Right of First Refusal in the Land Register: Form, Time Limit, and Effect

Anyone looking to buy a plot of land or a property in Erlangen may sometimes come across an entry in Section II of the land register that can complicate the purchase: a right of first refusal. Whether in favor of a private individual, a family member, or the city of Erlangen itself, the right of first refusal gives the entitled party the option to step into an already negotiated purchase agreement. Those who understand the legal nuances have an advantage, whether on the buyer’s or seller’s side.

Legal Background: Real Right of First Refusal under Sections 1094 et seq. of the German Civil Code (BGB)

The right of first refusal in rem regarding a property is governed by §§ 1094-1104 BGB. It grants the beneficiary the right to step into a purchase agreement for the encumbered property if the owner sells the property to a third party. The right arises through agreement and registration in Section II of the land register for the encumbered property.

The real right of first refusal must be distinguished from other rights of first refusal. The contractual right of first refusal (Sections 463 et seq. BGB) applies only between the contracting parties, not against third parties. It is not registered in the land register. If the property is sold to a third party in circumvention of the right of first refusal, the beneficiary is entitled only to claims for damages.

The statutory right of first refusal of co-owners (Section 2034 BGB) applies to the sale of a share of an inheritance. Co-heirs have a statutory right of first refusal that arises without registration in the land register.

The municipal right of first refusal (Sections 24 et seq. of the German Building Code (BauGB)) grants the City of Erlangen a public-law right of first refusal in certain areas (redevelopment zones, land readjustment zones, areas under Section 24 of the BauGB). This right arises directly from the law and does not require entry in the land register. Buyers must clarify this risk separately by submitting an inquiry to the Erlangen City Planning Office.

The Erlangen Local Court maintains the land registers for Erlangen and its associated districts. The Notary District of Middle Franconia also includes Erlangen; notaries within the district authenticate the creation and transfer of preemptive rights.

Deadlines and Procedures: Exercising the Right of First Refusal

According to Section 469(2) of the German Civil Code (BGB) in conjunction with Section 1098(2) BGB, the exercise period for the real right of first refusal is two months from the date on which the beneficiary was notified of the contents of the purchase agreement concluded with the third party.

Type of Right of First Refusal	Exercise Period	Duty to Notify	Legal Consequence upon Exercise
Right of first refusal in rem (Sections 1094 et seq. BGB)	2 months from notification	Owner/seller	Entry into the contract on the same terms
Right of first refusal under the law of obligations (Sections 463 et seq. BGB)	2 months from notification	Owner/seller	Entry into the contract (effective only between the parties)
Municipal right of first refusal (Section 24 BauGB)	2 months from conclusion of contract	Municipality is notified	Municipality enters into purchase contract
Statutory right of first refusal for co-heirs (Section 2034 BGB)	2 months from notification	Co-heir receives notification	Co-heir may acquire share of inheritance at the same price

Source: WEG Act (as of the 2020 WEG reform + 2026 amendments), BGB, GNotKG table, Bavarian Justice Portal, Nuremberg/Fürth/Erlangen Land Registry, as of Q1/Q2 2026.

The seller is obligated to provide notice: They must immediately inform the party entitled to the right of first refusal of the terms of the concluded purchase agreement. The period does not begin to run until this notice is given. If notice is not provided, the period does not begin to run-the entitled party may still exercise the right of first refusal at a later date, which can lead to significant legal uncertainty.

The right is exercised by a unilateral declaration by the holder of the right of first refusal to the party subject to the right of first refusal (Section 464(1) of the German Civil Code (BGB)). With this declaration, a purchase agreement is concluded between the holder of the right of first refusal and the seller on the terms agreed upon by the seller with the third party-including the purchase price, payment terms, and other conditions.

Practice in Erlangen: When Preemptive Rights Become Relevant

In Erlangen real estate practice, preemptive rights are particularly common in the following situations:

Family transfers with a right of repurchase: Parents transfer a property to a child and reserve a right of first refusal to ensure that the property remains within the family or that the proceeds from the sale flow back to the family if the child sells it. The right of first refusal is entered in the land register as a right in rem.

Neighbor preemptive rights for row houses or semi-detached homes: Owners of neighboring houses or semi-detached homes agree to mutual preemptive rights to prevent an undesirable neighbor from moving in. This practice is legally permissible but not always enforceable if an unreasonably high purchase price was set as a deterrent.

Municipal Right of First Refusal in Redevelopment Areas: The City of Erlangen holds rights of first refusal in certain development areas (e.g., as part of urban development initiatives) pursuant to Sections 24 et seq. of the German Building Code (BauGB). Before purchasing, buyers should check with the Erlangen City Planning Office to determine whether the property is located in an area subject to a right of first refusal.

> For a current valuation of your Erlangen property-including consideration of encumbrances in Section II of the land register-the valuation tool from leadmarkt.ch is available.

Handling the municipal right of first refusal: Before the notary appointment, the notary should obtain a negative certificate from the Erlangen City Planning Office (or instruct the buyer to do so). This certificate confirms that the municipal right of first refusal does not apply to the specific property being purchased or is not being exercised. The notary will not file the application for transfer of ownership until the negative certificate is available or the two-month period has expired without the municipality issuing a declaration of exercise.

