Right of Pre-emption: A Sale Annulled, and Could You Lose Everything?

You have signed a preliminary contract for a lovely house in La Seyne-sur-Mer. Everything seems perfect: the price is agreed, the notary is preparing the deed. But a clause may have escaped you: one that makes the sale conditional on the waiver of the right of pre-emption. What if the local authority or another holder of this right does not respond within the time limits? The sale falls through, and you lose your deposit. This is exactly what happened in the case decided by the French Supreme Court on 21 October 1997. But what did it decide? And above all, what can you do to protect yourself? This article explains everything clearly, with concrete examples.

The question every owner or buyer asks: 'Can I get my deposit back if the sale does not go through because of the right of pre-emption?' The answer is not simple, because it all depends on how the condition precedent (the condition that suspends the sale until an event occurs) is drafted. The decision of 21 October 1997 provides crucial clarification: where the condition precedent is not fulfilled due to the lack of a waiver of the right of pre-emption within a reasonable time, the buyer can not only recover their deposit but also claim damages if the seller did not act in good faith.

This decision follows a judgment of the European Court of Human Rights (ECtHR) of 22 September 1994 in the Hentrich case. The ECtHR did not condemn the principle of the right of tax pre-emption, but the manner in which it had been exercised in that case. The French Supreme Court draws the consequences of this case law: the right of pre-emption is not illegal per se, but it must not be exercised abusively or without respecting procedural safeguards. In short, if the administration or the local authority delays in responding, or if the seller does not take the necessary steps, the buyer can take action against the seller.

The Facts: A Story Like Many Others

Imagine: in 1994, Ms Hentrich, a German owner, sold a piece of land in France. But the tax administration exercised its right of pre-emption (the right to buy the property instead of the buyer) at a lower price. Ms Hentrich challenged this, arguing that this right of pre-emption infringed her right to property guaranteed by the European Convention on Human Rights. The ECtHR ruled in her favour in 1994, but not on the merits: it held that the conditions for exercising the right of pre-emption were disproportionate (for example, lack of reasons, too short a time limit).

In France, this case had repercussions. The decision of the French Supreme Court of 21 October 1997 concerns a similar but civil dispute. Buyers (the Biessy Promotion companies) had paid a deposit for the purchase of land. The sale was subject to a condition precedent: the absence of pre-emption (i.e., the holder of the right of pre-emption waives its exercise). But the seller did not obtain this waiver within the time limits, and the sale did not take place. The buyers demanded the return of the deposit, but also damages for the loss suffered (for example, loss of an opportunity to buy, price increases).

The first instance judges dismissed their claim, holding that the condition precedent had not been fulfilled and that the seller was not liable. But the French Supreme Court quashed this decision: it held that the seller was obliged to do everything possible to obtain the waiver of the right of pre-emption, and that by failing to do so, he had committed a fault. In other words, the seller cannot hide behind the condition precedent to avoid returning the deposit. What few people know is that this reasoning also applies to local authorities that exercise their urban pre-emption right (DPU) in the context of the sale of a property.

The Reasoning of the Court — Deconstructed

The French Supreme Court bases its decision on Article 1240 of the Civil Code (formerly 1382), which provides that 'any act of man, which causes damage to another, obliges the person by whose fault it occurred to repair it'. In everyday language: if you cause harm to someone through your fault, you must compensate them. Here, the seller's fault is failing to request the waiver of the right of pre-emption within a reasonable time, or failing to inform the buyer of the difficulties.

The Court also specifies that the condition precedent is not a 'potestative' clause (i.e., a condition whose fulfilment depends solely on the will of one party). Indeed, if the seller does nothing to obtain the waiver, the condition is not fulfilled, but it is his fault. The judges remind that the seller must act in good faith and with diligence. For example, if the local authority has a two-month deadline to respond, the seller must follow up if necessary.

This decision confirms previous case law: the French Supreme Court had already held that the seller is under an obligation of result regarding the fulfilment of the conditions precedent that he has undertaken to satisfy (for example, obtaining a planning permission). Here, it extends this principle to the right of pre-emption. However, note that this is not a reversal of case law, but a logical application of the general principles of contract law. The trend of the courts is to protect the buyer, especially when the seller is a professional or has some experience.

In short, if you are a buyer and the sale fails because of a right of pre-emption, you can not only recover your deposit but also claim damages if the seller was not proactive. But be careful, the burden of proving the seller's fault is on you. So you must keep all evidence of the steps taken (letters, emails, follow-ups).

