The right of first refusal means that someone has a priority right to purchase a property. However, this only applies to sales and does not include gifts, foreclosures, inheritance, exchanges, etc. The right of first refusal is divided into four different forms
First, there is the right of first refusal in rem, also known as the classic right of first refusal. This is generally entered in the land register. Even if a purchase has already been made by a third party, it becomes invalid because the land register is secured. It is therefore not possible to inherit the right of first refusal; it must be specified in the land register that the right of first refusal passes to the heir. Otherwise, the right of first refusal expires upon death.
Furthermore, there is the contractual right of first refusal. The contract applies to movable and immovable property. In this case, a private contract is concluded in which everything can be agreed upon. Since it is not recorded in the land register, the property can also be legally purchased by a third party, for example. In this case, however, the seller who has circumvented the right of first refusal is liable for damages. The person with the right of first refusal is nevertheless no longer entitled to the property. Thus, the contractual right of first refusal does not secure the land or the property, but only the claim for damages.
The third option would be the public law right of first refusal. This means that the municipality/city generally has a right of first refusal. It can only be exercised for a valid reason, e.g., in the public interest and with regard to the following laws: Railway Act, Monument Protection Act, Nature Conservation Act, Water Act, Reich Settlement Act. The right of first refusal is not always entered in the land register, except if it:
- Are areas for public use
- are rezoning areas and are to be reclassified
- is a designated redevelopment area
- is a design area of a substitute statute
In all other cases, the public right of first refusal may not be exercised, nor may it be exercised in the case of sale to relatives.
Finally, there is the statutory right of first refusal for tenants. However, this is not entered in the land register and does not apply in the event of sale to family members. An example of this would be if an apartment building is divided into several condominiums and the current tenants therefore have a statutory right of first refusal.
There is no right of withdrawal in the case of a right of first refusal. Once the right of first refusal has been exercised, it is binding. If the purchase price is not paid, the seller can withdraw from the sale and claim damages or enforce payment.
