Municipal pre-emption right (Vorkaufsrecht) in Germany

When the right exists

The rules are federal, in the Baugesetzbuch (BauGB). Section 24(1) lists the cases where the municipality may exercise a general right. The ones a home buyer meets most often are:

• a plot in a redevelopment area (Sanierungsgebiet) or an urban development zone (no. 3);
• an area covered by a preservation by-law (Erhaltungssatzung), the type used for protected neighbourhoods, or by an urban conversion by-law (no. 4);
• undeveloped plots in areas mainly meant for housing (no. 6);
• plots in flood zones kept free of building (no. 7);
• areas with an urban defect (städtebaulicher Missstand) or buildings showing serious defects (no. 8).

The list also covers land earmarked in a development plan for public purposes (no. 1), plots in a land-readjustment area (no. 2) and unbuilt land outside built-up areas that the land-use plan shows as housing land (no. 5). A further, special right can arise from a municipal by-law (§ 25), for example for undeveloped plots in a development plan or in areas with a tight housing market designated under § 201a.

Two exclusions are general. The right does not apply to the sale of flats under the Wohnungseigentumsgesetz or of building rights (§ 24(2)). Nor can it be used against a sale to a spouse or to a relative in the direct line, or in the collateral line up to the third degree (§ 26 no. 1), against some purchases by the public or by churches (§ 26 no. 2), or where the plot is already built and used as the plan or the urban measure requires and shows no defects (§ 26 no. 4).

The conditions for using it

The municipality may act only if the public good justifies it, for example to meet a housing need in the municipality (§ 24(3)). It must say what it intends to do with the plot. It can also exercise the right in favour of a third party who commits to the intended use within a set time (§ 27a), in which case the contract is concluded between the third party and the seller.

The procedure and the deadline

1. The seller must tell the municipality the content of the contract without delay. The buyer’s notice can replace the seller’s (§ 28(1)). The Act names the seller and the buyer, so ask the notary who will send it.
2. The municipality has three months from that notice to decide, by an administrative act addressed to the seller (§ 28(2)). If it exercises the right, the purchase contract is made between it and the seller on the terms agreed with you (§ 464(2) BGB, applied by § 28(2)).
3. If it does not, or if no right exists, it issues on request a certificate (Zeugnis), which counts as a waiver (§ 28(1)). The land register may register you as owner only once non-exercise or non-existence has been shown to it.
4. A municipality may also waive the right in advance for its whole territory by an announced decision (§ 28(5)). In that case no certificate is needed unless the waiver was later revoked.

During the wait, a priority notice for the municipality is entered in the register on request (§ 28(2)). The right cannot be transferred. A right granted by contract is extinguished when the municipality takes ownership (§ 28(2)).

What happens to the price

The municipality normally pays the agreed price. If that price is above the market value (Verkehrswert) at the time of the sale, it may fix the amount to pay by the market value instead (§ 28(3)). The seller can then withdraw from the contract within one month after the decision becomes final. If the seller does not, the seller’s obligation toward you lapses and ownership goes to the municipality once it is registered. A buyer who agreed a price far above market value therefore runs a real risk: the seller may withdraw and the sale falls away.

How a buyer can avert it

Under § 27(1) you can prevent the exercise if you can show that the use of the plot is fixed or can be fixed with enough certainty by building rules or the aims of the urban measure, that you are able to use the plot accordingly within a reasonable time, and that you commit to this before the three-month period ends. If the building has defects, you can avert the right by committing to remove them within a reasonable time. On your request, the municipality must extend the period by two months if you make it credible that you can meet the conditions. There is no right to avert in some cases, such as a plot reserved for public purposes in a development plan (§ 27(2)).

Which professional to consult

A notary can tell you who sends the notice and who requests the certificate. A property valuer can say whether the price is close to market value, which matters under § 28(3). For help understanding how the area may be used, an architect can read the local plan.