On 27 December 2023, the Brussels ordinance introducing a right of first refusal for tenants whose property is put up for sale was published in the Belgian Official Gazette.
This ordinance adds a section 4bis to the Brussels Housing Code adding a right of first refusal for Brussels tenants.
What exactly this right entails and how it must be respected by landlords, real estate agents and notaries, is explained in this article .
1. When does the right of first refusal apply?
A tenant has a right of first refusal in case of a sale of his rented home, if the following conditions are met:
- it must concern the sale of a home (house or flat);
- the property must be rented for at least three years as a principal residence;
- the tenant must be domiciled in the property.
The right of first refusal also applies when a short-term lease contract is transformed into a long term contract nine-year rental contract. This might happen when the initial duration of a short term contract is exceeded or when the short term contract is neither renewed nor terminated. Hence, any contract that is not considered to be a short-term contract (any more) falls under this rule, provided the tenant is domiciled in the rented property.
But, the right of first refusal lapses when the tenant dies.
When the tenant has transferred the rent, the right of first refusal also accrues to the transferee of the rent. The initial tenant (transferor) can no longer claim it.
2. What if there are multiple beneficiaries of the right of first refusal?
Not only the tenant himself can claim a right of first refusal, also his spouse, legal cohabitant or de facto partner or even his descendants or adopted children or those of his spouse, legal cohabitant or de facto partner, on condition that they are also domiciled in the property at stake.
If there are several potential beneficiaries of a right of first refusal, they have to agree among themselves who will exercise this right. They must decide within the same period in which the right of first refusal must be exercised. If they fail to do so, they will be deemed to have forfeited this right.
3. What is not covered by the right of first refusal?
The right of first refusal does not include all sales and properties. The following sales are not subject to this new regulation:
1° the sale of properties between spouses or legal cohabitants or between de facto cohabitants domiciled at the same address, as well as between relatives by blood or marriage up to the third degree, provided that no principal can be appointed for the benefit of a person other than the above-mentioned persons;
2° the sale of bare ownership, usufruct or other rights in rem, as well as the sale of annuities, including those with a non-random term;
3° the sale of properties pursuant to mergers, demergers, liquidations of companies;
4° the sale to the company or the contribution to the company of which the seller or his/her spouse, or legal cohabitant, alone or with relatives by blood or marriage up to the third degree, holds at least fifty per cent of the shares of the existing company or the company to be incorporated
5° the transfer of undivided rights between co-owners;
6° the sale of the property to a public administration or a public law person when the property is purchased to be used for purposes of general interest;
7° properties for which an expropriation decision has been taken for public interest purposes;
8° properties for which an uninhabitability decree has been issued;
9° buildings with multiple dwellings occupied by different tenants, if the building is sold as a whole;
10° properties that are subject of a promise of sale with a fixed date prior to the conclusion of the lease, insofar as that promise was accepted by the person to whom it was made.
4. How to apply the right of first refusal?
4.1 Notification by registered letter with acknowledgement of receipt
Prior to concluding the sale, the tenant must be notified by registered letter with acknowledgement of receipt of the intention to sell the property and of the right of first refusal he enjoys.
It is important that the notification is sent by registered letter with acknowledgement of receipt and is addressed to everyone who can be considered a tenant. This notification will also be legally enforceable against the other beneficiaries of the right of first refusal, who can only enforce their rights against the tenant and not against the landlord, the notary or the real estate agent.
The notification by registered letter will be considered as an offer of sale in favour of the tenant, unless it is a public sale.
If such notification has not been made, then the notary or real estate agent who is charged with the sale is subject to the same obligation and will have to give notice.
This means that the notary who will execute the authentic deed of sale is obliged to verify that this notification obligation has been fulfilled.
If this has not been done, he will still have to provide the tenant with a copy of the sales agreement or a similar written document recording the exchange of consents regarding the property, price and conditions of sale. Only if the tenant has waived his right of first refusal in writing will this obligation not apply.
4.2 Content of the notification
To be valid, the notification to the tenant must include at least the following information :
- the identity and residence of the landlord;
- the address of the property of which the sale is intended;
- the description of the property and in particular the cadastral plot identiﬁcation;
- an indication of the price or setting price in the event of a public sale and the conditions of the intended sale;
- the rights in rem that may be attached to the property.
This list may be supplemented in the future.
The notification, as well as any other form of notification regarding the right of first refusal, must always be made by registered letter with acknowledgement of receipt.
4.3. Exercise of the right of first refusal by the tenant
The tenant must inform the landlord, the notary or the real estate agent, at the latest within 30 days after receipt of the notification, of his decision to waive his right of first refusal or to exercise it at the published price and conditions, enclosing proof of his domicile in the property concerned.
This notification must also state whether the tenant is exercising the right of first refusal personally or on behalf of one of the beneficiaries (see above).
