Right of First Refusal in Real Estate Auctions: A Guide

Purchasing a property at auction is an extraordinary opportunity, but the process can hide legal pitfalls that, if ignored, risk turning a great deal into a complex problem. Among these, one of the most significant is the right of first refusal (diritto di prelazione), a factor that can literally overturn the outcome of a successful bid, even when it seemed final. In simple terms, the right of first refusal is the power, granted by law to specific individuals or entities, to be preferred over others, under the same conditions, in the purchase of a property. This means that, even after winning an auction, you could find yourself superseded by someone who holds this right.

Thoroughly understanding this mechanism is not a whim for legal experts, but a practical necessity for anyone who wants to invest in the judicial auction market with peace of mind and awareness. This comprehensive guide, based on current regulations and practical cases, is designed for you: the investor, the aspiring homeowner, anyone who wants to participate in a real estate auction with maximum preparation, avoiding unpleasant surprises. As specialized consultants, we at Aste Florio will guide you step by step in discovering this legal institution, providing you with the tools to recognize risks and act with confidence.

What is the Right of First Refusal (Diritto di Prelazione) and Who is Entitled to It?

To navigate the world of auctions safely, the first step is to understand the regulatory framework governing the right of first refusal. This is not an abstract concept, but a specific power, governed by specific articles of our legal system. Forced sales, such as judicial auctions, are based on the Code of Civil Procedure, specifically in articles 501-508 for forced sales in general and in articles 567-595 for real estate foreclosures. It is within this context that the different forms of pre-emption rights are established, each with its own rules and beneficiaries.

The law does not grant this privilege to just anyone, but only to categories of individuals or entities who have a qualified connection to the property. The legislator's objective is to protect interests deemed worthy, such as the continuity of a commercial activity, housing stability, or the integrity of a family or cultural heritage. Let's look in detail at the four main types you might encounter.

• Urban Pre-emption (Leases): This is perhaps the most common category. It is divided into two distinct cases. For commercial leases, Article 38 of Law 392/1978 establishes an almost automatic right for the tenant (conduttore) who carries out an activity in contact with the public. For residential leases, however, the right is much more limited: Article 3 of Law 431/1998 provides for it only in a specific scenario, namely when the owner, at the first contract expiration, denies renewal because they intend to sell the property and, a crucial condition, they do not own other residential properties besides the one they may live in.
• Agrarian Pre-emption: This right protects the agricultural sector. It belongs first to the direct farmer (coltivatore diretto) who has been leasing the land for at least two years. If the tenant does not exercise their right (or is not a direct farmer), the pre-emption right passes to the owner of the adjoining land, provided they are also a direct farmer.
• Hereditary Pre-emption: Governed by Article 732 of the Civil Code, it protects the integrity of family assets. If a co-heir decides to sell their share of the inheritance (which includes real estate) to an outsider, the other co-heirs have the right to be preferred in the purchase at the same price.
• Pre-emption on Cultural Heritage Assets: The State, Regions, or other local public authorities have the right to purchase on a preferential basis real estate properties declared of historical-artistic interest, as provided for by D.lgs. 42/2004 (Code of Cultural Heritage and Landscape).

To provide an even clearer picture, we have summarized the main differences in the following table.

How the Pre-emption Procedure Works in Auctions

Understanding who is entitled to the pre-emption right is only half the job. The other half, perhaps the most important for an auction participant, is understanding how this right is actually exercised. The procedure is marked by precise phases and deadlines, the failure to respect which can result in the loss of the right itself. Let's look at the fundamental steps together.

Phase 1 - The Notification (Denuntiatio): It all begins with a formal act called denuntiatio. It is not a simple communication but, as clarified by the jurisprudence of the Court of Cassation, a "mandatory act of inquiry, bound in form and content." In practice, the person intending to sell the property (or, in the case of auctions, the sales delegate) must formally notify the holder of the pre-emption right of the intention to proceed, indicating the price and conditions. This communication must be made through channels that guarantee certainty of receipt.

• Judicial Officer (U.G.)
• Certified Electronic Mail (PEC)
• Registered Mail with Return Receipt (A/R)

Phase 2 - The Deadlines for Exercise: Once the notification is received, the clock starts ticking. The right holder has a peremptory deadline of 60 days to declare whether they intend to exercise their pre-emption right. This deadline is absolute: a late response, even by a single day, causes the right to be definitively forfeited, clearing the way for the sale to a third party.

