Pre-emption right in real estate transactions - BAZA realestate

Pre-emption right in real estate transactions


Buying or selling real estate can be a demanding process. In addition to a good knowledge of the real estate market, it also requires legal knowledge. One of the important legal institutes in a real estate transaction is the institute of pre-emption.

Right of pre-emption generally means that the owner of the thing (the seller) is obliged to inform the pre-emptive beneficiary of the intended sale of the thing to a certain person and the conditions of this sale before the actual sale, and to offer him to buy it under the same conditions.

There are different types of pre-emption rights that should be taken into account when buying or selling real estate. The right of pre-emption arises from the contract or from the law.  As the name implies, the contractual right of pre-emption is agreed by contract and legal by law. A contractual right of pre-emption arises when the owner of the real estate commits to the right of pre-emption with a contractual provision. The legal right of pre-emption is regulated by several laws, among others the Law of Property Code, Agricultural Land Act, Spatial Management Act, Cultural Heritage Protection Act, Act on Forests, Nature Conservation Act, Housing Act, Water Act, and some others.

The contractual right of pre-emption ends with the expiration of the time specified in the contract. If the duration is not specified, the right of pre-emption expires five years after the conclusion of the contract. The duration of the legal right of pre-emption is not limited in time.

Regardless of the basis of the right of pre-emption, before the sale, the owner is obliged to offer the property for purchase to the preemptive beneficiary, under the same conditions. This means that when the seller finds a suitable buyer for a certain price, he must offer the property for purchase to the pre-emptive beneficiary for the same price and under the same conditions. Within 30 days of receiving the owner’s notice of intended sale, the preemptive beneficiary must notify the seller in a reliable manner of his decision to exercise his preemptive right. If the pre-emptive beneficiary exercises his right of pre-emption and accepts the seller’s offer, the seller must conclude a purchase contract for the property with the pre-emptive beneficiary.

If the beneficiary of pre-emption makes a statement about not exercising the right of pre-emption, or if he does not accept the offer within 30 days, it is considered that he does not exercise the right of pre-emption.

In the event that a purchase contract has been concluded, but the pre-purchase beneficiary has not been informed about it, the concluded purchase contract is void or voidable. The legal consequences depend on the basis of the right of pre-emption. Therefore, before buying or selling, always make sure that there are no pre-emptive rights on the property, or that pre-emptive beneficiaries will not assert their rights.