A right of first refusal can bind heirs and beneficiaries in Minnesota, but only when the agreement is written to reach them. If you hold a right of first refusal and the owner who granted it dies, the heirs generally take the property subject to your right, provided the contract names heirs, successors, and assigns and, for real estate, was recorded. If you granted the right and want it to end at death, the drafting has to say that too. Minnesota treats a right of first refusal as a question of contract law, so the words you choose control whether the right survives an inheritance.
Two questions decide most disputes. First, is the right a personal one that ends when the holder dies, or a transferable property interest that passes to the holder’s estate? Second, does the burden run with the property, so that whoever inherits must honor it? The sections below explain how Minnesota answers both, how the statutory rule against perpetuities affects a long-term right, and how to draft a right of first refusal that holds up after ownership changes.
Key Takeaways
- A right of first refusal binds heirs and successors in Minnesota only when the contract names heirs, successors, and assigns.
- Heirs generally take property subject to a valid, recorded right of first refusal, so an inherited asset can still carry the burden.
- A right drafted as a personal right ends at the holder’s death; a right drafted as a property interest passes to the holder’s estate.
- Minnesota Statutes section 501A.04 excludes a bargained-for right of first refusal from the rule against perpetuities, so a business right is generally not limited by the 90-year rule.
- Coordinating the clause with any related will or trust and recording it for real estate reduce the risk of a later dispute.
Understanding the Basics of Right of First Refusal
A right of first refusal gives you the chance to match a third-party offer before the owner sells the asset or interest. It gives the holder control over transfers of ownership and limits the seller’s freedom to dispose of the property without first offering it to you. In closely held businesses, owners use a right of first refusal to keep shares or real estate from passing to an outsider, and that same goal drives the question of what happens when an owner dies.
Whether the right can be transferred or delegated turns on the assignment terms you write into the agreement. Those terms shape both enforceability and your options, so define the scope, duration, and conditions plainly to avoid a fight later.
Enforceability of a right of first refusal turns on precise language, especially the notice process and the time frame for exercising the right. Those foundational terms are what let you protect your interest and enforce the right when ownership changes hands.
How ROFRs Are Transferred Upon Death
When the holder of a right of first refusal dies, the first question is whether the right transfers to the holder’s heirs or estate. In Minnesota, the answer depends on the terms of the agreement you signed.
Some rights of first refusal are personal rights that terminate at death, while others are property interests that pass to heirs or beneficiaries. That distinction controls whether the estate can still enforce the right. If the contract ties the right to one named person with no successor language, a Minnesota court is likely to read it as personal and treat it as ending at death. If the contract says the right runs to heirs, successors, and assigns, it is far more likely to pass through the estate.
The same distinction affects whether the right can be sold or assigned during life. If you expect to transfer the right as part of a business sale, the assignment terms in your contract need to permit it. State expressly whether the right survives death and who may hold it, or you leave the estate to litigate the point.
Minnesota Law: Perpetuities and When a Right of First Refusal Is Valid
A long-term right of first refusal can raise a Minnesota-specific concern: the statutory rule against perpetuities. That rule limits how long a future interest in property can stay open before it must vest. Under Minnesota Statutes section 501A.01, “A nonvested property interest is invalid unless: (1) when the interest is created, it is certain to vest or terminate no later than 21 years after the death of an individual then alive; or (2) the interest either vests or terminates within 90 years after its creation.” In plain terms, an open-ended right to buy property someday cannot last forever, and a right that could be exercised beyond the statutory window is at risk of being void.
For most business rights of first refusal, Minnesota removes that risk. Section 501A.04 excludes from the rule “a nonvested property interest or a power of appointment arising out of a nondonative transfer,” subject to a short list of family-and-estate exceptions. A right of first refusal that a buyer, co-owner, or tenant receives in exchange for consideration arises out of a nondonative transfer, so it is generally not limited by the 90-year rule and can bind successors indefinitely if the contract says so.