What This Means for You — In Practice

For seller-owners: you must be proactive. From the signing of the preliminary contract, send a request for a waiver to the holder of the right of pre-emption (local authority, SAFER, etc.). Follow up in writing if you do not receive a response within the legal time limit. Keep records. If you do not, the buyer may claim damages from you. For example, if you sell an apartment in Sanary-sur-Mer for €200,000, and the sale fails because you did not request the waiver from the local authority, the buyer could claim €10,000 in damages for the loss of opportunity (if prices have risen in the meantime).

For buyers: if the condition precedent is not fulfilled, check whether the seller has taken the necessary steps. If not, you can demand the return of the deposit (often 5 to 10% of the price) and damages. But be careful: if the condition is simply 'the waiver of the right of pre-emption', without specifying time limits, the seller might argue that he waited. It is therefore better for the preliminary contract to provide a specific time limit (for example, 'the seller undertakes to obtain the waiver within two months').

For co-owners: if you sell a unit in a co-ownership, can the local authority have a right of pre-emption over the common parts? No, but it may have a right of pre-emption over the unit itself if the property is located in a pre-emption zone. Check before signing.

undefined, I have come across cases where buyers lost their deposit because the condition precedent was poorly drafted. For example, a clause stating 'the sale is subject to the absence of pre-emption' without specifying who should take the steps. Result: the seller did nothing, the sale was annulled, and the buyer lost their deposit. With proper drafting, this risk is avoided.

Four Tips to Avoid This Type of Dispute

• Draft a clear and detailed condition precedent: specify that the seller undertakes to request the waiver within 15 days of signing, and to provide evidence of his steps within one month. Mention the consequences of non-compliance (return of deposit and damages).
• Anticipate time limits: the local authority's pre-emption right (DPU) is two months from the declaration of intention to alienate (DIA). The seller must file the DIA as soon as the preliminary contract is signed. If the local authority does not respond, the waiver is implied after two months. But if it responds after this time limit, the prefect must be involved, which delays the sale.
• Keep all supporting documents: keep the acknowledgements of receipt of the DIA, follow-up letters, emails. In the event of a dispute, you will need to prove that you acted diligently.
• Use a professional: a notary or solicitor specialising in property law can check the clause and advise you on the steps. In La Seyne-sur-Mer, notaries are familiar with local specificities (pre-emption zones, etc.).

Further Reading: Related Case Law and Developments

The decision of 21 October 1997 is part of a line of decisions protecting the buyer. For example, the French Supreme Court held in a judgment of 13 November 1996 (No. 94-14.123) that the seller must inform the buyer of the existence of a right of pre-emption before signing the preliminary contract, on pain of nullity. Another example: in a judgment of 12 July 2006 (No. 05-15.082), it specified that the seller cannot rely on the condition precedent if he himself has not respected his duty of loyalty.

The trend of the courts is therefore to strengthen the protection of the buyer, considered the weaker party. On the other hand, local authorities that exercise their right of pre-emption abusively may be condemned, as the ECtHR recalled in the Hentrich case. For the future, it is likely that judges will continue to require full transparency from the seller and the administration. If you are faced with a right of pre-emption, do not hesitate to challenge the conditions of its exercise if they seem abusive (lack of reason, too short a time limit, undervalued price).

Frequently Asked Questions

• Can I get my deposit back if the sale fails because of the right of pre-emption? Yes, if the condition precedent is not fulfilled, the deposit must be returned to you. But if the seller took the necessary steps and the local authority exercised its right, you cannot claim additional damages.
• What if the local authority does not respond within the two-month period? The waiver is implied. You can therefore proceed with the sale. However, it is prudent to obtain written confirmation from the local authority of the waiver to avoid any subsequent dispute.
• Can the seller be ordered to pay damages if the sale fails? Yes, if he did not act diligently. For example, if he did not file the DIA on time or did not follow up with the local authority. You must prove his fault (e.g., absence of correspondence).
• What amount of damages can I claim? It depends on your loss: loss of the opportunity to buy (if prices have increased), notary fees, moving expenses, etc. In practice, courts award between 5 and 15% of the sale price.
• How do I know if my property is subject to a right of pre-emption? Check with the town hall or consult the local urban plan (PLU). Certain areas (such as the coastline in Sanary-sur-Mer) are often affected.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) could save you months of proceedings — and often much more. Book an appointment →