Right of first refusal

Before a landlord can sell his freehold title or his building containing flats providing certain criteria is met he must, by law, offer it to the flat owners before offering it on the open market.

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Formal notices must be served by the landlord on the tenants telling them that he is intending to sell the freehold and the sale price and provide a deadline in which the flat owners have to serve a notice accepting his offer. During the time period between the landlord serving a notice saying he is selling and the date the flat owners can accept the offer the landlord  cannot sell to another party, at a price less than that proposed to the flat owners.

If the landlord sells without first offering the freehold to the flat owners they can serve a notice on the new owner requesting information about the sale with a view to forcing the new owner to sell the freehold to the flat owners upon the same terms that it was sold to the new owner.

It must be remembered:

• this is not the same as enfranchisement under the Leasehold Reform, Housing and Urban Development Act 1993 where leaseholders can force a landlord to sell the freehold interest of their building.  
• A right a first refusal arises when a landlord decides to sell the freehold and he can withdraw the offer any time before contracts are exchanged.
• the purchase price is not negotiable and the landlord also has the option of selling by auction.

Download our factsheets on lease extension & enfranchisement

Download our director's guide on freehold management

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