When selling a home, do you know if the right of first refusal applies to you? Do you know what to do if it does?
We will explain what this is and what you need to do.
The right of preference or first refusal in the sale of a property is actually nothing new. In truth, this idea has been subject to legal requirements for a while and has lately undergone certain adjustments under the Housing Bases Law.
What does this mean in practice? How do we determine whether the property we wish to sell is subject to this right? What is the legal right of preference?
First, it is important to clarify that the legal right of preference is acquired by a declaration or certificate that reflects whether or not a person or business has exercised their right of choice to a certain property.
This indicates that public entities have a right of preference to purchase a property, in the process of classification, or located in a protected area of cultural heritage or urban restoration.
Other circumstances in which public entities have the right of preference in the purchase of properties designated for housing are also covered by Decree-Law 89/2021, issued November 3, 2021.
It states the following:
If the property is situated in an urban pressure zone, or in a neighborhood that is inaccessible to the majority of families;
Whenever the property is in the National Housing Program's service area, and whenever there is an issue with the availability of suitable or adequate housing;
No contract or bills for services, such as water, electricity, or telecommunications, mentions the property.
According to the law, municipalities, autonomous regions, and states, the latter of which is represented by the Institute of Housing and Urban Rehabilitation, are given the right of preference in the following sequence when purchasing real estate.
The right of preference applies to the property, what now?
However, it is crucial to be aware that the seller will need to post an internet advertisement in order for a public entity to use the right of preference in the acquisition of a property.
For a fee of 15€, this advertisement should be posted on the Casa Pronta website and include all relevant information, such as:
Who is making this request (proprietor or real estate agency)
Sellers identification
Buyers identification
The address of the property
Property Information
Price of purchase
Date of the deeds
Only those entities that might want to use their right of preference, the registration services, and the applicant have access to this website. The interested entity will then indicate their interest on the website.
The window of opportunity for exercising the right of preference is just 10 working days from the date the advertisement was placed. If this time frame is exceeded, the seller is free to sell the property to any buyer.
You can check whether your property is located within the right of preference lines on the city councils website where the property is located.
Right of preference in rented properties - how does it work?
If the property is rented, the tenant's legal right of preference will take precedence over public agencies' legal rights.
This implies that the tenant must be informed of the sale value of the property or of the entire plot, for instance, when selling an entire apartment block which only has one unit rented. The tenant is given one month to determine whether or not to go ahead with the purchase.