Understanding ROFR - Timeshare Right of First Refusal

What does 'ROFR' mean?

The acronym itself is relatively common knowledge as it stands for Right of First Refusal, but beyond that, what this concept means escapes many if not all timeshare owners who dive into the Timeshare Resale Market.

In its simplest term, ROFR is the concept of a resort matching a resale offer of a timeshare themselves instead of letting the interval get sold to another owner for an extremely low price. Sound bizarre? It certainly is, but it is also a tactic that has been around for many years in the timeshare industry!

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Bob has a Timeshare week that he purchased new from a Developer many years ago. Bob now wishes to sell his timeshare and decides to advertise it on TUG/craigslist/etc. Bob finds a buyer after a short time named Jim, and they agree on the sale price of $1000.

If Bob's resort was currently exercising ROFR...before the transaction between Bob and his buyer could actually be completed, the resort has to approve the deal before ownership can be transferred from Bob to Jim. If the resort were unhappy that their timeshare week was being sold for such a low price, they could exercise ROFR on the deal, and take the week back themselves for the $1000 price Bob was selling it for, thus ensuring that Jim could not purchase that unit for such a low price, and he would need to seek another unit elsewhere...or....purchase the same unit the resort just bought from Bob...at whatever price they affix to the interval to sell themselves.

And there you have what ROFR is in a nutshell.

You might ask yourself why a timeshare resort would even do this, and you would get more than one answer! The two most common theories are listed below:

ROFR Theory 1:
ROFR is utilized by some resorts (and I stress the word some) to maintain and control the resale price of the intervals at that resort by buying up their own intervals that sell at the lowest prices, thus ensuring that anyone who wants to purchase an interval at that resort on the resale market, must pay a higher amount to obtain ownership. This theory is the one used by the timeshare developers to explain ROFR...and accepted by a large % of timeshare owners as well.

ROFR Theory 2:
ROFR is utilized by some resorts (more stress) to obtain prime value weeks, at sub prime value prices. IE essentially allowing the resort to purchase any "higher demand weeks" that may or may not be sold for abnormally low prices on resale sites by unknowing owners. This would allow the resort to purchase these weeks for pennies using ROFR, and then re-advertise them themselves for premium prices. So, which one is true? in all likelihood there is truth in both theories, but no one outside the resort would know the full answer!

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What does ROFR mean to me as a buyer?

Well firstly, if you are lucky enough to discover the resale market, give yourself a huge pat on the back as you are well ahead of the curve and you will be saving many thousands of dollars on your timeshare purchase! However it is important to determine if the week you are looking to snap up from the Timeshare Marketplace, or ebay, or elsewhere is at a resort currently exercising ROFR. This can be done by calling the resort, or requesting the current seller to do so.

Although as mentioned before, many resorts that used to utilize ROFR in the past, are no longer doing so given the state of the economy as it is currently, but that is not to say that all sales will pass ROFR, so it never hurts to check!

It is also important to note that ROFR to be used to block a sale of a timeshare, that the ROFR clause MUST be listed in the timeshare contract when it was purchased by the seller. If there is no mention of ROFR in the original sales contract, then the resort has no right to exercise ROFR on that interval! Many resorts in the past have attempted to exercise ROFR when they have no actual right to do so (see this thread for an example PAHIO & ROFR! This could cost you that gem of a timeshare you were about to snag for a single dollar! So as we always say on TUG, do your research before you buy and you will save a fortune!

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Any additional ROFR Tips or Links?

You can find ROFR information on just about any Timeshare System here on the TUGBBS owner forums

An independent site that tracks ROFR data! ROFR.NET

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