Right of first refusal for property: what buyers and sellers should know

The Right of first refusal for real estate is an important legal aspect that can be relevant for both sellers and buyers. It allows certain parties, such as municipalities, tenants or persons registered in the land register, to acquire a property before it is sold to a third party. In this article, we look at the challenges of the right of first refusal, who can claim it and what impact it has on the property purchase. It is important to find out exactly what pre-emption rights apply before making a property purchase to avoid any nasty surprises.

What is the right of first refusal and who can claim it?

The Right of first refusal is a legal or contractual right that allows a specific person or institution to buy a property before it is sold to another buyer. There are two main forms of right of first refusal:

1. Legal right of first refusalThis right is available to local authorities or the state in certain cases, for example if a property is located in a redevelopment area or an urban development measure is pending.
2. Contractual right of first refusalA contractual right of first refusal can be granted to tenants or third parties, for example, usually via a contract or through an entry in the land register. This gives these parties the opportunity to acquire a property before it is sold to a third party.

Right of first refusal in the land register: effects and consequences

A Right of first refusal entered in the land register has far-reaching consequences for the sale of a property. Unlike the statutory right of first refusal, which only applies in special cases, a contractual right of first refusal entered in the land register is binding for all potential buyers. This means that

• Sale only under reserveIf a buyer wishes to purchase a property that is subject to a right of first refusal, the purchase must be subject to the condition that the authorised party (i.e. the person or institution entered in the land register) does not exercise their right of first refusal.
• Security for the authorised partyThe person entered in the land register has the right to purchase the property on the same terms as those agreed with a third-party buyer. This right remains in force even in the event of a change of ownership.
• Delays in the sales processA right of first refusal entered in the land register can significantly delay the sales process, as the seller must inform the authorised party of the sale and the latter can then decide within a specified period whether to exercise its right of first refusal.

What challenges does the right of first refusal entail?

The Right of first refusal, A right of first refusal, especially one entered in the land register, can be a challenge for buyers and sellers alike. Sellers must ensure that the right of first refusal is taken into account before concluding a purchase agreement. Buyers are faced with the uncertainty that the actual purchase agreement may not materialise if the entitled party exercises their right of first refusal.

A right of first refusal entered in the land register also places a burden on the property that could deter future buyers. Potential buyers may be reluctant to make an offer to purchase if they know that a third party has the right to take over the purchase.

Example: Right of first refusal of a party entered in the land register

A married couple want to buy a property in a sought-after location. They sign a purchase agreement, only to find out later that a third party has a right of first refusal in the land register. This person, a relative of the original owner, exercises the right to purchase the property on the same terms. The couple therefore lose the opportunity to purchase the property, even though the contract had already been signed.

Which technical terms should you know?

• Notarised purchase agreementA purchase agreement that only becomes legally effective if the right of first refusal is not exercised.
• Land register entryThe legal proof of ownership and any encumbrances on a property, such as a right of first refusal.
• Deadline for exercising the right of first refusalAs a rule, the deadline is two months after notification of the purchase contract to the authorised party.

Tips for dealing with the right of first refusal

1. Examination of the land registerSeller and buyer should carefully check the land register of the property to identify possible pre-emption rights.
2. Contractual protectionA purchase contract should contain a clause that binds the purchase to the non-fulfilment of the right of first refusal.
3. Early clarificationBuyers and sellers should clarify at an early stage whether a right of first refusal exists in order to avoid delays in the sales process.

Let us advise you

If you are looking for a property in Nuremberg, Fürth, Erlangen, Schwabach or Roth If you want to sell or buy and are unsure whether a right of first refusal is registered in the land register, do not hesitate to contact the experts at my-home.de to contact us. We will provide you with expert advice on all questions relating to the right of first refusal and help you to organise the sales process smoothly.

Right of first refusal in the land register - a legal challenge

A property registered in the land register Right of first refusal can be a hurdle for both buyers and sellers. It offers certain parties the opportunity to acquire a property before it is sold to a third party and remains in place even in the event of a change of ownership. Clarifying a right of first refusal at an early stage is essential to avoid problems later on and to speed up the sales process.

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