The right of first refusal and pre-emption right in favour of the Generalitat Valenciana, which has recently been recognised by Decree-Law, is important because it is a preferential acquisition right in favour of this institution.
What is a right of pre-emptive acquisition? In Spanish Civil Law, pre-emptive acquisition rights are the right of first refusal:
- The right of first refusal is the preference of a specific person, whether natural or legal, to be awarded a property before it is transferred.
- The right of pre-emption is the preference of a specific person, whether natural or legal, to be awarded a property after it has already been transferred. It can even be awarded when it has already been sold to third parties. And even when the transfer tax, notary fees and land registry fees have already been paid.
Why the Valencian Government’s right of first refusal and withdrawal?
A good law firm should be aware of the particularities of the Valencian Government’s right of first refusal and pre-emption right. Specifically, these will particularly affect the real estate market in the Valencian Community.
Such rights were recognised by Decree Law 6/2020, of 5 June, of the Consell. The main reason for the approval of this regulation was the housing crisis caused by the Covid-19 pandemic. Faced with this health emergency, it was essential to expand the public housing stock.
Tax specialists in real estate law should be familiar with this regulation, as it has a decisive influence on the real estate market in one of the main areas of activity in our country.
It means that the Valencian Government has preferential acquisition rights over real estate in this Autonomous Community, one of the most active in Spain in terms of real estate. Law firms such as Imont Legal & Taxes are experts in this type of problem.
On the other hand, the right of first refusal and pre-emptive right in favour of the Generalitat Valenciana is subject to very specific deadlines and cases of action, determined by the Decree Law.
Deadlines for the Valencian Government’s right of first refusal and right of pre-emption
The deadline for the Valencian Administration to exercise its pre-emptive acquisition rights is 60 calendar days. More specifically:
- For the right of first refusal: 60 calendar days before the title deeds are signed.
- For the right of pre-emption: 60 calendar days once the title deeds have been formalised.
Which dwellings are subject to the Valencian Government’s right of first refusal and pre-emptive rights?
The dwellings that are most commonly subject to these preferential acquisition rights of the Valencian Government in the territory of this Autonomous Community are:
- Dwellings that have been acquired by means of dation in payment for a mortgage debt. In other words: those that have been handed over to pay off the mortgage debt.
- Dwellings that have been subject to a judicial foreclosure That is: those that have been seized due to unfulfilled debts of the person, and, following a court ruling, have been put up for public auction, sale, etc.
- The homes that were owned by a bank, and that are assets of bank restructuring since 21 April 2005. The restructuring of the Spanish financial system, promoted and favoured by the Spanish government as a result of the great financial crisis of 2008, led to the acquisition by State funds of « toxic assets ». In other words, assets with high financial risk, high book value and low market value. Among these assets were real estate assets, which are nowadays usually under the right of first refusal of the Generalitat Valenciana.
In addition, these dwellings must be located in an Area of Housing Need (ANHA) or its catchment areas. What is an ANHA? These are geographical areas where access to housing is more difficult. This may be for social and economic reasons (more deprived areas or where there is a greater risk of social exclusion), demographic, geographic, climatic or public health reasons.
ANHA’s are declared by the Regional Ministry of Housing of the Generalitat Valenciana. They can also be declared by the municipalities in their respective municipalities.
The Real Estate Lawyer and the Generalitat Valenciana’s right of first refusal and pre-emption.
The fact that a property is subject to the Generalitat Valenciana’s right of first refusal does not mean that it cannot be transferred. This can be done, but with the prior authorisation of the Valencian Government. Otherwise, the Generalitat Valenciana will be able to take possession of the property, within the periods mentioned above for the right of first refusal.
Lawyers specialising in Real Estate Law, such as those at Imont Legal & Taxes, have an in-depth knowledge of these issues and can advise the client on them.
The right of first refusal in favour of the Generalitat Valenciana is something that must be taken seriously into account when purchasing properties in this Autonomous Community, which is so active and important in the sector.