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Buyer Beware: Don’t Lose Your Rights Under A Right of First Offer Provision

In Headquarters Hotel, LLC v. LBV Hotel, LLC, a court ruled that a buyer rejected an offer by refusing to execute a confidentiality agreement required by the seller as part of the offer under a right of first offer provision.

The buyer and seller are parties to a 129-year lease for the property at 154 Berkeley Street in Boston. The seller (i.e., LBV Hotel, LLC) operates the Loews Boston Hotel on the property.

The lease contains a so-called “ROFO provision” requiring that if either party desires to market its interest in the property, it must first offer its interest to the other party “at the same price and upon all of the same terms and conditions” that would be offered to third parties. This is the key language in the ROFO.  The way the Court saw it, the provision is so broad that it allows the seller to determine for itself the terms of the sale.

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