Right of First Refusal: What You Need to Know Before Buying or Selling

December 20, 2024 4-minute read

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Droits de préemption : ce qu’il faut savoir avant d’acheter ou de vendre

The right of first refusal in real estate is a legal mechanism that allows certain entities—such as local governments, the federal government, or even tenants—to have priority in purchasing a property that is put up for sale.

What is the right of first refusal in real estate?

Who has the right of first refusal on a piece of real estate?

Several parties may exercise this right. Local governments and the federal government are often on the front lines when it comes to ensuring urban development projects or projects in the public interest. Tenants, in certain cases, also have this right, particularly when the public housing units they occupy are sold.

Which areas are subject to the right of first refusal?

The right of first refusal applies primarily in areas defined by local governments through a land-use planning document, such as the Local Urban Development Plan (PLU). These preemption zones often include downtown areas, areas slated for redevelopment, or sectors deemed strategic for public projects.

Good to Know : When a landlord wishes to sell a property that is occupied by a tenant, the landlord must first offer the property for sale to the tenant. The tenant then has a right of first refusal, giving them priority to purchase the property before anyone else. This right applies only if the landlord gives the tenant notice to vacate so that the property can be sold vacant.

What types of property are subject to the right of first refusal?

The right of first refusal applies to real estate properties offered for sale. This may include land, buildings, houses, or commercial spaces, depending on the areas in question and the public interest projects defined by local authorities. However, certain types of transactions are excluded from this provision, such as gifts, inheritances, or sales carried out as part of a judicial liquidation.

How does the urban right of first refusal (DPU) work?

The DPU is a specific type of right of first refusal that allows municipalities to acquire property for urban projects, such as the creation of public spaces or the construction of public housing. When a property owner lists a property for sale in a DPU zone, they must notify the city hall, which has two months to decide whether to exercise its right.

Tenants’ Right of First Refusal: What Is It?

This right allows certain tenants to have the first option to purchase the dwelling they occupy if the owner decides to sell it. This protection is intended to promote homeownership, particularly in public housing or when buildings are subdivided.

What steps must be taken to sell a property in a preemption zone?

If a property is located in a preemption zone, the owner must submit a Declaration of Intent to Sell (DIA) to the relevant local authority. The local authority then has a period of time—generally two or three months—to decide whether or not to exercise its right. During this period, the sale cannot be finalized.

What happens if the right of first refusal is exercised?

If the local government decides to exercise its right of first refusal, it must offer the seller a price corresponding to the property’s value. If the seller and the local government cannot agree on the amount, a proceeding to have the price set by the expropriation judge may be initiated.

What are the implications of the right of first refusal for buyers and sellers?

For sellers, the right of first refusal can slow down the sale and require negotiations with a public entity. For buyers, it poses the risk that the transaction could be canceled if the public entity decides to acquire the property. It is therefore essential to do thorough research before proceeding with any transaction.

Is it possible to challenge a real estate right of first refusal?

Yes, it is possible to challenge a preemption decision if it is deemed abusive or contrary to the public interest. Such a challenge may be brought before the administrative court, which will assess the legality of the action.

How can our CENTURY 21 Auteuil and Auteuil Seine offices assist you?

At CENTURY 21 Auteuil and Auteuil Seine, we do everything we can to support you throughout your real estate project, from the very beginning to the finalization. Our teams, with their deep local expertise, will work with you to identify any potential issues related to the right of first refusal and guide you through the complex administrative procedures. We offer solutions tailored to your situation to ensure a secure transaction and provide you with a smooth and stress-free experience.

Our team is here to answer any questions you may have about your real estate projects—whether you’re selling, buying, or managing rental properties. Please feel free to contact our two real estate agencies, CENTURY 21 Auteuil Immobilier and CENTURY 21 Auteuil Seine, by phone at 01 42 15 16 21 or 01 56 07 16 21, or by email at: auteuil@century21.fr or auteuilseine@century21.fr

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