Phase 3 - The Completion: If the right holder responds positively within the 60 days, the pre-emption is completed. Warning: this does not mean that ownership of the property is transferred immediately. The declaration of intent to purchase creates a binding obligation between the parties, committing them to sign the final sales contract (or, in the context of auctions, to formalize the substitution) under the same economic conditions. In the case of auctions, the price will be the winning bid amount.

But what happens, in practice, to the person who won the auction? If a pre-emption right emerges and is validly exercised *after* the provisional award, the winning bidder is "superseded." The pre-emption holder takes over their right to purchase, paying the winning bid price. The original winning bidder is entitled to a refund of their deposit, but loses the deal. This is why a preventive analysis is crucial. A specialized consultant like Aste Florio analyzes the appraisal (perizia) and the notice of sale precisely to identify these risks even before an offer is made, thus protecting your investment.

When the Right of First Refusal Does NOT Apply: Exceptions and Limitations

There are specific situations, defined by law and consolidated by case law, in which the right of first refusal cannot be exercised, even if the conditions appear to be met. Knowing these exceptions is fundamental for an investor, as it allows them to identify opportunities where others see only risks. Let's analyze the most important cases.

The "En Bloc" Sale: This is one of the most relevant exceptions. The urban pre-emption right does not apply when the leased property is not sold individually, but as part of a larger real estate complex (for example, an entire building or an entire block of flats) for a single, non-divisible price. Imagine a tenant renting an apartment in a 10-unit condominium. If the owner sells the entire building in a single transaction for a total price of 2 million euros, the tenant of the single apartment cannot exercise their pre-emption right. The reason is that the object of the sale is a different and larger asset than the single leased unit.

Hereditary Division: Another important exception concerns family assets. The urban pre-emption right (both commercial and residential) does not apply if the property transfer occurs not through a sale, but as part of a division among co-heirs. In this scenario, the logic of hereditary pre-emption (art. 732 c.c.) prevails, which favors members of the hereditary community over external parties such as tenants.

Donation or Exchange (Permuta): The fundamental prerequisite for exercising the pre-emption right is a transfer "for consideration," meaning a sale that involves the payment of a price. Consequently, the right does not arise in the case of a donation, exchange (permuta, swapping one asset for another), or contribution to a company, as these contracts lack a monetary consideration that can be matched by the pre-emption holder.

Update on Project Financing: It is important to stay updated on the latest regulatory news. A recent ruling by the Court of Justice of the European Union (Case C-810/24 of February 5, 2026) declared the promoter's pre-emption right in project financing incompatible with EU law. Although this concerns a very specific sector (public works), it shows how the regulatory framework is constantly evolving. This development, however, does not affect the traditional forms of urban, agrarian, or hereditary pre-emption, which remain fully in force. For a complete overview of how to navigate the market, consult our guide on Apartment Auctions: How to Participate and What to Know.

Risks and Pitfalls to Avoid for Auction Buyers

Participating in an auction without a full awareness of the risks related to pre-emption is like navigating uncharted waters without a map. Problems can emerge even after a considerable time, jeopardizing the investment. Let's see what the most common pitfalls are and how a preventive analysis, like the one offered by the Aste Florio team, can make a difference.

Risk 1: Undeclared Pre-emption and the Right of Redemption: This is every winning bidder's nightmare. What happens if an entitled party (for example, a tenant) does not receive notification of the sale and only finds out after the property has been awarded and transferred? In many cases, the law grants them the so-called right of redemption (diritto di riscatto or retratto). This means the pre-emption holder can "reclaim" the property from the buyer within a certain period (usually six months from the registration of the deed of sale), by reimbursing the price paid. The winning bidder is thus left without the property and facing the need to initiate procedures to recover any additional costs incurred.

Risk 2: Incomplete or Superficial Documentation: The key to avoiding surprises is a meticulous analysis of the auction documentation, particularly the expert appraisal (perizia di stima) and the notice of sale (avviso di vendita). Often, it is precisely in these documents that crucial information is found, such as the existence of current lease agreements, their expiration dates, or the agricultural nature of a piece of land. Ignoring these details or reading them superficially is a mistake that can be very costly.

Risk 3: Unexpected Timelines and Costs: Even when the pre-emption right is correctly notified and not exercised, its mere existence can introduce delays. The procedure requires time for notifications and for waiting for deadlines to expire. These delays can impact the buyer's financial planning, for example, in relation to a mortgage application. To avoid surprises, it is essential to conduct a visit to the auctioned property and gather as much information as possible before committing.

Practical Cases: The Right of First Refusal in Real-World Scenarios

Legal theory comes to life when we apply it to concrete scenarios. Seeing how pre-emption works in real situations helps to understand its scope and practical implications for auction buyers. Let's analyze three typical cases you might encounter.

