If you sell a property, the municipality may have a statutory pre-emption right: In certain cases, it may enter into the purchase agreement in place of your buyer. For the vast majority of private sales, this is not an obstacle—nevertheless, the municipality reviews every notarized purchase agreement, and your buyer will only be registered in the land register once a so-called certificate of non-exercise has been issued. We explain when the municipality can exercise its right, how the process works and why the certificate of non-exercise is indispensable for completion by the notary.
What is the municipality’s pre-emption right?
The municipal pre-emption right is a statutory right of the municipality to acquire a sold property itself under the terms of the purchase agreement already concluded. The legal basis is §§ 24 to 28 of the German Building Code. If the municipality exercises its right, it takes the place of your buyer—the purchase price and other terms generally remain the same, but the property goes to the municipality instead of the private interested party.
Important: The pre-emption right does not exist for every sale. It requires that your property be located in one of the areas regulated by law. For the sale of an existing condominium or a heritable building right, the general pre-emption right under § 24 para. 2 BauGB is expressly excluded.
When can the municipality exercise its right?
§ 24 BauGB conclusively lists the cases in which the municipality has a general pre-emption right. The most important in practice are:
- Development plan: The property is designated for public purposes (such as roads, schools or green spaces) or for compensatory measures.
- Land readjustment and redevelopment areas: The property is located in a formally designated redevelopment or development area.
- Preservation statute (neighborhood protection): The property is located within the scope of a preservation statute.
- Residential building land: Undeveloped land designated as residential building land in the land-use or development plan.
- Flood and inundation areas as well as properties with significant urban-planning deficiencies.
There is also a crucial hurdle: The municipality may exercise the pre-emption right only if the public interest justifies this (§ 24 para. 3Building Code). This primarily includes meeting the municipality’s housing needs. A purely fiscal interest—for example, the wish to acquire a property cheaply—is not sufficient.
In addition to the general right of first refusal, there is a special right of first refusal (§ 25 Building Code), which the municipality can establish by statute for individual areas in order to safeguard urban development planning.
Procedure: From the Purchase Agreement to the Certificate of Non-Exercise
The procedure is governed by § 28 Building Code. In practice, it is largely handled through the notary and usually affects you as the seller only marginally.
Step 1: Notification of the Purchase Agreement
After notarization, the notary informs the municipality of the contents of the purchase agreement. This starts the period running.
Step 2: Review by the Municipality
The municipality examines whether a right of first refusal exists at all and whether the public interest justifies its exercise. It has a maximum of three months from notification of the purchase agreement to do so. If it does not exercise the right within this period, it expires for this sale.
Step 3: Certificate of Non-Exercise or Exercise
If no right of first refusal exists or the municipality waives it, it issues without undue delay upon application a certificate confirming non-exercise—the certificate of non-exercise. By law, this constitutes a waiver. Only in exceptional cases does the municipality exercise the right by administrative act against you as the seller.
Step 4: Registration in the Land Register
The land registry office may register the buyer as the new owner only once it has been provided with proof that the right of first refusal was not exercised or does not exist. Without the certificate of non-exercise, the transfer of ownership is put on hold. For this reason, the notary generally applies for the certificate automatically.
How long does the certificate of non-exercise take?
The law requires it to be issued without undue delay. In practice, processing usually takes only a few days to around two weeks—provided the property is not located in a sensitive area. Many municipalities charge an administrative fee for the certificate, often in the low three-figure range. Since the notarial completion process already takes several weeks, the certificate of non-exercise normally does not noticeably delay the sale.
When the Right of First Refusal Is Excluded
Even in an area subject to a right of first refusal, the right does not always apply. § 26 Building Code excludes it, among other cases, when
- you to your Sell to spouses or close relatives (in direct line or up to the third degree of the collateral line),
- the property has already been developed and used in accordance with the planning objectives and does not have any significant defects.
In addition, your buyer can avert the exercise pursuant to Section 27 BauGB: If they undertake in writing to use the property within a reasonable period in accordance with the urban-development objectives or to remedy existing defects, the municipality must refrain from exercising its right of first refusal.
Preservation of the social structure: What the BVerwG ruling changed
The right of first refusal was particularly often a point of dispute in social preservation areas (preservation of the social structure) – until the Federal Administrative Court set narrow limits on 9 November 2021 (Case No. 4 C 1.20). Accordingly, the municipality may not base its right of first refusal solely on the assumption that the buyer will use the building in future in a manner contrary to preservation objectives, for example by dividing it into condominiums. The actual condition at the time of the authorities’ decision is decisive. If the building is being properly used and is free of defects at the time of sale, the right of first refusal is excluded pursuant to Section 26 No. 4 BauGB.
For sellers in social preservation areas, this has meant significantly greater legal certainty ever since. However, the legislator is working on an amendment to the Federal Building Code intended to strengthen the right of first refusal in social preservation areas again; as of 2026, it is still in the legislative process. If your property is located in a preservation area, it is therefore worth checking the current status.
Municipal right of first refusal vs. tenant’s right of first refusal
The municipality’s right of first refusal is often confused with the tenant’s right of first refusal – but the two have little to do with each other:
- The municipal right of first refusal (Sections 24 et seq. BauGB) belongs to the municipality and is linked to urban-development objectives.
- The tenant’s right of first refusal under Section 577 BGB belongs to the tenant. It arises only if a rented apartment is converted into condominium ownership after the tenancy has begun and is sold to a third party for the first time. The tenant may then purchase it on the same terms.
Unlike the municipal right of first refusal, the tenant’s right of first refusal does not block your sale: The tenant merely takes the buyer’s place in the existing contract. If you sell a rented, converted Condominium, however, you must inform the tenant of their right of first refusal in good time.
FAQ on the municipality’s right of first refusal
Can the municipality prevent my sale?
No. The municipality may not prohibit the sale, but only enter into the purchase agreement itself—and exclusively in the areas regulated by law and if this is justified by the public interest. You therefore do not lose the right to sell, but at most the specific buyer.
Do I receive the same price if the municipality exercises its right?
In principle, yes: The municipality assumes the contract under the agreed conditions. However, if the purchase price significantly exceeds the market value, the municipality may use the market value as the basis pursuant to Section 28 of the German Building Code (BauGB). In this case, you as the seller may withdraw from the contract within one month.
Do I have to apply for the negative certificate myself?
Usually not. The notary applies for the certificate from the municipality as part of completing the purchase agreement. As the seller, you generally do not need to take any further action.
Does the right of first refusal also apply to condominiums?
For the sale of an existing condominium, the general right of first refusal under Section 24 (2) BauGB is excluded. It is particularly relevant for undeveloped plots, apartment buildings and properties in redevelopment or preservation areas.
How do I know whether my plot is affected?
The responsible building authority or urban planning office, as well as the municipality’s development, redevelopment and preservation bylaws, can provide information. The notary will in any event check the right-of-first-refusal situation as part of the notarization.
Conclusion
The municipality’s right of first refusal sounds more threatening than it is for most sellers. It applies only in clearly defined areas, requires a public-interest justification and is excluded in any event for existing condominiums. For your sale, one thing is particularly important: Without a negative certificate from the municipality, the buyer will not be entered in the land register. Since the notary routinely obtains this certificate, the process generally runs quietly in the background. Particular attention is required only if your property is located in a redevelopment or neighborhood preservation area—in that case, you should clarify the right-of-first-refusal situation at an early stage.