What is a right of first refusal?
Basically, a right of first refusal is very easy to explain. It regulates the right that a person entitled to pre-emption may acquire a plot of land or property before a buyer when selling it. The pre-emptive right holder must accept the notarized purchase agreement exactly as it was concluded between the seller and the original buyer. This means that the person with the right of first refusal must also pay the same purchase price for the land or property as the original buyer. There are various legal bases and structuring options for the right of first refusal for land and real estate, which we present to you below.
Depending on the situation, different types of pre-emptive right apply to a house or plot of land. The right of first refusal can be entered in the land register(right of first refusal in rem) or regulated contractually between the parties(right of first refusal under the law of obligations). However, statutory pre-emption rights, which do not require a contract, also come into play (statutory and public law pre-emption rights).
The right of first refusal in rem
The right of first refusal in rem is always entered in the land register as a priority notice and can only be created for immovable property, i.e. developed or undeveloped land. The entry in the land register creates an automatically effective block on disposal in the event of a sale. The first purchaser cannot be entered in the land register as the new owner until the entitled party announces the waiver of their pre-emptive right.
The right of first refusal under the law of obligations
In contrast to the right of first refusal in rem, the right of first refusal under the law of obligations applies to movable property such as houses and apartments as well as immovable property such as land. In contrast to the right of first refusal in rem, it is not entered in the land register but is regulated by contract between the two parties. As a result, the party entitled to pre-emption cannot reverse the entry of the first buyer as the new owner in the land register, even if they have not been informed of their pre-emptive right. In this case, however, the person entitled to pre-emption would have a claim for damages against the seller.
Procedure for sale with a right of first refusal in rem or under the law of obligations
The sale of real estate or land encumbered with a right of first refusal in rem or under the law of obligations usually proceeds as follows: