Tenant's pre-emption in the event of the sale of a commercial property

Tenant's pre-emption in the event of the sale of a commercial property

The pre-emption of the tenant of a property for commercial use is mainly governed by Articles 38 and 39 of Law No. 392 of 27 July 1978. The regulation protects the continuity of the economic activity carried out in the property and is divided into two distinct instruments:

1. pre-emption, before sale;

2. redemption, after the sale, when the tenant has been unlawfully pretermed.

The commercial pre-emption should not be confused with the pre-emption provided for in the case of a new lease of the property, governed by Article 40 of the same law.

1. Prerequisites for pre-emption

The right arises when these conditions are generally met:

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The rationale of the protection is to ensure the continuation of the activity carried out in the leased property and to safeguard the economic value of the commercial goodwill. The Supreme Court underlined that this purpose can operate even in the presence of transferable events not completely attributable to the ordinary voluntary sale. Judgment no. 23056 of 25/07/2022, hearing of 04/05/2022, President FRASCA RAFFAELE GAETANO ANTONIO, Rapporteur GRAZIOSI CHIARA

Normally protected activities

The pre-emption concerns, in particular, commercial, artisanal, industrial, professional or tourist activities that have an effective connection with the customers of the business and with the location of the property.

The right does not depend only on the formal name of the activity, but on the concrete way in which it is carried out and whether there is a goodwill linked to the premises.

2. The owner's communication: the denuntiatio

When the landlord intends to sell the property, he must formally notify the tenant.

The communication must be made:

• by a document served by a bailiff;

• indicating the consideration for the sale;

• indicating the conditions of the sale;

• inviting the tenant to exercise pre-emption;

• putting the tenant in a position to purchase under the same conditions offered to the third party.

The communication must come from the owner or owners of the property. In the case of co-ownership, the communication from only one of the co-owners requires the use of the name of the others and the relative written power of attorney; a subsequent ratification does not automatically produce retroactive effect. Judgment of 05/02/1997 n. 1107 - Court of Cassation - Section/College 3

Required content

The denuntiatio should indicate at least:

• personal details of the seller;

• personal details of the tenant;

• cadastral identification and description of the property;

• title of origin or indication of ownership;

• total price;

• payment methods and times;

• any deposit;

• date scheduled for the deed;

• any conditions precedent or termination;

• identity of the identified buyer, where relevant;

• indication of any simultaneous sale of appurtenances;

• express invitation to exercise the pre-emption within the legal deadline.

The price must be determined in money. A generic, incomplete communication or one that is not suitable for actually representing the terms of the deal may not be sufficient to start the term for the lessee.

3. Deadline for exercising the pre-emption right

The tenant must exercise the pre-emption right within 60 days of receiving the communication.

The exercise must take place:

• in writing;

• by means of a document served on the owner by a bailiff;

• clearly and unreservedly declaring the willingness to buy;

• under the same conditions as indicated in the denuntiatio.

The Supreme Court clarified that the exercise of the pre-emption is perfected with the timely manifestation of the tenant's willingness to purchase under the conditions communicated. It is not necessary to wait for the final stipulation to consider the right exercised. Judgment no. 6601 of 28/02/2022, hearing of 02/02/2022, President DI VIRGILIO ROSA MARIA, Rapporteur BERTUZZI MARIO

The lessee's declaration does not constitute a simple acceptance of a contractual proposal that has already been finalized: rather, it produces the obligation for the parties to proceed with the stipulation of the contract under the conditions provided for by law. Judgment of 05/02/1997 n. 1107 - Court of Cassation - Section/College 3

Exercise Effect

The valid exercise of the pre-emption determines:

• the tenant's obligation to purchase;

• the owner's obligation to sell;

• the need to proceed with the stipulation of the contract;

• the obligation to pay the price within the established terms.

The tenant cannot validly exercise the pre-emption by formulating a conditional declaration, reserving the right to subsequently verify the price or unilaterally modifying the conditions of the sale.

4. Payment of the price and conclusion

In the event of exercising the pre-emption right, the price must be paid within 30 days from the sixtieth day following the notification of the denuntiatio. The payment must be coordinated with the stipulation of the deed of transfer or the preliminary contract, according to the concretely applicable procedures. Law 392 of 1978-07-27, Article 38

The tenant must therefore comply with two distinct terms:

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The exercise of the pre-emption without the subsequent willingness to pay may expose the tenant to the consequences of non-compliance with the obligation to contract.