If the tenant exercises the right of first refusal on behalf of one of the beneficiaries, his reply to exercise must also be signed by that beneficiary.
Failure of the tenant to reply within the said period shall be considered as a waiver of the right of first refusal.
The tenant's acceptance of the price and conditions stated in the notice shall be deemed a sale.
However, the transfer of ownership of the property and payment of the price shall not take place until the authentic deed is signed. But, a downpayment may be agreed in advance.
If the tenant's initial offer is not accepted but the owner still decides to sell under conditions or at a price more favourable to the buyer, the notary must notify the tenant of these conditions and the price, unless the landlord has already done so.
This notification also is an offer of sale in favour of the tenant. This offer will be valid for 7 days from the date of receipt.
The tenant's failure to reply within the 7-days period shall be considered as a waiver of the right of first refusal.
4.5 Public auction
In the event of a public auction, the notary must inform the beneficiaries of the right of first refusal no later than 30 days before the first session and give them the details of the public sale, such as the date of the first session.
The beneficiaries of the right of first refusal must be invited to this session.
At the end of the session of the auction, but before the allotment, the beneficiary of the right of first refusal must be invited to exercise his right of first refusal at the price of the last bid.
In case of a resale when the right to issue a higher bid is exercised, the beneficiary of the right of first refusal must be publicly invited during such higher bid session, whether or not that right will be executed.
The property will be alloted to the beneficiary of the right of first refusal who declares to exercise his right at the price of the last bid.
If the beneficiary of the right of first refusal does not confirm to exercise the right of first refusal during any public auction session, it will be deemed to be waived.
If the right of first refusal is waived, the sales process shall continue in accordance with the rules governing public auctions.
4.6 Dematerialised public auction
Even in the case of a dematerialised public auction (e.g. Biddit), the notary must provide the tenant with a copy of the conditions of sale at least 30 days before the start of the auction period as well as the address of the website where the dematerialised auction will take place.
The beneficiary of the right of first refusal must inform the notary at the latest the day before the start of the auction of its decision to either waive its right of first refusal or to to exercise its right of first refusal, indicating the maximum price, excluding expenses, the beneficiary is willing to pay for the property.
The tenant or beneficiary who has not exercised its right within this period shall lose the benefit of the right of first refusal.
If the amount of the last bid retained by the notary is less than or equal to the maximum price quoted by the tenant, the latter has exercised its right of first refusal and the property shall be sold to him/her at the price of the last bid.
If the amount of the last bid retained by the notary exceeds the maximum price quoted by the tenant, the latter can no longer exercise its right of first refusal.
5. Condition precedent
Any written or verbal agreement relating to a sale that is subject to the right of first refusal shall be irrefutably deemed to have been concluded under the condition precedent of the non-exercise of the right of first refusal.
The right of first refusal shall therefore always be deemed to be included as a condition precedent in any sale.
6. What are the sanctions?
If the right of first refusal is not respected, the aggrieved tenant has one year to claim the annulment of the sale and to buy the property himself.
Should the sale of the property proceed violating the tenant's right of first refusal, the tenant is entitled to claim the substitution against the buyer. Although the proceedings will be brought against the buyer, the landlord must be served with the claim for substitution, as well.
If such a claim is filed, it will also have to be registered with the General Administration of Patrimony Documents. If such claim is granted, the judgement will serve as title of transfer and must be registered.
The tenant, who substitutes the buyer, will then have to pay the purchase price to the buyer, and to reimburse the costs of the deed. The registration taxes paid by the buyer will be refunded by the tax administration at the buyer's request.
But, the tenant also has a claim against the landlord if the latter has failed to respect the right of first refusal.
Such a claim lapses one year after the registration of either the official record of the public auction or the notification of the authentic deed of sale. Therefore, if a tenant's rights are violated, this period must be observed.
However, this presciption period does not apply with regard to the liability of the real estate agent and the notary who face both contractual, extra-contractual and disciplinary liabilities to which longer prescription periods are attached.
Each actor in the sales process should therefore be vigilant, and make sure that the obligations attached to this right of first refusal are respected.
7. Contractual waiver?
The right of first refusal cannot be waived contractually. At each sale, the tenant must therefore be given the opportunity to exercise its right.
8. From when does this right of first refusal apply?
As from 6 January 2024, the right of first refusal must be taken into account. Any sale starting from this date (regardless of when the lease was concluded) will therefore be subject to the right of first refusal. If a sale is already in progress, this will not apply, but bear in mind that you will have to be able to prove that the sale was started before 6 January 2024.
Should you have any questions about this topic, do not hesitate to contact the specialists at Seeds of Law via email@example.com or +32 (0)2 747 40 07.
On 22 January 2024, Ulrike Beuselinck will also give a presentation on this topic in cooperation with VIVO. You can register via the following link.