Impact on Value and Notary Fees Upon Registration

A registered right of first refusal reduces the market value of the encumbered property, as it limits its marketability: A potential buyer must anticipate that the holder of the right of first refusal may step into their purchase contract, meaning they will not receive the property. It is difficult to quantify the reduction in value on a flat-rate basis-appraisers typically estimate 2 to 8 percent of the market value, depending on how likely it is that the right will be exercised.

Notary fees for the creation of a real right of first refusal (GNotKG):

Transaction value (property value)	Basic notary fee	Notary for creation (0.5 times)	Land registry office
€100,000	€273	approx. €137	approx. €100
€200,000	€435	approx. €218	approx. €160
€500,000	€935	approx. €468	approx. €340

Source: GNotKG Table B, as of 2026 (values based on transaction value pursuant to §§ 97-100 GNotKG).

Notary fees are incurred again when exercising the right of first refusal, as the resulting purchase agreement between the party with the right of first refusal and the seller must be notarized. These costs correspond to the costs of a standard purchase agreement under the GNotKG (1.5 times the fee based on the purchase price as the transaction value).

Local Context: FAU and the Erlangen Housing Market

Erlangen is characterized by the Friedrich-Alexander University (FAU) and the Siemens Campus. The housing market is tight: The vacancy rate is below 2 percent, and purchase prices for condominiums range from €3,500 to €5,500 per square meter of living space, according to the Erlangen City Appraisal Committee (as of 2025). In this context, preemptive rights are particularly relevant, as pressure on limited land is high.

The Friedrich-Alexander University and Siemens AG hold significant land holdings in Erlangen. In the event of partial sales of these properties, preemptive rights may exist in favor of the City of Erlangen or other institutions. Buyers of such properties should clarify all public-law preemptive rights before the notary appointment.

In the Büchenbach-West district and in new development areas on the outskirts of Erlangen, urban redevelopment zones have been designated in which the City of Erlangen holds a statutory right of first refusal pursuant to Sections 24 et seq. of the German Building Code (BauGB). Buyers should obtain a negative certificate from the Erlangen City Planning Office prior to the notary appointment.

Conclusion for Owners and Buyers in Erlangen

The right of first refusal is one of the more complex rights in Section II of the land register. Anyone selling or buying a property in Erlangen that is subject to a registered right of first refusal must be aware of the deadlines and conditions for exercising this right. If the entitled party is not notified, the deadline does not begin-with unclear consequences for planning certainty.

Before you buy or sell a property in Erlangen, it is worth using the valuation tool from leadmarkt.ch for an initial market orientation-followed by a thorough review of the land registry extract and an inquiry with the Erlangen City Planning Office regarding municipal preemptive rights.

Right of First Refusal: Common Mistakes and Practical Pitfalls

In the practice of Erlangen’s notary offices, disputes surrounding rights of first refusal often arise from avoidable mistakes. The most common ones:

Failure to notify or delayed notification: If the seller fails to notify the party entitled to the right of first refusal of the purchase agreement, the two-month period does not begin. The holder of the right of first refusal can then exercise that right even months or years later-which creates significant legal uncertainty for buyers. Anyone who purchases a property without prior clarification and then has the holder of the right of first refusal step in loses the property but retains claims against the seller.

Incomplete content of the notification: The notification must contain the complete purchase agreement-not just the purchase price. Missing ancillary agreements (e.g., handover date, continued rent payment clause) can trigger a new notification obligation.

Right of first refusal incorrectly not registered in the land register: In the case of contractually agreed rights of first refusal-which are not registered in the land register-the right exists only under the law of obligations. If a third party purchases the property unaware of the right, the entitled party may only claim damages, but cannot demand the return of the property. Entry in the land register is therefore indispensable for rights of first refusal that are to be secured in rem.

Owners in Erlangen who establish or assume a right of first refusal should seek advice from a notary in the Mittelfranken notarial district regarding the exact requirements and consequences.

Right of First Refusal and Taxes: What to Consider Upon Acquisition

If the holder of the right of first refusal exercises their right, they acquire the property under the terms of the purchase agreement that the seller concluded with the third party. For tax purposes, the Erlangen tax office treats this acquisition as a normal purchase:

Real estate transfer tax is levied on the assumed purchase price (Bavaria: 3.5%). This applies even if the person entitled to the right of first refusal is the owner of the dominant property-the real estate transfer tax exemption for certain gifts and inheritances does not apply here.

For income tax purposes, the person entitled to the right of first refusal must treat the acquisition in accordance with Section 6b of the German Income Tax Act (EStG) or report it accordingly in their income tax return. If the property is part of business assets, special rules for carrying forward the book value must be observed.

For the seller, the exercise of the right of first refusal does not change anything from a tax perspective-they realize the same capital gain as in a direct sale. The obligation to pay capital gains tax under § 23 EStG depends, as always, on the holding period and owner-occupancy.

Regarding the preemptive purchase price as the tax base: If the original purchase agreement contained a price that was unusually low for the market (e.g., because the original seller wanted to favor a friend), the party entitled to the right of first refusal exercises it at the lower price-which is advantageous from both a tax and financial perspective. However, the tax office will examine whether an unusually low price can be considered a hidden gift.

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Prepared by the my-home.de editorial team in collaboration with regional real estate analysts. Data as of: Q1/Q2 2026.