Right of first refusal on land: what it binds

Quick summary: This guide explains what a right of first refusal on land is, how it differs from an option, and when it binds a later buyer. It is for landowners who hold or grant one and for buyers who find one in a title search. The key takeaway: an unrecorded right may not bind a buyer, and an unreasonable one may not bind anyone.

What a right of first refusal is

A right of first refusal is a promise that, if the owner decides to sell, the holder gets the first chance to buy. North Carolina courts call it a preemptive right. The Supreme Court of North Carolina defines it as a right that requires the property to be offered first to a named person before it may be sold to another party.

The owner keeps full control of the timing. If the owner never decides to sell, the right never comes into play. If the owner does decide to sell, the holder may buy on the agreed terms or step aside.

A related right is the right of first offer. Under it, the owner must offer the land to the holder before marketing it to anyone else. North Carolina’s recording statute lists both rights by name.

How it differs from an option

An option and a right of first refusal both give someone a claim on land, but they work in opposite directions. The court draws the line this way: an option creates the power to compel a sale, and a preemptive right creates only the right to buy first if the seller decides to convey. See How an option to purchase land works for the option side.

	Option	Right of first refusal
Who decides whether a sale happens	The holder	The owner
What starts it	The holder’s notice of exercise	The owner’s decision to sell, often a third-party offer
Price	Usually set in the option	Usually tied to the third-party offer or to market value
Usual payment	The buyer pays the owner for the option	Often part of a larger deal, such as a lease or a deed

Where rights of first refusal come from

A right of first refusal can sit in almost any document that touches land. The court’s opinion names leases, contracts, and restrictive covenants in deeds or recorded in the chain of title. Common sources on rural and suburban land include these:

• Deeds. A seller keeps the first chance to buy the land back, or gives it to a neighbor or family member.
• Leases. A farm tenant, a ground lessee, or a tower lessee gets the first chance to buy the land under the lease.
• Family agreements. Co-owners agree that no one sells a share to an outsider before the others can buy it.
• Owners association declarations. A declaration gives the association or the developer the first chance to buy a lot before it is resold.
• Purchase contracts. A buyer of one tract gets a first refusal on an adjacent tract the seller keeps.

A right in a recorded declaration is a kind of private restriction. You find it the same way you find other restrictions: in the declaration, the plat notes, and the deeds. See Restrictive covenants: what they are and how to find them.

When a court enforces one

A North Carolina court enforces a right of first refusal only when it is reasonable. The Supreme Court held that preemptive rights are not void per se and will be enforced if reasonable, and it named two tests.

1. Duration. The right must be limited in time. The court tied the limit to the period of the rule against perpetuities.
2. Price. The price must be linked to the fair market value of the land, or to the price the seller is willing to accept from third parties.

A right that runs forever, or that fixes a price that ignores the market, risks being an unreasonable restraint on the owner’s power to sell. An attorney reads the actual terms against the current law.

Watch for: A right of first refusal in an old deed can still sit in the chain of title. Before you list land, have an attorney check whether any right survives, who holds it, and whether it was recorded.

Recording and a later buyer

A right of first refusal binds a later buyer for value only after it is recorded. North Carolina’s recording statute names the right of first refusal and the right of first offer among the interests that are not valid against purchasers for value or lien creditors until registration in the county where the land lies.

The parties need not record the whole agreement. They may record a memorandum that carries the notarized signatures of each record title holder and each holder of the right, a description of the land, the expiration date, and a reference to the full agreement.

A recorded memorandum gives the same notice as the full agreement. The memorandum statute also presumes that the right has expired as to later recorded buyers and creditors 60 days after the stated expiration date, unless a recorded extension says otherwise. The expiration date is part of the protection for everyone who comes later.

For a buyer, the check comes before closing. A title search finds a recorded right, and the buyer’s attorney asks for a written waiver or release from the holder before closing. See Title search for land: what it finds and who does it.

Take action: If you own land and think a right of first refusal may bind it, gather the deeds, leases, and family agreements before you talk to a buyer. Start with Is your land a data-center site?

How a third-party offer starts it

Most rights of first refusal start when the owner receives an offer from a third party and wants to accept it. The agreement sets the steps, and the steps differ from document to document. A typical sequence runs like this:

1. The owner receives a written offer from a buyer.
2. The owner sends notice of the offer and its terms to the holder, in the form and to the address the agreement requires.
3. The holder has the number of days the agreement states to match the offer or decline.
4. If the holder matches, the holder buys on those terms. If the holder declines or lets the period run, the owner may sell to the buyer on the noticed terms.

Two points cause most disputes. The first is a sale on terms different from the noticed terms, such as a lower price. The second is a sale of a larger tract that includes the land under the right. The agreement’s text controls both, and an attorney reads it before the owner signs a contract with the outside buyer. See What is in a land purchase agreement?

Who drafts and who confirms

A North Carolina real estate attorney drafts a right of first refusal and the memorandum that records it. The same attorney, or the buyer’s closing attorney, confirms whether a recorded right still binds the land and obtains any waiver.

The public record shows a recorded right, a recorded memorandum, and any recorded release. It does not show an unrecorded side agreement, and it does not settle whether a right is reasonable enough to enforce. Those questions go to the attorney. See Chain of title: how ownership passes from deed to deed.

Key recap

• A right of first refusal gives the holder the first chance to buy if the owner decides to sell. It does not force a sale.
• An option gives the holder the power to compel a sale. A right of first refusal does not.
• A court enforces a right of first refusal only when its duration and price terms are reasonable.
• The right binds later buyers for value only after it, or a memorandum of it, is recorded.
• A North Carolina real estate attorney drafts the right, reads its trigger, and obtains any waiver before closing.

Questions

Is a right of first refusal the same as an option?

No. An option lets the holder compel a sale on set terms. A right of first refusal lets the holder buy first only if the owner decides to sell.

Does a right of first refusal have to be recorded in North Carolina?

Recording decides whether it reaches a later buyer. Under the recording statute, it is not valid against a later buyer for value or a lien creditor until it is registered. A recorded memorandum with the required contents is enough.

Can a right of first refusal last forever?

A right with no time limit risks being an unreasonable restraint on the owner’s power to sell. The Supreme Court of North Carolina tied the limit to the rule against perpetuities, and an attorney checks the terms against the current law.

How do I get a right of first refusal released?

The holder signs a written release or waiver, and the attorney records it in the county where the land lies. The buyer’s closing attorney usually asks for it before closing.

References

Primary sources cited on this page, in APA style.

• N.C. Gen. Stat. § 47-119 (2025). https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_47/GS_47-119.html
• N.C. Gen. Stat. § 47-120 (2025). https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_47/GS_47-120.html
• N.C. Gen. Stat. § 47-18 (2025). https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_47/GS_47-18.html
• Supreme Court of North Carolina. (1980, August 15). Opinion on preemptive rights in real property (301 N.C. 58). Caselaw Access Project, Harvard Law School. https://static.case.law/nc/301/html/0058-01.html