Right of pre-emption: the downside of undivided joint ownership
Right of pre-emption: the downside of undivided joint ownership
- július 02, 2022
The right of pre-emption primarily makes life difficult for buyers, as they assume the risk that the sales contract may even become invalid. This is also why it is important to hire a lawyer experienced in real estate matters when buying real estate, especially if we want to buy undivided common property. How does the right of first refusal work?
What does the right of first refusal mean?
The right of pre-emption is a contractual right that is based either on legislation or on a contract, and its provisions in Hungary are set out in the Civil Code. regulates. It provides the holder of the right of pre-emption with the opportunity to enter into a sales contract under certain conditions with the owner of the asset included in the transaction, before the owner is entitled to conclude the transaction with a third party.
In the case of a right of pre-emption, the seller must communicate the entire purchase offer received from the buyer to those entitled to pre-emption. The potential buyer can only purchase the property if none of the entitled parties wishes to exercise their right of pre-emption, otherwise the sales contract will be concluded between the seller and the person entitled to pre-emption under the same conditions.
Who has the right of first refusal?
In the case of jointly owned real estate, co-owners usually have the right of pre-emption due to legal provisions. The local government and the Hungarian State can also form rights to certain properties. If, for example, a property is under monument protection, the district municipality, the capital municipality and the Hungarian State also enjoy an advantage in the sale and purchase.
Right of pre-emption in the case of a condominium
Can the neighbor have a right of first refusal? In the case of condominiums, the right of pre-emption in the founding deed only becomes effective upon entry in the real estate registry. It is also important that the lawyer involved in the sale and purchase also checks the apartment building's master sheet before concluding the contract.
Osztatlan közös tulajdon elővásárlási jog
Osztatlan közös tulajdon esetében az ingatlan birtoklása és használata a tulajdonostársak mindegyikét megilleti tulajdoni hányaduk arányában. Előfordulhat olyan eset is, amikor a társasházhoz tartozó garázs, beálló vagy tároló közös albetétet képez, amely osztatlan közös tulajdonba tartozik. Ilyen esetekben is kötelezően tájékoztatni kell az elővásárlásra jogosultakat az adásvétel részleteiről.
Right of pre-emption of real estate: sending the invitation
In most cases, the lawyer notarizing the sale, on behalf of the seller, sends the contract draft to those entitled to pre-emption, usually by registered mail, with return receipt requested, so that the sending of the invitation can be certified by the Land Registry.
- The seller is obliged to prove to the land office that the person entitled to pre-emption does not exercise his right, the simplest way of which is to sign a waiver.
- If, according to the receipt, at least 15 days have passed, it can be considered that the holder has not used his right of pre-emption, but in the case of a municipality or state body, 30-60 days is the rule for the land office.
- If the communication of the offer encounters an obstacle or would involve a significant delay, it is possible to dispense with direct notification, but the land office may even provide for direct contact with the co-owners. In other cases, however, even a notice posted on a notice board may be sufficient if the content of the purchase offer can be viewed for a sufficient period of time.
It should be noted that, in judicial practice, it is a matter of individual consideration whether the arising difficulties, due to which the seller does not notify those entitled to pre-emption, are accepted. That is why it is very important to act as carefully as possible when buying undivided common property, because evading the right of pre-emption can even backfire. If the number of persons entitled to pre-emption exceeds thirty, it can generally be said that we can refer to impediment.
Exercising the right of pre-emption
If the rightful person claims the property, a sales contract will be established between him and the seller, with the same conditions as stated in the offer. In the case of several beneficiaries, the right of pre-emption can be exercised in the order in which the rights of pre-emption arise, but it is also important to note that the right of pre-emption based on legislation takes precedence over the right of pre-emption based on the contract.
Breach of the right of first refusal
If the violation has already been discovered at the land office, the persons entitled to pre-emption must be contacted in a gap filling procedure. If the right of ownership has been registered, but the call was missed or was not properly announced, it is also possible to enforce the right of pre-emption afterwards. The right holder may initiate a lawsuit against the parties within 3 years from the conclusion of the contract, and if successful, the sale and purchase will be void.