Scenario 1: The Shopkeeper in the Historic Center.

• Situation: A commercial space on a central street, leased for 15 years to a clothing retailer, ends up at auction due to the owner's debts. An investor wins the property for €250,000. The shopkeeper, who has always wanted to buy the premises for his business, wants to assert his rights.
• Analysis: In this case, the commercial pre-emption right provided by Law 392/1978 fully applies. The sales delegate must notify the shopkeeper (conduttore) of the successful bid and the price. The shopkeeper has 60 days to declare his intention to exercise the pre-emption right, offering to pay the €250,000. If he does so, he replaces the investor and becomes the buyer. The investor loses the deal.

Scenario 2: The Apartment in a Condominium Sold En Bloc.

• Situation: An entire building of 8 apartments, owned by a single bankrupt real estate company, is put up for auction as a single lot. A tenant, who has lived in one of the apartments for 10 years with a regular residential lease, would like to buy his home and asks to exercise his pre-emption right.
• Analysis: The tenant cannot exercise the pre-emption right. As we have seen, established case law excludes the individual tenant's right of first refusal in the case of an "en bloc" sale of the entire building for a global price. The buyer will be awarded the entire building and will take over the existing lease agreements, but will not have to fear pre-emption from the individual tenant.

Scenario 3: The Adjoining Agricultural Land.

• Situation: A 5-hectare plot of agricultural land goes to auction. The land is vacant; there are no tenants. The owner of the adjoining plot, a direct farmer (coltivatore diretto), is interested in expanding his farm and participates in the auction, but is outbid by a non-agricultural entrepreneur.
• Analysis: The adjoining direct farmer has the right of first refusal. Even though he lost the bidding, once the award to the entrepreneur is formalized, the delegate must notify the adjoining owner of the final price. The latter will have 60 days to exercise the pre-emption right and purchase the land at the same winning bid price. The law, in this case, favors the consolidation of agricultural plots and the continuity of the activity.

Frequently Asked Questions (FAQ) on the Right of First Refusal

The complexity of the subject often generates doubts and questions. We have collected the most common ones our clients ask us, providing clear and direct answers to help you dispel any uncertainty.

Q: What happens if the owner does not notify me of the sale?
A: If the sale occurs without proper notification (denuntiatio), the right holder does not lose their protections. On the contrary, in many cases (such as in urban and agrarian pre-emption), the law grants them the powerful tool of the right of redemption (diritto di riscatto or retratto). This allows them to "reclaim" the property directly from the third-party buyer (the auction's winning bidder), even after the sale has been concluded and registered, by reimbursing the price paid. This is a complex legal procedure, but it represents a serious threat to an unverified purchase.

Q: Can I exercise the pre-emption right and then pay in installments?
A: No. The fundamental rule of pre-emption is "parity of conditions." This means that the pre-emption holder must be able to meet the exact same payment conditions as the third-party buyer. In auctions, the winning bid price must be paid in a single lump sum within the deadlines set by the notice of sale (usually 120 days). Therefore, anyone exercising the pre-emption right must also be prepared to pay the full amount in a single payment.

Q: If I exercise the pre-emption right, am I obligated to buy?
A: Yes, absolutely. The declaration communicating the intent to exercise the pre-emption right is a legally binding act. Once communicated, it creates an obligation to enter into a contract. Changing your mind is not permitted, and if the pre-emption holder were to refuse to proceed with the purchase, they could be held liable for damages caused to the seller.

Q: Does the right of first refusal also apply to auctions without bidding (aste senza incanto)?
A: Yes. The way the auction is conducted (with bidding or, as in almost all cases today, without bidding - senza incanto) has no influence on the existence of the right of first refusal. This right is linked to the nature of the property (commercial, agricultural, etc.) and the status of the parties involved (tenant, co-heir, etc.), not the type of sales procedure used by the tribunale.

Navigating the complexities of the right of first refusal, peremptory deadlines, and regulatory exceptions requires expertise and meticulous analysis. Relying on a specialized consultant like Aste Florio is not just a precaution, but a strategic investment for a peaceful purchase. Our team analyzes every detail of the procedure, from reading the appraisal (perizia) to verifying any third-party rights, ensuring a safe and transparent purchase. Our experience is your best protection against unforeseen events and disputes that could cost time and money. Exploring the auction market is simpler with an expert guide by your side; on our portal asteflorio.it, you can find thousands of listings and use tools like our interactive map to identify the best opportunities in your area.