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Tenant's Right of First Refusal: § 577 BGB Guide 2026

Last updated: 1 September 2026 · Reading time approx. 8 minutes

Buy an apartment building, convert it into condominium units (Wohnungseigentum) and sell them individually — a standard value-add plan, and at one point a liability trap. The sitting tenant may buy the flat on exactly the terms you negotiated with your buyer, and a landlord who fails to notify them properly ends up owing the difference between market value and purchase price.

When the right of first refusal arises at all

The provision is short. Under § 577(1) sentence 1 BGB the tenant is entitled to pre-emption where “let residential premises in which condominium ownership has been or is to be created after they were made available to the tenant are sold to a third party”. Three elements must coincide — if one is missing, there is no right of first refusal.

RequirementProvisionWhat matters
The premises are let as housing § 577(1) sentence 1 BGB A valid residential tenancy must exist. The provision speaks of “vermietete Wohnräume” — pure commercial space is not covered.
Conversion only after the tenant moved in § 577(1) sentence 1 BGB Condominium ownership must have been created — or be intended to be created — “after the premises were made available to the tenant”. A split predating the tenancy produces no right.
Sale to a third party § 577(1) sentences 1 and 2 BGB A purchase contract with a third party must have been concluded. The only exemption is a sale “to a family member or a member of the landlord's household”.

Via § 577(1) sentence 3 BGB the general pre-emption rules in §§ 463 et seq. BGB apply too. That adds a practically important exception: under § 471 BGB the right is excluded “where the sale is effected by way of enforcement or from an insolvency estate” — a foreclosure buyer has nobody to notify.

Sequence decides — and it decides twice

“After the premises were made available to the tenant” is the hinge of the provision. If the split predates the tenancy, § 577 BGB is empty; split a fully let building only after acquiring it, and the right arises for every unit.

The same timing switch appears a second time: the termination moratorium in § 577a(1) BGB also applies only where condominium ownership was created “after the premises were made available to the tenant” and then sold — a purchaser may then invoke own use only “after three years have elapsed since the disposal”, and under § 577a(2) BGB a state regulation may extend that to up to ten years. Converting triggers both at once: the right of first refusal and the moratorium on terminating for own use after a purchase.

Notice, deadline, exercise: the sequence in five steps

The right is not a veto. It is triggered only by your purchase contract with the third party and then follows a fixed pattern.

StepProvisionContent
1. Purchase contract§ 463 BGB The beneficiary may exercise the right “as soon as the person bound has concluded a purchase contract on the object with a third party”. Before that there is nothing to exercise.
2. Notice§ 469(1) BGB, § 577(2) BGB The seller must communicate “the content of the contract concluded with the third party without undue delay”; notice by the third party replaces it, and it must be combined with informing the tenant about the right.
3. Deadline§ 469(2) sentence 1 BGB For land, two months “after receipt of the notice”. The clock starts on receipt by the tenant, not at the notary's appointment.
4. Exercise§ 577(3) BGB “By written declaration of the tenant to the seller” — not to the buyer, not to the notary. Notarial form is not required (§ 464(1) sentence 2 BGB).
5. Effect§ 464(2) BGB A second sale comes into existence, between tenant and seller, “on the terms agreed between the person bound and the third party”.
It cannot be negotiated away. § 577(5) BGB declares any “agreement deviating to the disadvantage of the tenant” ineffective. And § 465 BGB closes the obvious detour through the purchase contract: an arrangement with the buyer “by which the sale is made conditional on the right of first refusal not being exercised, or by which the person bound reserves a right of withdrawal in the event that it is exercised”, is ineffective vis-à-vis the tenant.

What an omission costs

The expensive mistake is not the tenant exercising the right — it is the omitted notice. A tenant who learns of the sale only after completion may claim the difference between market value and purchase price (see the case law below). The arithmetic is unpleasant:

ItemAmount
Market value of the let flat€300,000
Purchase price agreed with the third party€240,000
Difference€60,000
less acquisition costs the tenant saved (transfer tax, notary, land registry)−€24,000
Loss the tenant can claim€36,000

The figures are an illustration, not a quota. The structure is what matters: the conversion profit moves to the tenant exactly to the extent the price sat below market value. Valuation itself becomes a risk factor — anyone who calculates the capitalised earnings value of a let flat properly knows the order of magnitude in advance.

If the tenant exercises, you lose nothing but the buyer: same price, different person. The ten-year tax holding period is unaffected — see capital gains tax on selling property.

What the courts have decided

Three questions the wording leaves open, and money hangs on each: does § 577 BGB reach beyond classic condominium ownership? Is the deadline negotiable? What if no notice was given at all? The Federal Court of Justice (Bundesgerichtshof, BGH) has answered all three.

BGH, judgment of 21 May 2025 – VIII ZR 201/23

The senate extends § 577 BGB to Teileigentum (non-residential unit ownership): “In analoger Anwendung des § 577 Abs. 1 Satz 1 BGB kann auch dann ein Vorkaufsrecht des Mieters entstehen, wenn anstelle von Wohnungseigentum Teileigentum […] begründet wird.” Splitting into Teileigentum is no way out. The two-month period is also “eine Ausschlussfrist”, one “die nach ihrem Ablauf nicht mehr der Disposition der Parteien unterliegt” — once expired, it cannot be revived, not even by agreement.

BGH, judgment of 23 February 2022 – VIII ZR 305/20

A clause requiring the tenant to pay more than the first buyer is “eine in Bezug auf den höheren Preis unzulässige und deshalb insoweit unwirksame Vereinbarung zu Lasten Dritter” — a contract to the detriment of a third party. That holds even where the first buyer owes the higher price “nur ausnahmsweise (unter bestimmten engen Voraussetzungen)”, while the beneficiary always owes it on exercising. Price tiers in the purchase contract are not a usable defence.

BGH, judgment of 21 January 2015 – VIII ZR 51/14

Where the landlord wrongfully omits the notice and the tenant learns of the sale only after the contract has been performed, the tenant may claim “Ersatz der Differenz von Verkehrswert und Kaufpreis (abzüglich im Falle des Erwerbs der Wohnung angefallener Kosten)”. Decisive for sellers: “Dies gilt auch dann, wenn der Mieter sein Vorkaufsrecht nach Kenntniserlangung nicht ausgeübt hat.”

Frequently asked questions

Does the tenant pay the same price as the buyer?

Yes. Under § 464(2) BGB the sale comes about “on the terms” agreed with the third party. A higher price tier written specifically for the tenant is ineffective to that extent under VIII ZR 305/20.

Can the tenant waive the right in the tenancy agreement?

An advance waiver does not help: § 577(5) BGB renders any agreement deviating to the tenant's disadvantage ineffective. The only route is to notify correctly and wait out the two months.

What if the whole building is sold as one package?

The wording covers not only a split already carried out but also one that “is to be created”, so a sale before the split does not automatically exclude the right. Whether it arises depends on the content of the purchase contract and is a question of interpretation — a matter for a notary, not a rule of thumb.

Does it apply to a sale to my own GmbH?

§ 577(1) sentence 2 BGB exempts only a sale “to a family member or a member of the landlord's household”. A company is neither — the exemption is narrow and does not extend to affiliated entities.

Prices, tenancies and deadlines per unit in one place

RenoDiary keeps property data, tenancies and documents together per unit — so that before the notary appointment it is visible which flat was let when, and when it was split.

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Sources

This article offers general orientation and does not replace individual tax or legal advice within the meaning of § 3 StBerG. Whether a right of first refusal exists in a specific case, and how the notice must be worded, depends on the individual facts — the figures are calculation illustrations, not quotas.