5. Plurality of conductors

When the property is leased to several tenants, the pre-emption must be coordinated between all the owners of the relationship.

In general:

• the pre-emption can be exercised jointly;

• if one of the tenants renounces, the others may take over in accordance with the procedures provided for by law and by the rental relationship;

• the communication must be brought to the attention of all the holders of the right.

The management of the plurality of tenants requires particular attention, especially when the lease contract is in the name of several natural persons or several legal entities.

6. When the pre-emption does not operate

Article 38 excludes pre-emption in some specific cases.

Transfer to spouse or relatives within the second degree

The pre-emption does not apply when the transfer is made in favour of:

• of the spouse;

• of relatives within the second degree.

The exclusion must be assessed in relation to the actual nature of the transaction and its real structure. A transfer formally carried out in favour of a family member but used to circumvent the pre-emption may give rise to disputes.

Pre-emption of co-heirs

The rules on the tenant's pre-emption do not apply in cases where the hereditary pre-emption provided for in Article 732 of the Civil Code applies.

Article 732 concerns the co-heir who intends to alienate his or her share of the inheritance to a stranger. In this case, the proposal must be notified to the other co-heirs, who may exercise the pre-emption within two months; in the absence of notification, they may exercise the redemption as long as the status of community of heirs lasts. Royal Decree 262 of 1942-03-16, Annex CIVIL CODE-art. 732

This is a different pre-emption from the commercial one:

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7. The right of redemption

The redemption operates when the tenant would have had the right to pre-emption but was unable to exercise it correctly because:

1. the owner has not made the denuntiatio;

2. the communication was not carried out correctly;

3. the consideration indicated in the communication was higher than that actually resulting from the deed of sale.

In these cases, the tenant can redeem the property from the buyer and any subsequent successors in title.

Term

The redemption must be exercised within 6 months of the transcription of the transfer contract. The term is particularly important because it is forfeiture. Law 392 of 1978-07-27, Article 39

Factual knowledge of the sale does not necessarily replace the formal data of the registration for the purposes of the start of the term provided for by law.

Payment of the price

After the exercise of the ransom, the price must be paid within 3 months.

In the event of an objection by the purchaser or a subsequent successor in title, the term for payment runs from the date of res judicata of the judgment that concludes the proceedings. Law 392 of 1978-07-27, Article 39

Effect of the Redemption

The redemption produces the substitution of the tenant for the third party buyer in the same contractual position.

The Supreme Court clarified that:

• the redemption takes effect ex tunc;

• the sentence is substantially declaratory in nature;

• there is no new sale from the third party to the tenant;

• the tenant takes over the position of the original purchaser;

• the transfer is considered to be effective from the deed of sale. Judgment no. 40252 of 15/12/2021, hearing of 09/06/2021, President GRAZIOSI CHIARA, Rapporteur SCRIMA ANTONIETTA

The same approach was reiterated in relation to transfers deriving from a trust agreement or from a constitutive sentence pursuant to Article 2932 of the Italian Civil Code. Judgment no. 23056 of 25/07/2022, hearing of 04/05/2022, President FRASCA RAFFAELE GAETANO ANTONIO, Rapporteur GRAZIOSI CHIARA

8. Failure to exercise the redemption and compensation for damages

If the tenant does not exercise the redemption within the term of six months, he normally loses the possibility of obtaining the transfer of the property through this instrument.

However, there may be a claim for damages against the seller and the buyer, but the tenant must prove the elements of liability, including the bad faith of the parties involved.

The Supreme Court clarified that the simple failure to notify after the sale does not automatically demonstrate the bad faith of the seller or buyer. The tenant who has missed the term for redemption must prove the malicious or fraudulent conduct of the responsible parties. Judgment no. 10136 of 29/03/2022, hearing of 17/02/2022, President FRASCA RAFFAELE GAETANO ANTONIO, Rapporteur IANNELLO EMILIO

9. Sale at a price different from the one communicated

The communication must indicate the actual price and terms of the sale.

If the owner communicates a higher price than the one actually agreed with the third party, the tenant can exercise the redemption, because the communication did not allow him to exercise the pre-emption under the real conditions.

In this case, the following are relevant:

• price indicated in the denuntiatio;

• actual price resulting from the deed;

• any out-of-act payments;

• allocation of goods or services other than money;

• accessory agreements;

• assumption of debts;

• compensation;

• simultaneous transfer of appurtenances or other properties.

It is not enough to compare only the nominal price: the overall economic conditions of the transaction must be considered.

10. Selling the property together with the company

Selling the property together with the company requires a concrete distinction.

