Right of first refusal

Your rights in the right of first refusal. We advise & represent you as lawyers and enforce your good right

You would like to use your right of first refusal – but the owner of the property sees it differently? As experienced lawyers for real estate law, we clarify your claims and represent you nationwide in all areas relating to the right of first refusal.

Exercising this right always presupposes that an effective purchase contract for the object of sale has been concluded with a third party, i.e. the first purchaser. Pre-emption rights can arise either from the law or from contractual agreements.

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Statutory rights of first refusal

German law regulates statutory pre-emption rights for tenants, members of a community of heirs and for municipalities in which the property in question is located. Further special regulations for the purchase of real estate can be found in the individual state laws in the areas of monument protection, nature conservation and forestry law.

When rented flats are converted into condominiums, Section 577 of the German Civil Code (BGB) grants the tenant a right of first refusal. The prerequisite is that condominium ownership has been established or is planned after the rooms have been transferred. The tenant’s right of first refusal is thus tied to the fact that a division into condominium ownership (through the so-called declaration of division) takes place or is planned to take place after the rented flat has been transferred. Exceptionally, the tenant only receives no right of first refusal if the owner sells the flat to his family members or household members. The landlord/owner is obliged to inform the tenant of the sale and of the tenant’s right of first refusal and the time limit for declaration. The tenant’s right of first refusal is not hereditary, but passes to the spouse or civil partner who entered into the tenancy in the event of the tenant’s death.

According to § 2034 BGB, co-heirs in a community of heirs may exercise a right of first refusal when selling an inheritance share and acquire the share themselves. The provision serves to ensure that the heirs, who are mostly relatives of the deceased, can settle the estate among themselves and do not have to deal with outsiders. Exceptionally, therefore, the right of first refusal does not exist if a co-heir sells his share to another co-heir.

In public building law, for example, there is a general pre-emptive right of the municipalities under § 24 BauGB, which serves to ensure municipal urban land use planning. As a rule, the buyer obtains a so-called negative attestation from the municipality before concluding the purchase contract, with which the municipality confirms that it will not exercise its pre-emptive right. Only after the negative certificate has been submitted does the land registry register the new owner. However, the municipality’s right of first refusal is limited to the cases also described in § 24 BauGB. It is primarily relevant in the case of (still) undeveloped areas and in so-called redevelopment or development areas or in the case of so-called “milieu protection”.

The most important information on the right of first refusal

Right of first refusal under the law of obligations and in rem

A distinction must be made between rights of first refusal under the law of obligations and rights of first refusal in rem. A right of first refusal under the law of obligations can be agreed for both movable and immovable property, but it only applies between the contracting parties and not vis-à-vis third parties. If the owner nevertheless sells the thing to a third party, the pre-emptor can only claim damages, but can no longer acquire ownership. Therefore, a right of first refusal in rem to real estate is regularly secured by an entry in the land register.

This right of first refusal in rem (§§ 1094 ff. BGB), which is only possible in respect of real property and rights equivalent to real property, is directly related to the real property and also binds all persons who become owners in the future or excludes their acquisition by exercising the right of first refusal. It can be established both in favour of a specific person and in favour of the owner of another plot of land.
Declaration within the cut-off period

Anyone wishing to exercise his or her right of first refusal must declare the exercise of his or her right to the obligor. This is a unilateral declaration of intent that must be received. It must therefore be received by the seller. The declaration does not require any particular form, even if the contract of sale requires form. For example, in the case of the purchase of real estate, the declaration can be made in writing, whereas the subsequent land purchase contract must be notarised.

The law provides for certain deadlines for the declaration. For example, § 469 II BGB regulates a preclusive period of two months in the case of real estate and a period of one week in the case of movable property. These statutory deadlines always apply if no other deadline has been effectively agreed by contract.