First Purchase of self-inhabited Condominium

When transforming rented apartments to condominiums (i.e. the apartment as tradable real estate = Eigentumswohnung) in Germany, tenants have the right of preemption to purchase the apartment first. But does this have to be before or can it also be before the sale has been completed? The BGH answers this question in its judgment of June 22, 3007 (re V ZR 269/06).

Sam dwells in his rented apartment inside an apartment house. The house was legally split into condominiums by the owner, Bernard. As time passé, Bernard sold the apartment to his son Christian. This sale is privileged in law that tenants do not have the right to purchase it first – i.e. before a relative of the owner. After some more time, Christian sold this piece of real estate to Deborah, Sam made up his mind to purchase it. So he wrote Christian a letter telling of his wish to purchase following his right of preemption. Christian denied the wish because did not own it anymore. So Sam ended up suing both Christian and Deborah in court to make use of his right of first purchase.

The court held that Sam had lost right of first purchase pursuant to §577 BGB. Tenants have the statutory right of §577 I 1 BGB of first purchase when an apartment has been transformed in condominiums (Wohnungseigentum), which is ruling case law. This right only exists until the apartment has been sold the first time after conversion into a real estate. This is not true when family members sell the apartment among one another (§577 BGB). In this case, the tenant has no right of preemption. When selling for the second time, even when the first sale was only among family members, the tenant does not have the statutory right of first purchase. This scenario does not constitute a misuse of statutory rights – as the court held. Cases of abuse of rights are considered when equity (“Treu und Glauben”) is impaired, §242 BGB. A case of misuse cannot be found here.







Published on the old CMS: 2008/8/30
Read on the old CMS till November 2008: 1,330 reads