It is necessary to verify whether the operation concerns:

1. the property alone;

2. the property and the company in a single store;

3. a complex of immovable and movable property;

4. a plurality of properties transferred as a unit;

5. a company in which the property constitutes only one of the assets.

The Supreme Court recognized that the protection of the tenant is linked to the continuity of the commercial activity and that the right of redemption can be transmitted to the successor in title in particular when there is a transfer of the business and the lease. Judgment no. 40252 of 15/12/2021, hearing of 09/06/2021, President GRAZIOSI CHIARA, Rapporteur SCRIMA ANTONIETTA

However, the concrete applicability of the pre-emption in the joint sale of real estate and business depends on the structure of the deed and the possibility of independently identifying the value of the property. It is not sufficient to formally qualify the transaction as a business transfer to automatically exclude the discipline of pre-emption.

11. Bulk Sale and Bulk Sale

The sale of several properties in the same deed does not automatically produce the same effects in every situation.

It is necessary to distinguish between:

• block sale, in which the real estate complex constitutes a unitary economic and functional entity;

• cumulative sale, in which several autonomous assets are transferred, simply included in the same contract;

• sale of the commercial property together with other assets or appurtenances;

• sale of a business or real estate complex.

The issue must be resolved by verifying:

• cadastral and functional autonomy of the buildings;

• existence of a single economic complex;

• uniqueness of the price;

• impossibility or difficulty of separating the value of individual assets;

• unitary destination;

• structure of the bill of sale;

• connection between the transferred assets.

In the presence of a structurally unitary sale, the exercise of pre-emption may not be materially separable from the negotiation complex. In the presence of autonomous assets and distinct prices, the analysis may lead to a different conclusion.

12. Trust agreements and compulsory transfers

The pre-emption does not necessarily cease because the transfer derives from a particular negotiation structure.

The Supreme Court held that the right can also come into play when the transfer of the property derives:

• by a trust agreement;

• a transfer obligation assumed previously;

• by a judgment pronounced pursuant to Article 2932 of the Italian Civil Code.

The purpose of protecting the commercial activity may therefore prevail over the particular configuration of the internal relationship between owner and third party. Judgment no. 23056 of 25/07/2022, hearing of 04/05/2022, President FRASCA RAFFAELE GAETANO ANTONIO, Rapporteur GRAZIOSI CHIARA

13. Sale in insolvency proceedings

Competitive selling in insolvency proceedings has specific profiles.

The Supreme Court affirmed that, in the competitive sale of a property in the context of a liquidation procedure, the tenant's legal pre-emption does not operate automatically when the property has been leased by the trustee.

In this context, the pre-emption must result from a specific contractual provision compatible with the purposes of the procedure. Judgment no. 28918 of 02/11/2025, hearing of 15/10/2025, President FERRO MASSIMO, Rapporteur AMATORE ROBERTO

Therefore, the position of the conductor must be verified with reference to:

• nature of the procedure;

• date and method of stipulation of the lease;

• content of the contract;

• call for sale;

• authorisations of the bodies involved in the procedure;

• any express pre-emption clause.

14. Commercial pre-emption and pre-emption in the event of a new lease

Article 40 of Law No 392/1978 regulates a different case: the tenant's pre-emption when, at the end of the lease, the landlord intends to lease the property to a third party.

In this case:

• the landlord must notify the tenant of the third party's offer;

• the communication must be made at least 60 days before the deadline;

• the tenant may exercise the pre-emption right within 30 days of receipt;

• it must offer the same conditions as those communicated.

Article 40 therefore concerns the new lease, not the sale of the property. Law 392 of 1978-07-27, Article 40

The obligation to notify the new lease does not apply, among other things, when the tenant has communicated that he does not wish to renew, when there is termination due to non-performance or withdrawal of the tenant, or in some cases of insolvency proceedings. Law 392 of 1978-07-27, Article 40

15. Compensation for loss of goodwill

The pre-emption must be distinguished from the indemnity for loss of commercial goodwill provided for in Article 34 of Law no. 392/1978.

The indemnity is generally due when the lease relationship ends for reasons not attributable to the tenant and the conditions of the protected activity are met.

The ordinary measure is:

An additional indemnity of the same amount is also provided when, within one year of the cessation, the property is again used for the same or similar activities. The release of the property is linked to the payment of the indemnity due. Law 392 of 1978-07-27, Article 34

Relationship between pre-emption and goodwill

The two institutes operate on different levels:

• the pre-emption allows the tenant to purchase the property under the conditions offered to the third party;

• the redemption allows the buyer to take over when the pre-emption has been violated;

• The goodwill indemnity compensates for the loss of goodwill in the event of termination of the relationship, when the conditions are met.

