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ROFR and Foreclosure Sale

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TroyZ2

Junior Member
What is the name of your state? Florida

How does a standard "Right of First Refusal" clause for a property work relative to a county foreclosure sale?

If the property is sold by court order at an open auction to a third party, how/when does the "Right of First Refusal" clause enter into the transaction. Does the person holding the ROFR rights then have the option to step in and accept the terms of the county auction, after the public sale.

Can someone explain in detail the order of proceedings:
-Public sale is held
-High bidder in excess of outstanding amount awarded rights to property
-Payment is made by third party to county clerk
-County clerk transfers property title to third party high-bidder
(Where does ROFR fit into this event list?)

Thanks.

Troy
 


S

seniorjudge

Guest
TroyZ2 said:
What is the name of your state? Florida

How does a standard "Right of First Refusal" clause for a property work relative to a county foreclosure sale?

If the property is sold by court order at an open auction to a third party, how/when does the "Right of First Refusal" clause enter into the transaction. Does the person holding the ROFR rights then have the option to step in and accept the terms of the county auction, after the public sale.

Can someone explain in detail the order of proceedings:
-Public sale is held
-High bidder in excess of outstanding amount awarded rights to property
-Payment is made by third party to county clerk
-County clerk transfers property title to third party high-bidder
(Where does ROFR fit into this event list?)

Thanks.

Troy

Troy, tell us what you are talking about....
 

TroyZ2

Junior Member
Detailed Example

Party_A agrees to purchase a land property from Seller_B for $100,000. Party_A agrees to pay $20,000 in cash and Seller_B offers a 10-year mortgage for the remaining $80,000 (I'll skip any interest to keep the math simple).

Seller_B includes a "Right of First Refusal" provision in the sales agreement:
In the event that Party_A desires to sell or transfer their ownership, Seller_B shall have the right of first refusal to purchase the land property under the same terms and conditions as the third party.

Party_A must notify Seller_B in writing no less than 30 days in advance of the proposed closing date of their intent to sell and must include a copy of the proposed transaction.

Upon receipt of the written notice, Seller_B has 30 days to determine whether to exercise its ROFR. If Seller_B elects to exercise its ROFR they shall notify Party_A in writing of such election and the purchase shall be closed on or before the closing date under the terms of the third party transacction agreement. If Seller_B fails to notify Party_A within 30 days then Party_A may proceed to close the transaction with the third party.
** End of ROFR Provision **


Party_A pays the agreed upon monthly mortgage payments for five years, then stops making the mortgage payments. Seller_B begins a foreclosure process (lis pendens, etc.) . The court issues a judgment against Party_A for a total of $42,000 (mortgage balance, court fees, lawyer fees, etc.) and orders a public sale of the land property. The court ordered public sale is published in the local newspaper and three weeks later the property is put up for auction at the courthouse.

Third parties C, D, and E attend the public sale. They are interested in the $100,000 property since the court judgment is only for $42,000. The three bid for the property and ThirdParty_C wins the auction with a bid of $53,000. Later that day ThirdParty_C submits a cashiers check to the county clerk for $53,000.

If there was not a ROFR provision in the original purchase agreement then a week or so later, the county clerk would issue a deed for the property to ThirdParty_C and transfer $42,000 to Seller_B.

My question is how does the ROFR provision enter into this scenario?

After ThirdParty_C submits the check to the county clerk, is written notice given to Seller_B to satisfy the ROFR provision. Does Seller_B then have 30 days to determine whether to exercise their ROFR provision. If they do elect to use the ROFR provision, does the deed transfer to Seller_B and the county clerk returns the $53,000 to ThirdParty_C.

Does the ROFR provision enter into the foreclosure proceedings in some other way or at a different time in the proceedings?

Does Seller_B have "intent to sell" in a foreclosure proceeding? Does this matter?

Troy
 
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