When purchasing real estate, it is essential to adhere to all legal requirements and pay attention not only to the advantages and disadvantages of the apartment or house but also to the legal restrictions regarding the disposal of real estate. As is known, the presence of a mortgage or lien limits the owner’s right to sell the apartment or house. However, not everyone knows that among such restrictions, an important place is occupied by the right of first refusal for real estate, which a dishonest seller may attempt to hide from the potential buyer. In this article, we will explore how to avoid such situations and what to pay attention to.
What is the Right of First Refusal for Real Estate?
According to § 1072 of the Austrian General Civil Code (Allgemeines Bürgerliches Gesetzbuch or ABGB), the preferential right belongs to the person who sells the property, provided that the buyer, if he wishes to resell it, must first offer it to that person.
More broadly, the right of first refusal for real estate means that a specific person or institution has the right to purchase the property on the same terms that have been proposed to a third party. If the owner intends to sell the property, he is obliged to first offer it to the person who has the right of first refusal before concluding an agreement with another buyer. It is important to note that this right applies only in the case of a sale of real estate and does not extend to gifts or inheritances.
Where to Check for the Right of First Refusal for Real Estate?
In Austria, information about the right of first refusal can be verified in the Grundbuch – the land register, which is an official document containing information about all rights to real estate. Section C (C-Blatt) of the land register provides information about encumbrances associated with the ownership of the property, including mortgages, liens, sales prohibitions, as well as the right of first refusal.
To check for the existence of the right of first refusal, it is necessary to contact the authority responsible for maintaining the register of property rights (Grundbuchamt) in the region where the property is located. Usually, this information can be obtained for free or for a small fee. It is required to provide information about the property, including its address or cadastral number.
Who Has Access to the Land Register in Austria?
In Austria, access to information in the land register (Grundbuch) is partially open. Generally, owners have the right to obtain complete information about their real estate, including all encumbrances and rights. Other individuals can also obtain information about the property, but only with a legitimate interest. For example, potential buyers, creditors, or legal entities may request information from the land register. Third parties may need to submit an application and provide evidence of their legitimate interest, including documents confirming the intention to purchase.
Types of the Right of First Refusal:
- Statutory Right of First Refusal. In Austria, municipalities have the right of first refusal for land in certain cases to ensure controlled development. Tenants may also have the right of first refusal for their apartments under certain conditions.
- Contractual Right of First Refusal may be stipulated in a contract between two parties, for example, between family members or business partners.
Municipalities’ Right of First Refusal for Real Estate
Municipalities may use the right of first refusal to achieve social, economic, and environmental goals in their communities. For example, when private individuals or companies plan to sell land for development, municipalities may have the right of first refusal to ensure the development of infrastructure or housing projects that meet the community’s needs, such as building social or affordable housing for local residents.
Another example could be when the property is located in a historic or protected area. In such cases, municipalities may also have the right of first refusal to preserve cultural heritage or ensure environmental protection.
How the Right of First Refusal Works
- If the owner wishes to sell an apartment or house, he is obliged to inform the person with the right of first refusal about the terms of the sale.
- The person with the right of first refusal is given a specific period (usually 30 days, unless otherwise specified by law or contract) to exercise this right.
- If the right of first refusal is not exercised, the sale may be made to a third party.
- If the procedure for exercising the right of first refusal is violated, the person who had that right may contest the purchase agreement and demand the transfer of the buyer’s rights to themselves.
Conclusion
When concluding a purchase and sale agreement for an apartment or house, it is advisable to carefully check all existing restrictions on the real estate. It is recommended to verify information in the land register with the help of lawyers or independently. Such verification costs almost nothing but can protect the buyer from potential legal disputes with other interested parties.
