The right of first refusal to purchase a share in an apartment guarantees the co-owner of the property to buy a share in the apartment first, and in the event of his refusal, the sale will be carried out according to the general rules for conducting a purchase and sale transaction to an outsider. Moreover, the preemptive right applies not only when selling real estate, but also in the case of its transfer under an exchange agreement.
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Real estate objects in shared ownership
An apartment owned simultaneously by several owners belongs to them under the right of joint ownership. This means that each of them has their own share of ownership of the property and can put it up for sale. When selling part of an apartment, it is important not to violate the pre-emptive right.
First of all, the preemptive right acts as a kind of protection of the property rights of other co-owners and allows not only to acquire property on a profitable basis, but also to combine several of its parts together.
Often housing is shared ownership with relatives. As a rule, this is due to the fact that the property was acquired as a result of:
- privatization;
- inheritance;
- purchases or donations.
However, even if the owners of the living space are relatives and one of them intends to alienate their part, then the pre-emptive right also extends its effect.
Buying a share from relatives occurs in the same way as buying from a stranger. Thus, the rules of pre-emption are the same and must be followed to avoid litigation in the future.
Rules for selling and purchasing apartment shares
In order for the purchase of a share to comply with all legal requirements, the following rules must be observed:
- The seller is obliged to notify all other co-owners in advance of the upcoming sale. To avoid future claims and disputes regarding the part being sold, it is better to give written notice. Since oral notice is not evidence, it is worth sending a letter by mail about the intention to sell.
- The period within which notified persons must make a purchase decision is 30 days from the date of receipt of the notice.
- The sale price of the property and the terms of purchase and sale must be equal for all possible buyers, including those who fall under the pre-emptive right.
- The seller can choose a buyer if several owners simultaneously want to purchase part of the apartment.
- In the case where not a single co-owner has expressed a desire for the purchase, either verbally or in writing, such silence may be tantamount to refusal.
If someone has agreed to buy out the share, it is advisable to document this fact, for example, draw up a written agreement that stipulates the period of redemption. However, if the share is not redeemed, the seller can sell it to other buyers.
Sales to third parties are possible in several cases:
- when none of the co-owners expressed their will to buy part of the living space (the purchase will take place in the same way as in a regular purchase and sale transaction);
- when property is sold through public auction.
If the seller deliberately neglected the pre-emptive right, the co-owner can go to court to appeal the sale.
Pros and cons of buying a share of an apartment
The preemptive right makes it possible to increase and increase one’s share in the property right. By purchasing the part being sold, the co-owner can thereby increase his share of the property.
And if the apartment, suppose, belongs to only two persons, each of whom has the right to half of it, then buying out the share in the form of ½ part would be the most reasonable option, which will allow you to become the owner of the entire object. This is precisely the huge advantage of purchasing part of an apartment.
In addition, it is more profitable for the seller himself to transfer part of the property under the right of first refusal, since it is quite difficult to sell not the whole property, but a small part of it. And if such acquisitions in the form of part of an apartment are typical for the capital and regional cities, due to high housing prices, then in small settlements it is very rare that someone can buy part of an apartment, especially with other tenants - owners.
It is important to apply the pre-emptive right when buying or selling a room in a communal apartment, notifying your roommates in writing. Therefore, often the residents of a room in a communal apartment, in order to increase living space, intend to purchase his room from a neighbor.
Another nuance of the purchase and sale of part of an object is the legal risks that may arise if the preemptive right has been violated. Risks are usually exposed to an outside buyer, to whom the property could be sold without notifying other owners, who in turn may file a lawsuit.
Therefore, usually outside buyers do not risk purchasing housing as part of it. However, if all legal rules for the sale of a share of housing are followed, there is no need to be afraid of such a transaction.
As a confirming document about the notification of co-owners, you can request from the seller a letter that he sent to these persons or their written refusal to purchase. Having these documents, there is a greater chance of buying the coveted meters without unnecessary complications.
