OGH on Right of First Refusal for Condominiums

Mar 1, 2024 Benn-Ibler Rechtsanwälte

The right of first refusal (ROFR) and right of repurchase are legally invalid according to Section 38 (1) no. 3 of the Austrian Condominium Act (Wohnungseigentumsgesetz, hereinafter WEG) if these rights are capable of nullifying or unreasonably restricting the rights to use or dispose of the property to which the condominium owner is entitled.

In the case at hand, the plaintiff had purchased a condominium from a real estate developer. According to an agreement concluded between the developer and the defendant municipality, the plaintiff granted a ROFR registered in the land register in favour of the municipality. Sales between spouses, parents, and children were excluded from the agreement. The ROFR would be transferred to the new owner.

The developer had purchased the land from the defendant at a price significantly below the market value. In return, the property developer undertook to sell the apartments only on the basis of a ROFR in favour of the defendant municipality.

The plaintiff sought to have the registered ROFR declared null and void and to have it cancelled.

The claim was upheld by both the first instance and appeal courts. In its decision, the OGH upheld the judgement of the lower courts.

Section 38 (1) of the WEG also includes the right of the condominium owner to dispose of their shares by sale. If an agreement restricts this right unfairly, it is inadmissible. On the one hand, the agreement did not contain a time limit and, on the other, it constituted an extended ROFR, since it would have transferred to the new owner if the property was sold within the family. This resulted in the claimant’s rights being restricted to a greater extent.

Although the interests of the defendant are understandable and legitimate, this does not justify a permanent restriction of the rights of the plaintiff. For such cases, Section 15g of the Austrian Non-Profit Housing Act (Wohnungsgemeinnützigkeitsgesetz, WGG) provides for a limited ROFR which expires after 15 years at the latest.

OGH 10 Ob 25/23h (21 November 2023)