The Law of 22 October 2008 on the so-called “Housing Pact”, as amended by the Law of 3 March 2017 (the so-called “Omnibus Law”), gives, under certain conditions, preemption rights to municipalities and/or the Housing Fund (Fonds du Logement).

Thus, prior to passing a deed of sale, a notary must verify whether such a right exists, and if so, notify the holder(s) of the preemption right of the intent to sell and the conditions thereof.

In case of the exercise of the right by the preemptive right holder, the authenticated deed must be sent within three months, the preemptive right holder being able to bring suit for damages and interest for forced execution of the acquisition or the conviction of the transferring owner.

The preemption right can only be exercised with respect to the completion of the accommodation  covered by the Law of 25 February 1979 on housing assistance, as amended, or with respect to the completion of road work, public equipment or aiming at constructing public facilities pursuant to the Law of 19 July 2004 on municipal planning and urban development, as amended.

That said, in three recent decisions, administrative tribunals and an administrative court had the opportunity to contribute notable clarifications with respect to the exercise of preemptive rights.

Thus, in a 22 July 2020 judgment, docket number 42595, an administrative tribunal decided that the preemptive right holder must “explain the finality of the exercise of the preemption right, which must not only be one of the finalities listed in Article 3 of the Housing Pact, but must also be a concrete project or at least one in the process of becoming concrete, and in any case, the explanations provided cannot be limited to abstract and hypothetical considerations.”

This decision was confirmed on appeal by the Administrative Court, which nonetheless nuanced the preemption right holder’s obligations, by considering that it would suffice that the holder should specifically indicate to what use the preempted building would be assigned. The court also specified that the assignment must be in line with the Housing Pact law objectives, the decision to exercise the preemption right must be indicated as soon as the notary is notified and then be completed as soon as possible, given the circumstances in the case at hand (Decision of 5 January 2021, docket number 44939C).

In another decision, the Administrative Tribunal confirmed the “objective for which the preemptive right is exercises must be cristalised at the time of the exercise of the right and cannot be provided ex post.” Moreover, it followed the Administrative Court by indicating that it would not suffice for the preemptive right holder to provide vague references to the building’s destined use, refer to a potential realisation of one of the objectives listed in the law or to refer generally the entirety of the potential objectives covered under Article 3 of the Housing Pact Law (Judgment of 3 March 2021, docket number 43 352).

As a conclusion, one could welcome the specifics contributed by the tribunal/court, the recent decisions of which have not failed to guarantee a certain balance between the respect of the right to property, on the one hand, and public action and the exercise of a preemption right, on the other.

By Mario DI STEFANO, Managing Partner.