The Pre-Emption Agreement

What is the pre-emption clause?
A pre-emption right, right of pre-emption, or first option to buy is a contractual right to acquire
certain property newly coming into existence before it can be offered to any other person or entity.

What does Right of first refusal means and how it can influence a purchase or sale?
The right of first refusal allows certain persons to have priority in the purchase of a property under
the same conditions as third parties. There are two types: legal, provided for by law, and voluntary,
based on private agreements.

 

Contents:

 

How to prepare for a sale with pre-emption?

The right of first refusal is a prerogative that allows certain persons to have priority in the purchase
of a property or other asset over other potential buyers. It is a legal institution that aims to protect
specific interests and rights, guaranteeing the right holder the possibility of acquiring the asset
under the same conditions offered to third parties. This mechanism, especially prevalent in real
estate, can have significant implications on the dynamics of purchase and sale, making it essential
to understand how it works and the consequences for all parties involved.

 

What is the right of first refusal?

The right of pre-emption can be defined as the possibility, granted by law or by agreement
between the parties, to be preferred in the purchase of a property. It is distinguished into legal pre-
emption, provided for by law in specific situations, such as in the case of leased property or
inheritance, and voluntary pre-emption, resulting from a written agreement between the parties
involved. Legal pre-emption is intended to protect public interests or particular categories of
people, such as tenants or co-heirs, while voluntary pre-emption is based on private agreements
reflecting personal or commercial needs.

 

How does the right of first refusal in real estate work?

The operation of the right of first refusal follows a precise procedure. When the owner of a
property wishes to sell it, he must formally notify the holder of the right of first refusal of his
intention to dispose of the property, indicating the price and the terms of the sale. The holder then
has a period of time set by law or agreement (often 60 days) to decide whether to exercise its
right. If he does not do so within the time limit, the owner is free to sell the asset to a third party,
but only under the same conditions communicated. It is important to note that failure to do so may
invalidate the sale or lead to legal disputes.

 

What impacts buying and selling real estate?

The right of first refusal can influence purchase and sale in several ways. On the one hand, it
offers greater protection to the holder of the right, guaranteeing him a privileged opportunity to
purchase. On the other hand, it can be a complicated element for sellers, who have to follow
precise procedural steps and meet strict deadlines. Moreover, for third-party buyers, the presence
of a right of first refusal may create uncertainties, especially in terms of timing and the possibility of
concluding the transaction. For this reason, it is essential to always check the existence of any
pre-emption rights before entering into real estate negotiations.

 

What are the differences between legal, and voluntary pre-emption?

The main differences between legal and voluntary pre-emption concern their origin and the
situations in which they apply. Legal pre-emption is established by law and applies in specific
cases, such as the sale of rented real estate, where the tenant has priority in the purchase, or the
sale of inherited shares, where the co-heirs have the right of pre-emption to maintain the integrity
of the family estate. Voluntary pre-emption, on the other hand, stems from a private agreement
between the parties, often included in preliminary contracts or shareholders’ agreements. This
type of pre-emption is more flexible, as the terms and conditions can be tailored to the needs of
the parties involved.

 

When and why the right of first refusal can be advantageous?

The right of first refusal is an advantage for the owner, as it allows him or her to acquire a property
of interest on the same terms offered to third parties, without having to compete with other buyers.
This is particularly relevant for tenants who wish to purchase the house they live in, avoiding the
stress and additional costs of a property search. At the same time, the right of first refusal can also
be useful for the seller, as it offers the possibility of maintaining harmonious relations with the
holder of the right, such as tenants or family members, and concluding the sale more quickly and
smoothly.

 

 

Updated: 8 September, 2025

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