Pre-emption, or right of pre-emption, is a legal institution that can have a significant impact on the sale of real estate. How does it work, what does it entail and who can use it? Find the answers in our article.
Table of Contents
- What Is the Pre-emption Right?
- Who Can Hold the Pre-emption Right?
- How Does the Pre-emption Right Work in Real Estate?
- Form of Exercising the Pre-emption Right
- What Happens if the Pre-emption Right Is Violated?
- Practical Example – Agricultural Land Pre-emption Right
- What Is the Difference Between Pre-emption Right and Acquisition Right?
- Pre-emption – Summary
- FAQ About Pre-emption
What Is the Pre-emption Right?
The pre-emption right is the entitlement of a specific entity to have priority in acquiring an item (usually real estate) when its owner decides to sell it to a third party. The owner must offer the property to the entitled party before selling it to another buyer. This must be done under the same conditions.
This institution limits the right of ownership. Yet, it has been provided for by law to protect public and private interests. For example, the State Treasury, municipality, co-owners and tenants.
Who Can Hold the Pre-emption Right?
The right of pre-emption may arise from:
| Source of the Pre-emption Right | Entitled Entity |
| Law (e.g., Real Estate Management Act) | Municipality, State Treasury, National Support Centre for Agriculture (KOWR in Poland) |
| Agreements between the parties | Private individual, co-owner, tenant, investor |
| Court rulings, cooperative statutes | Third parties indicated by an authority or agreement |
Example:
If a property is located within an area covered by a land development plan, the municipality may have a statutory pre-emption right. It will have priority over other buyers.
How Does the Pre-emption Right Work in Real Estate?
To properly exercise the pre-emption right, certain conditions must be met:
- Conclusion of a conditional sale agreement. The property owner signs a contract with a buyer. Yet, its effectiveness depends on the non-exercise of the pre-emption right.
- Notification of the entitled party. The owner must promptly inform the entitled entity about the terms of the sale.
- Deadline for decision. The entitled party has one month from receiving the notification to exercise their pre-emption right.
- Effects of exercising the right. If the entitled party exercises the right, the contract with the initial buyer becomes ineffective. The sale proceeds in favor of the entitled party.
Form of Exercising the Pre-emption Right
In the case of real estate, the declaration of exercising the pre-emption right must be made in the form of a notarial deed. This means:
- Exercising the pre-emption right without this form is invalid,
- A notary must certify the content and the date of the declaration.
What Happens if the Pre-emption Right Is Violated?
Selling real estate without respecting the pre-emption right doesn’t automatically void the transaction. However:
- The entitled party may claim damages,
- In certain cases (e.g. statutory pre-emption right), they can seek annulment if the transaction was unlawful.
Practical Example – Agricultural Land Pre-emption Right
In Poland, a common example is the pre-emption right of KOWR regarding agricultural land. The abbreviation stands for Polish National Agricultural Support Centre. If agricultural property is sold to an individual who is not a farmer, KOWR may exercise its pre-emption right or acquisition right. It can take over the property for the State Treasury.
What Is the Difference Between Pre-emption Right and Acquisition Right?
| Pre-emption Right | Acquisition Right |
| Applies before the conclusion of the final agreement. | Applies after the agreement is concluded. |
| Requires a conditional contract. | Acquisition occurs automatically if conditions are met. |
| It often concerns municipalities, KOWR, or co-owners. | Typical for agricultural land, forests, and municipal housing. |
Pre-emption – Summary
The right of pre-emption is an important institution. It can have a real impact on the course of the sale of real estate. Both sellers and buyers should carefully verify whether a property is subject to this right. Ignoring the pre-emption obligations can lead to litigation. It can even result in declaring the contract invalid.
Are you planning to sell your property? Or maybe you want to buy one but are unsure if a pre-emption right exists? Consult an expert before signing any agreement. You will avoid mistakes, save time, and protect your money.
FAQ About Pre-emption
What is the pre-emption right?
It is the entitlement to purchase a property first, under the terms agreed upon with a third party.
Who can have the pre-emption right?
Municipalities, the State Treasury, KOWR, co-owners, tenants – depending on the situation.
Does the pre-emption right always have to be included in a notarial deed?
Yes – the exercise of the pre-emption right must take place in the form of a notarial deed.
What are the consequences of exercising the pre-emption right?
The property is sold to the entitled party, and the previous buyer loses the opportunity to buy.
What if a property was sold without the pre-emption right?
The entitled party may claim damages or, in some cases, seek to annul the sale.
Does the pre-emption right always apply?
No – it occurs only in certain statutory or contractual cases.
How much time does the entitled party have to exercise the pre-emption right?
Usually, one month from the date of notification by the owner.
Can the pre-emption right be waived?
Yes – the waiver statement should be in writing or notarised.
What is a conditional agreement?
It is a sales agreement that depends on the failure to exercise the right of pre-emption.
Can the pre-emption right be registered in the land and mortgage register?
Yes – it is advisable to disclose it in Section III of the land and mortgage register.