Failing grade

Certificate of Non-Exercise - The certificate of non-exercise (also known as a certificate of non-objection or a waiver of the right of first refusal) is a document issued by the municipality certifying that it will not exercise its statutory right of first refusal under Sections 24-28 of the Building Code (BauGB) in connection with the sale of a property, or that no such right exists. It is a mandatory prerequisite for the transfer of ownership in the land register.

Legal Basis and Procedure

The municipal right of first refusal is regulated in Sections 24 through 28 of the German Building Code (BauGB). It applies, among other things, to properties within the scope of a zoning plan, in formally designated redevelopment areas, in urban development areas, and in areas with a preservation ordinance (environmental protection). Whenever a property is sold, the notary who notarizes the transaction must submit the purchase agreement to the relevant municipality so that it can verify whether a right of first refusal exists and whether it wishes to exercise it.

Pursuant to Section 28(2) of the German Building Code (BauGB), the municipality has a period of two months following notification of the purchase agreement to decide whether to exercise the right of first refusal. If it does not exercise the right or determines that no right of first refusal exists, it issues a negative certificate. Without this certificate, the land registry office may not transfer ownership-it is therefore a genuine prerequisite for completion. In practice, issuance takes between one and eight weeks, depending on the municipality. Some municipalities issue the certificate within a few days, while others use nearly the entire two-month period.

The notary typically applies for the negative certificate immediately after notarization at the relevant Real Estate Office or the municipality’s Building Authority. The costs for issuance are low and depend on the respective municipal fee schedule-in Bavaria, they typically range between 20 and 100 euros. Under standard contract terms, the buyer bears the fee.

Special Cases: Redevelopment Areas and Neighborhood Preservation

In certain areas, the municipality’s right of first refusal is extended, and the municipal review is particularly thorough. In formally designated redevelopment areas pursuant to Sections 136 et seq. of the German Building Code (BauGB), the municipality may exercise the right of first refusal to achieve urban redevelopment objectives-such as securing land for public facilities, social housing, or infrastructure projects. In areas with a preservation ordinance (Section 172 of the BauGB) designed to protect the neighborhood character, a right of first refusal also applies under Section 24(1)(4) of the BauGB. Here, the municipality assesses whether the sale could jeopardize the composition of the resident population.

Another special case is the general right of first refusal under § 24(1)(1) BauGB for areas designated for public purposes in the zoning plan. If the right of first refusal is actually exercised, the municipality enters into the contract under the terms of the purchase agreement-the original buyer is displaced.

Practical Tip for Nuremberg and the Metropolitan Region

The city of Nuremberg has several formally designated redevelopment areas, such as in parts of the Südstadt, in St. Leonhard/Schweinau, and in Gostenhof. Anyone purchasing a property in these neighborhoods should expect a more thorough review and potentially longer processing times for the negative certificate. We recommend that buyers ask the notary early on about the property’s location within a redevelopment area and take this into account when planning the timeline for the purchase transaction. Typically, the City of Nuremberg issues the negative certificate through the Office of Urban Planning. In the surrounding municipalities of the metropolitan region-such as Fürth, Erlangen, or Schwabach-processing is often faster because there are fewer cases involving preemptive rights. We assist our clients in coordinating with the notary and the municipality to ensure that no avoidable delays occur during the purchase process.

Frequently Asked Questions

Can the real estate purchase be completed without a negative certificate?

No. The Land Registry will not transfer ownership without a negative certificate. While the purchase agreement itself is validly notarized, the transfer of ownership in the Land Registry-and thus the legal completion of the transaction-requires the submission of the negative certificate. In practice, this means: As long as the certificate is missing, the seller remains registered as the owner in the land registry, even if the purchase price has already been paid.

How long does it take to issue a negative certificate?

According to Section 28(2) of the German Building Code (BauGB), the municipality has a statutory deadline of two months from receipt of the purchase agreement. In practice, the process is often much faster-in straightforward cases outside of redevelopment areas, it often takes two to four weeks. In Nuremberg’s redevelopment areas, however, processing can take as long as six to eight weeks, as the city conducts a substantive review of the urban planning relevance.

What happens if the municipality actually exercises its right of first refusal?

In this case, the municipality steps into the purchase agreement in place of the original buyer-under the same terms, in particular at the same purchase price (Section 28(2) Sentence 1 of the BauGB). The previous buyer loses their rights under the agreement. In the Nuremberg metropolitan region, however, the actual exercise of the right of first refusal is rare. It is generally limited to strategically important properties for public infrastructure or social housing.

How does a redevelopment area affect the purchase process beyond the negative certificate?

If a property is located in a formally designated redevelopment area under Section 136 of the BauGB, the consequences for the purchase process are more extensive than just the negative certificate. In addition, the purchase agreement requires approval under Section 144 of the BauGB from the municipality, as a moratorium on changes applies within the redevelopment area. This approval verifies whether the planned purchase price corresponds to the value prior to the start of the redevelopment measures-the so-called redevelopment compensation amount. In the event of a subsequent sale, the municipality may also levy a compensation amount (Section 154 of the BauGB) to recoup the increase in land value resulting from the redevelopment. In Nuremberg, the redevelopment areas in St. Leonhard/Schweinau and Gostenhof are active; buyers in these neighborhoods should take into account the redevelopment-related encumbrances and the potential compensation amount when negotiating the purchase price. The Nuremberg City Planning Office provides information upon request regarding the status of the redevelopment process and the estimated amount of the compensation payment.

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