Preferential acquisition rights in favour of the Generalitat of Catalonia in transfers of housing made in the context of foreclosures or through debt compensation or debt payment with mortgage guarantee

10 July, 2024
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Real Estate
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Amaia Forcada


There are first refusal and repurchase rights of different natures and in favour of various holders (co-owners, tenants, housing subject to official protection regimes…), but today we will focus on those legally recognized in favour of the Generalitat of Catalonia concerning the transfers of housing that has been acquired through foreclosure or through debt compensation or debt payment with a mortgage guarantee.

First refusal and repurchase rights can be defined as preferential acquisition rights that allow the holder to acquire real estate or other real rights with preference over any other interested party.

What does the right of first refusal consist of?

The right of first refusal grants its holder a preference to acquire real estate or a real right under the same conditions and price as a third party before the sale is formalized.

What does the right of repurchase consist of?

The right of repurchase, on the other hand, grants its holder the right to nullify a sale of real estate or a real right made in favour of a third party, acquiring it under the same conditions and price. This right is exercised after the sale has been formalized and results in the annulment of the initial transfer.

Regulation

The regulation of these rights in favour of the Generalitat of Catalonia is contained in Decree-Law 1/2015, of March 24, on extraordinary and urgent measures for the mobilization of housing from foreclosure processes, and its validity period is 12 years from March 27, 2015.

The condition for the activation of preferential acquisition rights is the transfer of housing acquired in a foreclosure process or through debt compensation or debt payment with a mortgage guarantee, and that has been acquired after April 9, 2008, when Law 18/2007, of December 28, on the right to housing came into force.

Which transfers are affected?

Transfers of housing acquired in a foreclosure auction, whether the mortgage lender or a third party acquires it, and regardless of whether the process was judicial or extrajudicial.

It also affects transfers of housing made to compensate debt between creditor and debtor, and also to deeds in lieu of foreclosure.

It is irrelevant whether the property owner is an individual or a legal entity, or whether the housing is the primary residence or a secondary residence of the owner, as in all cases, the Generalitat of Catalonia may exercise its preferential acquisition rights.

In fact, it does not only affect the first transfer, but also all subsequent transfers during the term of validity of Decree-Law 1/2015, which will not end until March 27, 2027 – unless it is extended again.

Thus, for example, if bank X or a company of its group sells Manuel a property acquired in a foreclosure, said transfer will be subject to preferential acquisition rights in favour of the Generalitat of Catalonia. And so will any transfer by which Manuel subsequently sells the property to Paula, provided that this second transfer (and also, where applicable, the third, fourth, etc.) occurs before March 27, 2027.

Who can exercise the preferential acquisition rights in these cases?

The Administration of the Generalitat of Catalonia directly or through public entities with their own legal personality competent in housing matters, as long as it is for the benefit of:

–> Itself;

–> The municipality;

–> Other related entities dependent on them;

–> Publicly owned companies; or

–> Non-profit organizations that are part of the housing network or considered social promoters according to Law 18/2007.

What is the procedure for the right of first refusal?

The procedure is very similar to that applied to the transfers of officially protected housing, with some peculiarities. The transferor must communicate their decision to transfer to the Housing Agency of Catalonia, indicating:

–> The unmistakable identification of both the physical and legal property;

–> The title held over the property;

–> The planned legal formulas for the transfer;

–> The expected sale price;

–> An explicit declaration of the occupancy status of the property;

–> A justified valuation of its condition;

–> The occupancy certificate; and

–> The reason for the transfer.

The process must be carried out electronically by clicking here, although if the owner is an individual, it can also be done in person.

Once the notification has been made, the owner is obliged to allow the inspection of the property if requested by the Administration, and non-compliance will suspend the right of first refusal period from the scheduled inspection date until effective compliance, without prejudice to the application of the corresponding sanctioning regime.

The Housing Agency of Catalonia has a maximum period of 2 months to exercise the right of first refusal. Note that this period is extended by an additional 15 days if the Administration requests to inspect the property.

Once the notification is received and before deciding on the preferential acquisition rights, the Generalitat of Catalonia must consult the municipality where the property is located.

If the right of first refusal period elapses without the Administration notifying its intention to exercise it, it is understood that it renounces exercising it for that transfer.

Before authorizing the granting of deeds formalizing transfers of real estate subject to preferential acquisition rights in favour of the Generalitat of Catalonia, notaries must ensure the proper execution of the required notifications and must testify to this in the corresponding deeds. Registrars, on their part, cannot register the deeds if the notifications have not been fulfilled.

Decree-Law 1/2015 prioritizes the exercise of preferential acquisition rights over well-preserved homes located in neighbourhoods with special social degradation and with a price below the market value.

When does the right of repurchase arise and how is it exercised?

The Generalitat of Catalonia will have the right of repurchase in the following cases:

–> If the property is transferred without prior communication for the exercise of the right of first refusal;

–> If, despite the notification mentioned above, any legal requirements are omitted;

–> If the transfer occurs before the expiration of the right of first refusal period; or

–> If the transfer is made under conditions different from those specified in the decision notification to transfer the property.

This right must be exercised at the same price and under the same acquisition conditions in which the transfer of real estate was actually made.

The Administration must issue a resolution on whether there is sufficient cause to exercise the repurchase right within 30 days from the day it became aware of the transfer of real estate and its conditions.

From the resolution of the existence of sufficient cause to the effective exercise of the repurchase right, no more than 3 months can elapse.

Other preferential acquisition rights in favour of the Generalitat of Catalonia

The Catalonia Urban Planning Law also recognizes preferential acquisition rights in favour of the Generalitat of Catalonia when protected housing, an entire building, or properties located in areas designated for public land and housing assets are transferred.

We will dedicate a blog entry to this case for a more detailed analysis.

At MES Advocats, we offer comprehensive advice and support to sellers and buyers in the formalization of property transfers subject to preferential acquisition rights. If you need more information or are interested in obtaining a quote, you can contact our real estate law area through this link.

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AcquisitionPreferential acquisition rightsRight of repurchaseFirst refusal rightsPropietarisTransmission

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