What is the right of first refusal and withdrawal?

The rights of first refusal and retraction, registered in article 25 of the Urban Leasing Law (LAU) and in article 1521 of the Civil Code, offer tenants the possibility of buying the house they have rented, before other people, if your landlord decides to put it up for sale.

It is, therefore, a “preferred” option to acquire the property that we have for long-term rental.

Right of first refusal and withdrawal: definition

The rights of first refusal and retraction are quite similar. In fact, both can be exercised by the tenants of a home that has been put up for sale.

However, these are two legal figures with different applications: the first is executed before the sale of the property, while the second can be exercised even after a third party has completed the purchase.

After receiving the communication, tenants have a maximum of 30 days to respond to their tenant.

What is the right of first refusal

The right of first refusal obliges the owners of a rented property to notify their tenants of the sale of said property in order to offer them the preference of its acquisition at the same price and conditions as other buyers.
This notice must be made in advance, preferably by registered letter. This document must specify the sale price.
After receiving the communication, tenants have a maximum of 30 days to respond to their tenant.

What is the right of withdrawal

When the owner does not comply with the right of first refusal and sells a property or leased premises without previously notifying the tenant, the latter has 30 days to avail himself of the so-called “right of withdrawal”, for which, if he wishes, he can request the cancellation of the sale made.
Later, this tenant will have preference to acquire the house at the same price and with the same conditions for which it had been sold to the third party.

Who can exercise this right?

The right of first refusal and withdrawal is a legal benefit of all tenants, unless a clause is signed in the lease contract for its resignation.
In the right of first refusal, it is the owner who has the legal obligation to communicate the sale and its conditions.

The right of first refusal and withdrawal is a legal benefit of all tenants, unless a clause is signed in the lease contract for its resignation.
In the right of first refusal, it is the owner who has the legal obligation to communicate the sale and its conditions.
Regarding the right of withdrawal, it may be exercised:
-If the owner signs the sale without informing his tenant in advance.
-If the communication omits details and conditions of the sale.
-If the owner sells the property at a price lower than that offered to the tenant to exercise the right of first refusal.
On the other hand, and although the rights of first refusal and withdrawal are undeniable, there are two cases in which they are not applicable:

1. The apartment or property is sold jointly with other properties that belong to a single property.
2. All the apartments and premises belonging to a single property are sold to a single buyer.

What happens if I request my right of withdrawal when a home has already been sold?

According to the Civil Code, when the right of withdrawal is appealed, the tenant must not only pay the price agreed in the sale: he must also assume the contract expenses and any other legitimate payment (notary, registration, etc.) to compensate the first buyer of those expenses that, in good faith, have been made in the acquired home.
The objective of this specification is to protect all parties involved in this type of operation, so that the tenant, when exercising his right, does not cause harm to the original owner of the home or to the third party who made the purchase.

Who benefits from the right of first refusal and withdrawal?

The right of first refusal and withdrawal establishes a preference system where the protection of the buyer’s interests is above the owner’s freedom of use.
This does not mean, far from it, that the owner does not have the possibility of choosing or that he loses money.

It simply indicates that the current tenant of a property assumes the right to be the first to purchase it.
On the other hand, and although the right of first refusal and withdrawal is normally associated with the private sphere, the Administrations can also exercise it for reasons such as the execution of urban plans or the guarantee of a public housing stock in a municipality.
Knowing what it is and when the right of first refusal and withdrawal is applied is interesting, both for owners and tenants.
Are you thinking of putting your property up for sale? Contact us!