By virtue of their municipal pre-emption right [droit de préemption urbain (DPU)] local authorities have the right to acquire real estate put up for sale by private individuals or companies, in preference to any other buyer.
Should it pursue this option, the local authority is authorised to replace the initial buyer.
Which types of real estate are concerned?
If the sale is to be pre-empted, the property must mandatorily be located in a pre-emption zone. Furthermore, the purpose of the proposed operation must be to facilitate an urban development project in the general interest.
The pre-emption right may apply to plots of all kinds and also to single-family houses, buildings in co-ownership and apartments.
Since 2005, municipalities have also had a pre-emption right over the disposal of businesses, artisanal businesses and commercial leases if they have delimited an area in which local shops and businesses are to be protected. Since 2008, this right has been extended to plots accommodating or intended to accommodate retail outlets with a sales area between 300 and 1,000 sqm.
Who can benefit from this right?
Any owner that wishes to dispose of property located in a pre-emption zone must make a declaration of intention to dispose of property at the town hall. The municipality then has two months in which to inform the owner of whether it wishes to acquire the property or not under the conditions proposed by the seller. It may take advantage of this period in order to negotiate the price (in the case of a sale) or the value of the asset (in the case of an exchange or contribution to a company). This decision is taken by the municipal council, unless it has delegated this power to the mayor (or any other person mentioned in the French Town Planning Code [Code de l'urbanisme], such as a state-owned land acquisition company [établissement public foncier] or semi-public company set up for this purpose, etc.).
If the property is located in an area designated for future development [zone d'aménagement différé] the decision will be taken by the person appointed by the prefect in the instrument by which the area was created. If it is located in a sensitive natural area, the decision will be the responsibility of the Departmental Council (with an authorisation to delegate the decision to its President). However, this power is also held by the Coastline Conservation Authority [Conservatoire du Littoral] (and hence the municipality in its stead) when this body is competent.
What is the role of the notaire?
When the asset to be sold is subject to a pre-emption right, in practice it is the notaire who assumes responsibility for informing the local authority of the signature of the preliminary sale agreement or the promise to sell by means of a declaration of intention to dispose of property. If the local authority decides to pre-empt, the notaire charged with drafting the instrument checks whether the procedures have been carried out correctly.
Whether you are the seller, a buyer who has been pre-empted or the representative of the local authority, do not hesitate to seek the advice of your notaire before the start of the procedure. You will thereby avoid the risks of a dispute, or a deadlock, or possibly seeing the municipality and the individuals in charge held liable.