The exclusion has an edge. A right of first refusal given as a gift, such as one written into an estate plan without consideration, is a donative transfer and is not excluded. That kind of right must still vest within the statutory period, and a poorly drafted one can fail. This is the practical dividing line: a bargained-for right of first refusal in a business or real estate deal is durable against heirs, while a gifted right embedded in an estate plan needs to respect the perpetuities limit. Because these turn on the same factors that decide contract enforceability generally, the wording and the consideration behind the right both matter.
Drafting ROFR Clauses to Bind Successors
A well-drafted right of first refusal is what makes the right enforceable against successors and heirs. Build the clause so that it binds future owners rather than only the person you signed with.
Key drafting considerations include:
- Explicit successor language: State clearly that the right applies to “heirs, successors, assigns, and beneficiaries,” so it transfers with the ownership interest instead of ending with the original owner.
- Coordination with estate planning documents: If the property will pass through a will or trust, reference the right of first refusal in those instruments so the estate plan and the contract do not conflict.
- Continuous obligation: Draft the right to survive ownership changes, which prevents an heir or beneficiary from selling free of the right simply because they inherited the property.
Practical Considerations for Enforcing ROFRs After Ownership Changes
Even a carefully drafted right of first refusal can be hard to enforce once ownership changes. The first practical challenge is identifying who now holds the interest, especially when the asset passed through a trust or will and title sits with several heirs.
Give heirs and beneficiaries clear written notice of the right so they cannot claim they never knew of it. Valuation is the next common flashpoint: disputes over a right of first refusal often turn on the fair market value that triggers the right, and a qualified appraiser can keep that from stalling a sale.
Observe the timing and procedural steps in the right of first refusal exactly. A missed notice window or a skipped step can forfeit the right, and Minnesota courts hold parties to the procedure they agreed to. Where the property is also governed by an estate plan, make sure the plan and the contract point the same direction.
Enforcing the right after an inheritance comes down to acting early, documenting each step, and keeping the contract, the estate plan, and the valuation aligned. Aaron Hall advises Minnesota business owners on drafting and enforcing rights of first refusal so they hold up when ownership passes to the next generation.
Does a right of first refusal bind the heirs of the property owner in Minnesota?
Yes, in Minnesota a right of first refusal can bind the heirs and successors of the person who granted it when the agreement says so. Heirs generally take property subject to the obligations the owner accepted, so an heir who inherits must honor a valid right of first refusal before selling. The right binds successors most reliably when the contract names heirs, successors, and assigns, and, for real estate, when it is recorded.
Does a right of first refusal survive the death of the holder?
It depends on how the agreement is written. A right of first refusal drafted as a personal right ends at the holder’s death, while one drafted as a transferable property interest passes to the holder’s estate and heirs. Minnesota courts look to the contract language to decide which one you created, so state expressly whether the right survives death.
Can Minnesota's rule against perpetuities void a long-term right of first refusal?
Usually not for a bargained-for business right of first refusal. Minnesota Statutes section 501A.04 excludes an interest arising out of a nondonative transfer from the statutory rule against perpetuities, so a right of first refusal exchanged for consideration is generally not limited by the 90-year rule. A right of first refusal given as a gift, such as one embedded in an estate plan without consideration, is not excluded and must vest within the statutory period.
Does a right of first refusal run with the land?
A right of first refusal runs with the land in Minnesota when the agreement is drafted and recorded to bind future owners. Recording gives later buyers and heirs notice of the right, which is what allows enforcement against someone who was not a party to the original contract. An unrecorded right of first refusal may still bind parties who had actual knowledge of it, but recording is the reliable path.
How should you draft a right of first refusal so it binds heirs and beneficiaries?
Draft the right of first refusal to name heirs, successors, and assigns, state clearly that it survives death, and set a definite notice procedure and time frame for exercising the right. For real property, record the right so it gives notice to future owners. Coordinating the clause with any related will or trust reduces the risk that heirs later contest it.
