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Rights of pre-emption
What
is a right of pre-emption?
It
is a right to step into a purchase of real estate property in the place of
a purchaser. The pre-empting
party acquires the property in the original purchaser’s stead.
In some respects, it is a similar concept to compulsory purchase.
Who
holds a right of pre-emption?
A
number of organisations and bodies, public and private, and also
individuals can hold a right of pre-emption.
These include: the local communal administration, SAFER (an
agricultural body) and tenants.
For
what purpose do they hold a right of pre-emption?
The
local communal administration sometimes holds a right to acquire property
in order to improve certain local amenities (the purchase of a barn to
enable the extension of the neighbouring municipal workshops for example)
or in the context of local development (in one extreme case, the local
commune had a right to pre-empt all sales in a village as it was intending
to create a living historical village there).
SAFER represents the interests of young farmers and acquires land
on their behalf in order to improve the land holding that they possess.
Tenants have a right of pre-emption to enable them to purchase the
property that they have enjoyed as their permanent home.
How
do you know if a right of pre-emption exists?
On
the town planning documentation, it will be stated whether or not the
local administration holds a right of pre-emption as a result of earlier
municipal town planning orders. SAFER
can pre-empt on the sale of land with an agricultural vocation of over
5,000m2. In reality, many
sales of property in rural areas will be notified to SAFER even if they do
not fall into this category to ensure that the obligations of notification
of any possible holder of the right have been complied with.
Tenants have a right of pre-emption by virtue of the general law
and this may also be reinforced by the contents of their rental agreement.
How
is the right of pre-emption exercised?
The
notaire responsible for the conveyancing of the property is under an
obligation to inform all parties holding a right of pre-emption of the
sale, including the price, terms and conditions of the same.
The pre-emptor then has two months in which to decide if it is
interested in the purchase of the property.
If after two months it has not indicated an intention to purchase
or declined the possibility, it is deemed to have declined and the right
of pre-emption will have been negated.
If
the pre-emptor decides to purchase the property, it is substituted for the
purchaser. It will be bound by
the same terms and conditions as the purchaser and in the event that it
wishes to argue the price down, for example, the vendor can refuse to sell
to it.
How
can you protect yourself against the exercise of a right of pre-emption?
There
should be a condition in every first contract (compromis) stating that in
the event of the exercise of a right of pre-emption, the original
purchaser will be free of any engagement and his or her deposit will be
returned immediately.
10/03/2003
- Issue of the week
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