The tenant’s right of pre-emptive acquisition of the rented property. PRE-EMPTION AND WITHDRAWAL.

When the owner of a property decides to lease it to a third party, he should not overlook certain implications that such a legal transaction has on his right of ownership of the property.

As is well known, the full dominion that any owner has over his property implies absolute freedom of management and disposal of the same, as long as these acts do not collide with the law or with the legitimate rights of third parties. In other words, in a concrete case, the owner of 100 % of the freehold of a house could sell it to whomever he wants and at whatever price he wants.

However, homeowners who decide to lease their property must be aware that, by signing the lease contract with the tenant, they are limiting their ability to dispose of the leased property, to the same extent that the tenant is acquiring a preferential right of purchase, with respect to other interested third parties, in relation to the property. These are the rights of first refusal and pre-emptive rights, as set out in the Urban Leases Act.

Although it is true that, in the event that the object of the lease is not a dwelling, these rights can be waived by contract; it is also true that, in the case of a dwelling, this waiver, even if it exists, will not be valid, given that the provisions of the Law in this respect cannot be contradicted by contract, and all clauses contrary to the Urban Leases Law will be deemed not to have been put in place.

The practical implications of this do not prevent the owner from selling the property to whomever he wishes and at whatever price he wishes, but he must give the tenant the opportunity to match the price and other conditions agreed with the buyer, so that if the latter matches it, he will have preference over the initial buyer to acquire the property.

Specifically, the landlord will have to communicate to the tenant, at least 30 days prior to the sale, the price and other agreed conditions, and the tenant will be able to match them and exercise his right of first refusal within those 30 days. To this end, and as the Supreme Court has recently declared, the simple provision to the owner of a bank cheque for the agreed price and other expenses will automatically give the tenant the right of ownership of the property, and the owner may be obliged to formalise it before a Notary.

In the event that the owner has not communicated to the tenant his intention to sell, or has communicated a price different from the real price, the tenant will have the possibility of exercising his right of withdrawal, that is to say, as soon as he is informed by the Notary of the formalisation of the sale, he will have 30 days to match the price and other conditions, automatically acquiring the property instead of the initial purchaser. If the owner were to omit in the notary’s office the fact that the property is rented, he would be committing the crime of falsification of a public document, punishable with imprisonment of 6 months to 3 years, as well as a fine of 6 to 12 months.

In short, even the simplest or everyday contract has implications that are not always reflected in it and that it is advisable to be aware of, so in order to avoid surprises, we encourage you to get information from a lawyer you trust before entering into any contract.