Right of first refusal

A municipality's right of first refusal is regulated in sections 24, 25, 26, 27 and 28 of the German Building Code. With the right of first refusal, a municipality has the option of entering into a property purchase agreement concluded between a seller and buyer before a notary and assuming the rights and obligations of the buyer.

The municipality can only exercise this right of first refusal if it concerns the purchase of land:

• within the scope of a development plan, insofar as the land is intended for public purposes (roads, paths, squares, compensatory measures, etc.)
• in the area of a reallocation zone
• in a formally defined redevelopment area and urban development area
• within the scope of a conservation statute
• in the outdoor area, insofar as the properties are undeveloped and for which a use as residential building land or residential area is shown in the land use plan
• within the scope of a development plan and within the built-up areas (inner area), if these areas can be developed primarily with residential buildings and if the properties are undeveloped
• and if the public good justifies the preemption

The municipality must specify the intended use of the property.

Under certain circumstances, the right of first refusal is excluded (e.g. sale of a property between spouses or close relatives). In addition, the buyer can avert the right of first refusal if the use of the property is determined or can be determined with sufficient certainty in accordance with building regulations or the objectives and purposes of the urban development measure and the buyer is in a position to use the property accordingly within a reasonable period of time and undertakes to do so before this period expires.

The seller of the property is obliged to notify the city of the conclusion of a purchase agreement without delay. The city then has two months to exercise its right of first refusal (by submitting a corresponding declaration). If it does not exercise its right of first refusal, it issues a so-called negative certificate.