Rights of first refusal for the purchase of a property

If the owner and the prospective buyer have agreed on the terms of the real estate purchase contract, it must always be checked whether the effective conclusion of the contract does not conflict with third party pre-emption rights. There are contractual and legal pre-emption rights. A right of first refusal, which is contractually agreed between the owner and a third party, can only be asserted against a good faith buyer if it is entered in the land register. Otherwise the protection of good faith applies in favour of the buyer. Since a current excerpt from the land register is only available at the latest, at the notary appointment, the buyer now becomes aware of the right of the third party, in the event of the registration of the right of first refusal, otherwise he acquires in good faith. In short: The contractually agreed right of first refusal does not usually entail any risk for the buyer. The situation is different with statutory pre-emption rights, since these are usually not entered in the land register.

The statutory rights of first refusal

Right of first refusal of the co-owner

The co-owner of a plot of land, apartment or house has a statutory right of first refusal (CC Art. 1522) if the other co-owner wishes to sell his share. If there are several co-owners who wish to exercise a right of pre-emption, they are entitled to the right of pre-emption on a pro rata basis in the amount corresponding to their share of the total property. The co-owner must exercise his or her right of pre-emption within nine days of the sale being entered in the property register. If the sale is not entered in the property register, the period does not begin to run until the day the sale is recorded in the property register.

Neighbour’s rights of first refusal

In rural areas, the neighbour’s right of first refusal must occasionally be taken into account, but this is subject to special conditions. This is because it only exists if the purchase of the property is smaller than one hectare (10,000 m²), unless neighbouring properties are separated by streams, canals, ravines, roads, etc. The neighbour’s right of first refusal in rural areas is intended to counteract further urban sprawl and lead to larger areas again. If two or more neighbours are considered as pre-emption beneficiaries, the pre-emption right of the neighbour with the smaller area is applicable (CC Art. 1523). In the case of the neighbour’s right of pre-emption, the period of nine days from registration or from the date on which the neighbour becomes aware of the situation also applies.

The tenant’s right of first refusal

In Spanish tenancy law, the tenant has a statutory right of first refusal (Art. 25 LAU). This right of first refusal entitles the tenant to buy the property at the price that a third party is willing to pay. The tenant must exercise this right of first refusal within 30 days. The period begins when the owner informs the tenant about his intention to sell to the third party. If the owner has sold the property without informing the tenant, the tenant has a right of objection, which after exercising, he can buy on the third-party terms agreed. Most lease agreements stipulate that the tenant waives his statutory right of first refusal.

Further statutory rights of first refusal

Other legal pre-emptive rights are, for example: the pre-emptive right between co-heirs (CC Art. 1067), the pre-emptive right between co-shareholders in the event of liquidation (CC Art. 1708), the pre-emptive right between super- and sub-shareholders in the event of sale of the ownership of the leasehold (CC Art. 1636) and the pre-emptive right between assignee and cedant in the event of a leasehold (CC Art. 1656 No. 6 and CC Art. 1655).