Exercising the right of first refusal means that, under certain conditions, the municipality has the right—when a property within its jurisdiction is sold—to have itself or a third party step into the purchase agreement and subsequently become the owner of the property. The right of first refusal may only be exercised if it is justified by the public interest.

The exercise of the right of first refusal may be precluded under certain circumstances or waived by the purchaser.

A property purchase is taking place.

The municipality must be notified of the purchase immediately. Without such notification, the three-month period granted to the municipality to exercise its right of first refusal does not begin to run.

If the municipality exercises its right of first refusal and there are no grounds for exclusion or such grounds are not averted, the municipality steps into the buyer’s place in the purchase agreement; if it exercises the right in favor of a third party, that party steps into the purchase agreement.

The municipality or the beneficiary third party must then pay the seller a purchase price that generally corresponds to the agreed-upon purchase price. Under certain conditions, a lower amount may also be paid, for example, if the agreed-upon purchase price clearly exceeds the market value at the time of the purchase.

The seller or buyer must notify the municipality of the terms of a purchase agreement.

If there is no right of first refusal or if the municipality does not exercise it, the municipality must issue a certificate to that effect upon request by a party involved (so-called negative decision/certificate).

If, on the other hand, the municipality exercises the right of first refusal, a new, separate purchase agreement is established between the seller and the municipality. In principle, the same terms and conditions (including the purchase price) that the seller had agreed upon with the original buyer apply. However, the purchase price may be capped if the agreed-upon purchase price significantly exceeds the market value in a recognizable manner. In this case, the seller may withdraw from the contract.

The right of first refusal is exercised against the seller; the buyer must be notified of the decision.

The municipality is entitled to preemptive rights under the law (general preemptive rights) and preemptive rights based on its bylaws (special preemptive rights). Both types coexist on an equal footing.

The statutory preemptive rights serve as urban planning instruments to ensure the implementation of land-use planning.

• The right of first refusal does not apply in several cases, such as when the property is sold to a spouse, relative, or in-law, or when the property is developed and used in accordance with the zoning plan.
• The right of first refusal may also be waived by the buyer, for example, if he

• is able to use the property for the intended purpose within a reasonable period of time and
• commits to doing so within two months after the purchase agreement has been notified to the municipality.

• The exercise of a right of first refusal in favor of a third party requires that the third party

• is able to use the property for the intended purpose within a reasonable period of time and
• undertakes to do so.

Regular appeals and lawsuits under the Administrative Court Rules (VwGO); in exceptional cases, a request for a judicial decision by the Chambers for Building Land Matters (particularly in cases involving Section 28(4) of the Building Code (BauGB)).

The right of first refusal may only be exercised against the seller within three months of notification of the purchase agreement.

There is no specific time limit for processing. However, given the deadline for exercising the right of first refusal (see below), the municipality must act without delay.

Responsibility lies with the municipal administrations of the association of municipalities; in the case of municipalities not belonging to an association, large cities within a district, and cities independent of a district, responsibility lies with the respective municipal or city administrations.

The seller or the buyer must immediately notify the municipality of the terms of the purchase agreement so that the municipality can decide whether to exercise its right of first refusal.

The buyer and/or seller will incur costs if they apply to the municipality for a declaration that they are waiving their right of first refusal.

The determination of the costs and their amount is based on the state laws governing local taxes in conjunction with the municipality’s administrative fee regulations.

The exercise of the right of first refusal must be effected by an administrative act. It is typically issued in writing.

No specific form is generally required for an application for a negative decision or certificate; this decision is also typically issued in writing.