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Using the example of one apartment dispute, the Supreme Court explained what rules should be followed when selling a share in a shared apartment. It is difficult to call the life of people who are not one family, but coexist in a common apartment, idyllic. Therefore, at the first opportunity, such citizens want to get rid of their neighbors and live in a separate apartment. The desire of such cohabitants is understandable, but the disposal of even their own shares in the apartment contains so many pitfalls that not only ordinary people stumble over them. Even judges make mistakes.
In our case, the story began with the fact that a citizen appealed to the Tyumen district court, outraged by the actions of her neighbor. The essence of the dispute is as follows - two women, each of whom had a child, owned one apartment in equal shares. It turned out that each of the residents - two adults and two children - had one-fourth share.
One of them found an option to exchange her share and the child’s share for a separate apartment. The citizen made an agreement with a certain family of four people. Naturally, the second owner of the apartment did not like this exchange, and she went to court to prove that the exchange agreement violated her preemptive right to purchase a neighbor’s share in the apartment. The district court agreed with the plaintiff. The regional court upheld this decision. The offended defendant reached the Supreme Court. There, the Judicial Collegium for Civil Cases studied the results of the proceedings and considered that the complaint could be satisfied.
The court must establish whether the letter from the one who decided to sell his share was correctly drawn up
The Supreme Court reminded its colleagues that Article 250 of the Civil Code states: in the event of the sale of a share in the right of common ownership to an outsider, the remaining participants in shared ownership have a preemptive right to purchase these shares. Moreover, at the price for which the share is sold, and on other equal conditions. The exception is the sale of shares at public auction.
The law also states that the seller of a share is obliged to notify in writing the other participants in shared ownership of his intention to sell his share to an outsider. In the same letter you must indicate the price and conditions under which the square meters are sold.
The law gives the co-owner one month to think and purchase. If the remaining participants in shared ownership refuse to purchase the neighbor’s share or remain silent, the owner of the square meters will have the right to dispose of them as he wishes.
Here’s what else is important to know: according to the law, if the owner disposes of his share in violation of the neighbor’s preemptive right, then any other participant in shared ownership has the right to demand in court within three months that the rights and obligations of the buyer be transferred to himself. And these rules also apply when alienating a share under an exchange agreement. From all the above provisions of the law, the Supreme Court concludes: a legally important circumstance that the courts must establish when considering such cases will be the presence or absence of a correctly executed notice from a citizen who has decided to get rid of his share. The correct execution of such a “letter of happiness” to a neighbor is an indication of the price of the share and other conditions, as well as confirmation of the solvency of other co-owners.
In our case, the local court, deciding this dispute, did not see evidence that the citizen, who wanted to exchange her share and the share of her daughter, correctly notified her neighbor. Therefore, the court decided that the exchange agreement violated the neighbor’s rights to priority purchase of the share.
Confirmation of solvency - namely the fact that the plaintiff had money to buy the neighbors' shares, which is half of the apartment - according to the Supreme Court, was also important for the correct resolution of the dispute. In our story, for some reason the court wasn’t even interested in the neighbor’s solvency.
The Supreme Court recalled that when demanding in court the transfer of the buyer's rights to himself, the plaintiff is obliged to transfer to the bank account of the Judicial Department in his constituent entity of the Russian Federation the amount paid by the buyer, fees and duties payable to the buyer and reimbursement of expenses incurred by him when purchasing a share of the expenses.
The Supreme Court emphasized: such a deposit of money in case the claim is satisfied contributes to the timely execution of the court decision. But according to the claim we are writing about, no money was deposited into the bank account, and therefore the court decision was not implemented.
In addition, the Judicial Collegium of the Supreme Court drew attention to an important detail. From the case materials it is clear that the defendant and those who exchanged money with her agreed on the price of the share in rubles.
It is not clear why, the district court, while considering the case, itself reduced the purchase price. And the court did not provide any legal reasons why the price “shrinked”. And this is a direct violation of Article 198 of the Civil Code. The Supreme Court ordered this case to be reviewed.
