinancing. Either way, this is not a clause to copy from a template. Have an Ontario real estate lawyer draft or review it, because a single word of tightness or slack can be the difference of hundreds of thousands of dollars.
Frequently Asked Questions
Is a right of first refusal or a right of first offer better for the holder?
It depends. A ROFR lets the holder match after the owner already has a genuine market offer, so the market has priced the deal and the holder carries less risk — but the owner keeps more control and may try to route around it through a portfolio sale. A ROFO gives the holder the first offer before the property hits the market, but the holder faces pricing alone and the owner sets the terms. If fair pricing matters most, a ROFR is usually the steadier position.
Does an Ontario right of first refusal need to be registered on title?
It is enforceable between the parties even unregistered, but registering notice — Ontario allows this under section 71 of the Land Titles Act — puts future buyers on constructive notice and greatly strengthens a later claim for specific performance. The risk of not registering: if a good-faith buyer with no knowledge closes on the property, you may be left suing the breaching owner rather than getting the property itself.
Can an owner bundle the whole building into one sale to bypass my ROFR?
Not necessarily. Ontario courts take a dim view of using a portfolio or bundled sale to sidestep a ROFR, particularly where bad faith appears, and may find the owner in breach. But the outcome turns heavily on how your ROFR is drafted — whether it covers a sale as part of a larger group of assets. That is exactly the point to spell out when drafting.
Is a tenant ROFR the same as the one in the Residential Tenancies Act?
Not quite. A privately negotiated tenant ROFR is about buying the property. The section 53 version in the Residential Tenancies Act is statutory — when a landlord serves an N13 to end a tenancy for major repair or renovation, a tenant who gives written notice can move back afterward at the prior lawful rent (not for demolition). That is about resuming the tenancy, not purchasing. Do not conflate the two.
When should I bring in a lawyer?
Before anyone signs. A single word in a ROFR clause can decide where hundreds of thousands of dollars land, and a template will not cut it. Whether you want to create a ROFR that will actually be enforced, or you need to understand whether an old clause on title will sink your sale, have an Ontario real estate lawyer draft or review it. This article is general education, not legal advice.
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