A right of first refusal in Colorado is a contract right that forces an owner, before selling an asset to anyone else, to first offer the deal to a designated person on the same terms a third-party buyer has already proposed. The holder either matches those terms and takes the deal, or passes and lets the sale proceed. Colorado recognizes the right in real estate contracts, business ownership agreements, parenting plans, and a state statute that gives local governments a chance to buy certain affordable rental housing.
How the Right Works Once Triggered
The right sits dormant until a triggering event, which in most agreements is the owner receiving a legitimate outside offer the owner intends to accept. At that point the owner has to notify the holder and present the same deal in full: the same price, the same closing timeline, and every other condition the third-party buyer proposed.
The holder then has a defined window to accept or decline. That window comes from the original agreement and may run anywhere from a few days to several weeks. If the holder matches, the sale goes to them. If they decline or let the clock run out, they lose the right for that transaction and the owner is free to close with the outside buyer.
One point trips people up. The holder has to match the entire offer, not just the parts they like. If the third-party buyer agreed to close in 30 days with no inspection contingency, the holder takes those same conditions. Picking out the favorable terms and rejecting the rest is not exercising the right.
Where the Right Shows Up in Colorado
Real Estate
The most familiar use is in real estate, especially leases. A commercial or residential tenant may negotiate a clause giving them the first chance to buy if the landlord ever decides to sell. The same provisions appear in HOA covenants and in private agreements between neighboring landowners who want some control over who ends up next door.
Recording the agreement with the county recorder matters. An unrecorded right of first refusal is still enforceable between the original parties, but it may not bind a later buyer who purchases without knowing the right exists. Recording puts the public on notice and protects the holder if the property changes hands.
Local Government Affordable Housing
Colorado law gives local governments a right of first refusal on certain multifamily rental properties that qualify as existing affordable housing with at least five units. Created by HB 24-1175 and codified at C.R.S. § 29-4-1202, the right lets a local government match an acceptable third-party offer, provided it commits to using the property as long-term affordable housing.1Colorado General Assembly. HB24-1175 – Local Governments Rights to Property for Affordable Housing
The timelines are short. Once a local government receives notice of a potential sale, it has 14 calendar days to preserve its right and then an additional 30 days to make a matching offer. If the government’s offer is accepted, it has to close within 60 days. The exception: if the third-party buyer made an all-cash offer, the government has to match that buyer’s closing timeline instead of using the standard 60-day window.1Colorado General Assembly. HB24-1175 – Local Governments Rights to Property for Affordable Housing
Child Custody Parenting Plans
In Colorado family law the right works differently. It is not a right to buy anything. It is a right to care for your child. When one parent cannot be with the child during their scheduled parenting time, the provision requires that parent to offer the other parent the chance to step in before calling a babysitter, a relative, or anyone else.
The parenting plan sets the details: how long an absence has to last before the right kicks in (often an overnight or a set number of hours), how much notice the absent parent owes, and what form the notice takes. These terms are negotiated between the parents, not imposed by statute, so they vary from one family to the next.
Colorado courts have generally held that leaving a child with a stepparent in the household does not trigger the right, on the view that the custodial parent retains discretion over day-to-day care during their own parenting time. A well-drafted plan addresses this directly.
Business Agreements
Partnership agreements and LLC operating agreements often include a right of first refusal to keep ownership inside the existing group. If a partner or member wants to sell their stake, they first have to offer it to the remaining owners on the same terms an outsider would get. That keeps a stranger from suddenly becoming a co-owner.
These clauses are common in closely held businesses where trust between the owners matters as much as the capital. A business-interest right of first refusal does not need to satisfy the Statute of Frauds, but writing it into the operating agreement is standard and makes enforcement far easier.
What Makes the Agreement Enforceable
Colorado courts will not enforce a vague or incomplete right of first refusal. A workable agreement needs to cover a handful of essentials:
- The owner granting the right and the person or entity holding it, both clearly named.
- A specific description of the asset. For real estate, a legal description of the parcel, not just a street address.
- The triggering event, usually the owner’s receipt of a bona fide third-party offer the owner intends to accept.
- How the owner must notify the holder, including form and delivery method.
- A definite window for the holder to accept or decline. Courts are skeptical of open-ended response periods.
For anything involving real property, writing is not optional. Under C.R.S. § 38-10-108, any contract for the sale of land or an interest in land is void unless it is in writing and signed by the party making the sale or granting the interest.2Justia Law. Colorado Revised Statutes Title 38 Section 38-10-108 An oral promise to give someone first crack at buying your property creates no enforceable right in Colorado. The agreement should also say what happens if the owner receives a second, different offer after the holder declines the first one, so a later dispute does not turn on whether the earlier waiver still applies.
Right of First Refusal vs. Right of First Offer
These two rights get confused constantly, and they run in opposite directions. A right of first refusal is a last-look right. The owner goes to the open market, finds a buyer, and then gives the holder the chance to match. A right of first offer flips the sequence. The owner has to approach the holder first, before marketing the property at all. If the two cannot agree on terms, the owner is then free to sell on the open market.
The difference matters because it changes who sets the price. Under a right of first refusal, a third-party buyer sets the terms and the holder decides whether to match. Under a right of first offer, the holder and the owner negotiate directly with no outside benchmark. Colorado’s affordable housing law actually uses both mechanisms for different categories of multifamily properties, so the distinction has real practical weight here.
What Happens If the Right Is Violated
Specific Performance
The strongest remedy when an owner ignores a right of first refusal is specific performance: a court order forcing the sale to the holder on the terms of the third-party offer. Colorado courts have been willing to grant this remedy even after the property has already been sold to someone else. In Thomas & Son Transfer Line, Inc. v. Kenyon, Inc., the Colorado Court of Appeals reversed a trial court’s denial of specific performance for a lessee whose right of first refusal had been violated, and the Colorado Supreme Court affirmed.3Justia Law. Thomas and Son Transfer Line Inc v Kenyon Inc A buyer who purchases property while knowing a right of first refusal exists runs the risk of having the sale undone.
Damages and Injunctions
When specific performance is not practical, or the holder would rather have money than the asset, a court can award monetary damages. The usual measure is the financial loss caused by the breach, which might be the difference between the property’s market value and the price at which the holder would have bought it, or the cost of finding a comparable replacement.
A court can also issue an injunction blocking a sale to a third party while the dispute is being litigated. That is often the first move, because once a sale closes and the new owner makes improvements or resells, unwinding the transaction gets much harder.
Sanctions in Parenting Plan Cases
Violating a right of first refusal in a parenting plan is treated as a failure to comply with court-ordered parenting time. Under C.R.S. § 14-10-129.5, a court can order make-up parenting time of the same type and duration that was denied, require the violating parent to pay the other parent’s attorney fees and court costs, hold the violating parent in contempt, or impose a civil fine of up to $100 per incident. Make-up time generally has to occur within six months of the violation, or within one year if the specific type of parenting time cannot be replicated within six months.4FindLaw. Colorado Revised Statutes Title 14 Section 14-10-129.5