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First right of refusal means... what?

I bought a piece of lake property not long ago, and the developer has first right of refusal if we decide to sell it. We originally looked at the property as an investment or building site, but I really don’t understand what first right of refusal means.

Dear Dave,

I bought a piece of lake property not long ago, and the developer has first right of refusal if we decide to sell it. We originally looked at the property as an investment or building site, but I really don't understand what first right of refusal means.

Craig

Dear Craig,


A lot depends on the wording, but typically it means that you can sell property to another buyer subject to the developer not wanting to buy it back at that price.

If you decided to sell within the timeframe specified in the first right of refusal contract you'd have to notify the developer you have a written offer on the property. Then, you have to give him a chance to buy the lot first at that price.   

Or, you could just ask the developer — in writing — to waive his first right of refusal if this is something you want to do. They're in the business of selling lots, not buying them, so it may be an easy deal.

-Dave

Dave Ramsey is America's trusted voice on money and business. He has authored five New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover, EntreLeadership and Smart Money Smart Kids. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

I’m debt-free except for my home, and I’ll have that paid off in about 12 months. I currently make $60,000 a year and live in an area of Florida that is designated a flood plain,

because a river that empties into Tampa Bay runs behind my home. Currently, I’m paying $1,070 a month for flood insurance. My house is worth $325,000, and water has only come up into

the yard twice in over 20 years. Since I’m doing pretty well financially, do you think I need to keep my flood insurance policy?

Trudy

Dear Trudy,

From what you’ve told me about the history of your property, it sounds like your biggest concern might be if a hurricane caused a backwash in your area. Insurance is already pretty

tough in Florida when it comes to those kinds of things, but you don’t want to run the risk of your house getting mowed down and losing everything.

If I were in your shoes, I think I’d like the protection of flood insurance. What you’re paying for the policy is such a small percentage of your world, compared to the value of your

home and your income. Keep the coverage, Trudy!