A right of first refusal in Michigan is a contractual right that lets a designated person match any third-party offer before the owner can finalize a deal with someone else. It appears most often in real estate agreements and parenting plans, and whether it actually protects you comes down to how it’s written, whether it’s recorded, and how long it’s meant to last. A vague clause or an unrecorded one can leave you holding a right that a court will not enforce.
How the Right Works in Practice
A right of first refusal (ROFR) is preemptive and conditional. It doesn’t obligate the holder to buy anything. It sits dormant until the grantor — the owner or the party controlling the decision — receives a legitimate offer from an outside party. At that point, the grantor must present the offer’s terms to the holder, and the holder decides whether to match them.
If the holder matches, the holder steps into the outside buyer’s shoes and the transaction moves forward on those terms. If the holder passes, the grantor is free to close with the third party. That’s the whole mechanism. Everything else in a well-drafted ROFR exists to make those steps enforceable when the moment arrives.
Making a ROFR Enforceable in Michigan
Michigan’s statute of frauds requires any contract involving the sale of land or any interest in land to be in writing and signed by the party granting the interest. A verbal ROFR tied to real property is void.1Michigan Legislature. Michigan Compiled Laws 566.108 – Statute of Frauds; Contract for Interest in Lands The written agreement can stand alone or live inside a larger document like a lease, purchase agreement, or parenting plan.
Writing it down is only the start. The language has to be specific enough that a court can figure out exactly what was granted. The Michigan Court of Appeals dealt with this in Gerstenberger Farms, Inc. v. Grimes, where farm tenants had a lease clause giving them “the opportunity to purchase the property” if the landlord decided to sell. The court held that this vague phrasing did not create an enforceable right of first refusal. The lease never used the term “right of first refusal,” contained no price terms, and lacked a complete legal description of the property. The court found the agreement failed both for its indefinite language and for not satisfying the statute of frauds.2Justia. Gerstenberger Farms Inc v Betty Grimes
A ROFR that will hold up needs several things spelled out:
- Use the phrase “right of first refusal” rather than softer terms like “opportunity” or “option.”
- Include the full legal description of the property, not just acreage or a street address.
- Spell out how the grantor must notify the holder when a third-party offer arrives, including the method of delivery — certified mail, email, or hand delivery.
- Set a specific response window, such as 10 or 15 business days after written notice.
- Clarify whether the holder must match every term of the third-party offer or only the price.
The trigger notice itself should carry the material terms of the outside offer: purchase price, contingencies, closing timeline, and any other significant conditions. Without that detail, the holder can’t make an informed choice, and disputes about whether proper notice was given become the fight.
Record It Against the Property
An unrecorded ROFR can be worthless against a buyer who never knew it existed. In Gerstenberger Farms, the court noted that the third-party buyer was unaware of any claimed right of first refusal because the tenants never recorded it.2Justia. Gerstenberger Farms Inc v Betty Grimes Michigan’s recording statute lists rights of first refusal among the interests that can be recorded against real property.3Michigan Legislature. MCL Section 565.891
Recording puts the world on notice that the right exists. Without it, a third-party buyer can claim they purchased in good faith, which makes it much harder to unwind the sale or force the seller to honor your right. If you hold a ROFR on Michigan real estate, file it with the register of deeds in the county where the property sits. Filing fees vary by county, but the cost is minor next to the risk of losing your right entirely.
How Long a ROFR Can Last
A ROFR without an end date can run into Michigan’s version of the Uniform Statutory Rule Against Perpetuities, which limits how long certain future interests in property can remain contingent. Michigan adopted this rule in 1988. It generally requires a nonvested property interest to vest or terminate within a life in being plus 21 years, or within 90 years of creation.
The safe move is to build in an explicit expiration or tie the right to a defined period, such as the length of a lease or a fixed number of years. An open-ended ROFR on real property risks being challenged as violating the rule, which can void it entirely. For custody-related ROFRs, the rule is not a concern because those provisions expire when the children reach adulthood.
ROFR in Custody and Parenting Plans
Michigan does not require a right of first refusal in custody cases, but parents can include one in their parenting plan by mutual agreement, and courts can incorporate one into a custody order. The idea is simple: before a parent arranges outside childcare during their parenting time, they must first offer that time to the other parent.
These clauses usually set a minimum duration that triggers the right, because requiring notice for every short errand would be unworkable. Some plans use two to four hours. Others only kick in for overnights. The threshold should match the family’s schedules and the children’s ages.
Courts asked to approve a parenting-plan ROFR focus on the children’s best interests. In high-conflict situations, the clause can become a tool for harassment or micromanagement rather than something that helps the children. Where there’s a history of domestic violence, abuse, or an inability to communicate civilly, a court may decline to include a ROFR. The provision works best when both parents can cooperate and handle last-minute schedule changes without conflict.
Exercising or Waiving the Right
Once notice arrives, the holder has two paths. Exercising the right means agreeing to match the third-party offer’s terms; the holder replaces the outside buyer and the transaction closes on those conditions. Waiving can happen actively, through a written declination, or passively, by letting the response deadline expire.
Whether a waiver kills the ROFR permanently or only applies to that one transaction depends on the agreement. Some ROFRs survive a waiver and reset for the next offer. Others are one-shot rights that disappear once declined. Negotiate this point and put the answer in writing when the ROFR is drafted, because the fight over it later is expensive and avoidable.
When a Grantor Ignores the Right
If a grantor sells or transfers the property without honoring the holder’s right, the holder can sue. Two remedies dominate. Specific performance asks the court to order the grantor to complete the transaction with the holder on the terms that should have been offered. That’s the remedy most holders want, because it delivers the deal itself rather than a check. Monetary damages compensate for the financial loss caused by the breach.
Specific performance generally requires showing that the ROFR agreement was clear and enforceable, that the holder was ready and able to perform, and that money damages alone would not make the holder whole. Real property is generally treated as unique under Michigan law, which helps ROFR holders argue that no dollar amount substitutes for the specific parcel they lost the chance to buy. If the agreement was vague or never recorded, that path narrows sharply. Gerstenberger Farms is the cautionary example: the tenants sought specific performance, but the court never reached that question because the underlying agreement was too indefinite to enforce.2Justia. Gerstenberger Farms Inc v Betty Grimes
The lesson runs through every part of a Michigan ROFR. Use the exact phrase. Describe the property properly. Spell out notice, deadlines, and what must be matched. Record it. Give it a defined lifespan. A right of first refusal is only as strong as the document that creates it.