The right of first refusal: understanding an essential lever in real estate and commercial law

The right of pre-emption is a complex and powerful legal mechanism, which allows certain actors — public authorities, tenants, farmers, etc. — to acquire real estate or commercial property offered for sale as a priority. As an SME manager, it is crucial to fully understand this system in order to secure your investment or sale projects. This “bible” article offers you an exhaustive, clear analysis illustrated by concrete examples and practical cases.

What is the right of first refusal?

General definition

The right of pre-emption is a legal right that gives its owner priority to buy a property offered for sale, replacing any third party purchaser. This mechanism applies mainly to real estate and commercial properties, for the purpose of general interest (urban planning, agriculture, tenant protection, local trade, etc.).

Unlike a simple right of preference, the right of pre-emption fundamentally changes the dynamic of the sale: the right holder can impose his own purchase on the sale, subject to respecting the financial conditions set or accepted by the seller.

Concrete examples

• A town hall with an urban pre-emption right may decide to buy an apartment offered for sale in an area defined by the Local Urban Plan (PLU), in order to create social housing.
• A tenant of an unfurnished home benefits from a legal right of pre-emption, which allows him to buy the property he occupies as a priority if the owner puts it up for sale.
• Since August 2024, a city in Paris has established a commercial pre-emption right relating to business and commercial leases in certain districts, in order to preserve local commerce.

How does the right of first refusal work?

The general mechanism

When an owner decides to sell a property subject to a right of pre-emption, he must notify this intention via a declaration of intent to alienate (DIA), often filed by the notary. This formality allows the holder of the right of pre-emption to be informed before the sale is definitively concluded.

The holder then has a legal period to decide whether or not to exercise his right. In the event of an exercise, he replaces the original purchaser and buys the property under the proposed conditions.

Duration and deadlines

The time limit for exercising a right of pre-emption is generally two months upon receipt of the DIA. This period may be suspended if the owner requests additional documents or a visit to the property, or in case of legal uncertainty.

If the licensee makes an offer at a lower price than the one offered, the seller then has two months to accept or refuse. In the absence of an agreement, an expropriation judge may be called upon to fix the price.

The different types of right of first refusal

Urban and real estate pre-emption law

The most frequent is the urban pre-emption right (DPU), granted to local authorities. It allows municipalities or other entities responsible for the PLU to acquire properties for the purpose of development, to combat speculation or to protect the general interest.

Areas concerned: neighborhoods undergoing urban renewal, sensitive natural areas, priority areas for the construction of social housing.

Tenants' right of first refusal

Tenants' right of pre-emption is a legal protection that allows a tenant to acquire the home they occupy as a priority. Applicable mainly to homes rented naked under lease subject to the 1989 law, this right aims to stabilize the situation of occupants and to promote access to property.

Example: a tenant receives an offer to purchase from his owner; he then has 2 months to accept or refuse this offer.

The right of first refusal on goodwill and commercial leases

Since 2024 in Paris, a specific right of pre-emption has applied to the transfer of businesses, commercial leases, and even lease rights in certain neighborhoods. This right aims to protect local businesses and crafts against disappearance or speculation.

Example of a clause to be inserted in a transfer act:
“This transfer is subject to the absence of exercise of the right of commercial pre-emption by the Paris Commune in accordance with article L214-1 of the Urban Planning Code.”

The right of pre-emption in agriculture (SAFER)

The Société d'Aménagement Foncier et d'Establishment Rural (SAFER) has a preferential right to purchase agricultural land put on sale, in order to guarantee the sustainability of agricultural activity.

What is the deadline for a right of first refusal?

The deadline is in principle two months as of the receipt of the declaration of intent to alienate (DIA) by the right holder. This period may be extended if additional documents are requested or if the property is visited.

If the holder indicates his intention to exercise the preemption within the time limit, the sale is suspended. In the absence of a timely response, the owner is free to sell to a third party.

How to avoid the city hall's right of pre-emption?

It is possible, under certain legal conditions, to attempt to circumvent or reduce the risks associated with the right of pre-emption, in particular:

• Challenge the legitimacy of the pre-emption zone or the general interest project invoked.
• Inform the town hall of the sale at the last minute in order to reduce its response time (handle with care, legal risks).
• Choose a purchaser who is not subject to the right of pre-emption.
• Opt for specific forms of sale that are not subject to the law, for example certain intra-family transfers or donations, subject to conditions.

This matter requires precise and personalized legal support.

The declaration of intent to alienate (DIA): the key role of the system

The DIA is the document sent to the town hall as soon as the sales agreement is signed, before the authentic act. It triggers the two-month pre-emption period.

In the absence of DIA, the sale is void with respect to the holder of the right of pre-emption. This formalism is therefore essential to respect.

Right of first refusal FAQ

What is the legal right of pre-emption?

The legal right of pre-emption is that provided by law, in particular for tenants or farmers. It is legally binding on the owner who wishes to sell his property, subject to legal conditions.

Pre-emption right in France on real estate: what should you remember?

In real estate, the right of urban pre-emption is a frequent tool for local authorities to control their territory. It applies in areas defined by the PLU with a strict framework, in particular in terms of deadlines and information.

What is the tenant's right of first refusal?

It is a right allowing the tenant to buy the accommodation he is renting as a priority, with a formal offer from the owner indicating prices and conditions, and a response time.

How to avoid the city hall's right of pre-emption?

The main means are the legal challenge of the law, the strategic management of information, or the search for an unwilling purchaser. But these solutions must be handled with the support of a lawyer.

The right of first refusal on business assets: how does it work?

Since 2024 in Paris, the city hall has been able to pre-empt business assets in certain areas. This regulation aims to protect local trade and imposes specific constraints on transfers.

What is DIA in the context of the right of pre-emption?

The DIA is the statement that informs the community of the impending sale of a property taxed by a right of first refusal. It starts the preemption period.

What is the duration of the right of first refusal?

The duration to exercise a right of pre-emption is generally two months, with the possibility of suspension and extension governed by case law.

Comparative table of the types of right of first refusal

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Complex matter: consult a lawyer

The right of pre-emption is a subject strictly regulated by law and case law, subject to a precise procedure and to imperative deadlines. Each case is specific, with specific challenges depending on the assets concerned and the right holders. It is therefore essential to benefit from appropriate and expert legal advice to anticipate risks, secure your transactions and assert your rights.

Article written by Guillaume Leclerc, lawyer in commercial contracts and commercial litigation in Paris.

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