The sale of the property does not determine, on its own, the termination of the lease: the buyer normally takes over the position of the landlord. Therefore, pre-emption and goodwill indemnity are not automatically alternatives.

16. Owner Communication Template

Below is an outline to be adapted to the concrete case.

Landlord's complaint

Subject: communication pursuant to Article 38 of Law No. 392/1978

The undersigned [name and surname / denomination], tax code or VAT number [●], as owner of the property located in [address], identified in the cadastral register on sheet [●], parcel [●], subordinate [●],

given that the property is currently leased to [tenant] by virtue of the contract signed on [●],

announces that it intends to transfer the aforementioned property for consideration under the following conditions:

• identified buyer: [●];

• total price: euro [●];

• payment methods: [●];

• deposit or down payment: [●];

• expected date of stipulation: [●];

• Additional conditions: [●].

The tenant is hereby invited to communicate any exercise of the right of pre-emption within 60 days of receipt of this letter, under the same conditions indicated above.

Place and date: [●]

Signature of the owner(s): [●]

17. Model for exercising pre-emption

Tenant's declaration

Subject: exercise of the right of pre-emption pursuant to Article 38 of Law No. 392/1978

The undersigned [name and surname / denomination], tax code or VAT number [●], tenant of the property located in [address], with reference to the communication received on [●],

declares that he/she is exercising the right of pre-emption provided for in Article 38 of Law no. 392/1978 and that he/she intends to purchase the property under the conditions indicated in the communication received, namely:

• price: euro [●];

• payment methods: [●];

• Additional conditions: [●].

This declaration is made without reservation and with the willingness to proceed with the stipulation of the deed and the payment of the price within the terms provided for by law.

Place and date: [●]

Signature of the host: [●]

18. Ransom Notification Template

Redemption exercise statement

Subject: exercise of the right of redemption pursuant to Article 39 of Law No. 392/1978

The undersigned [name and surname / name], tax code or VAT number [●], tenant of the property located in [address],

Given that:

• the property was leased under the contract of [●];

• the transfer of the property was carried out on [●];

• the transfer contract was transcribed on [●];

• the communication required by Article 38 of Law no. 392/1978 has not been made / the actual price is lower than the one communicated;

declares that he/she is exercising the right of redemption provided for in Article 39 of Law No. 392/1978 against the purchaser [●] and any subsequent successors in title.

The undersigned declares to be willing to pay the price due within the terms provided for by law.

Place and date: [●]

Signature: [●]

19. Operational checklist

For the owner

• Check if the property falls within the scope of the protected commercial lease.

• Check the activity carried out by the tenant.

• Identify all owners.

• Prepare a complete communication.

• Indicate actual price and condition.

• Use service by a bailiff.

• Keep proof of receipt.

• Wait for the 60-day period to expire.

• Coordinate stipulation and payment on time.

For the conductor

• Check the date of receipt of the communication.

• Calculate the 60-day term.

• Check price and conditions.

• Check that the communication comes from all the owners or from a person with a power of attorney.

• Exercise pre-emption without reservations.

• Use the form notified by law.

• Prepare financial resources in a timely manner.

• Check the date of stipulation.

• If you fail to do so, check the date of registration of the sale.

• Evaluate the redemption within six months.

• Check for any bad faith on the part of those involved, if the redemption deadline has already expired.

20. Main litigation risks

The disputes mainly concern:

• failure to notify the denuntiatio;

• communication from a single co-owner;

• price indicated does not correspond to the real price;

• incomplete or untrue conditions;

• late declaration of the tenant;

• conditional or conditional declaration;

• sale of the property together with the company;

• sale of several properties with unit price;

• sale in the context of insolvency proceedings;

• transfer to family members;

• start of the six-month term;

• actual knowledge of the sale;

• proof of bad faith on the part of the buyer or seller;

• concrete qualification of the activity carried out;

• ownership of the lease;

• transfer of the company and the lease.

The Supreme Court also clarified that failure to comply with the obligation to communicate does not automatically determine the owner's obligation to conclude the sale with the tenant: the typical consequence provided for by the system is the right of redemption, to be exercised within the terms established by Article 39. Judgment no. 10136 of 29/03/2022, hearing of 17/02/2022, President FRASCA RAFFAELE GAETANO ANTONIO, Rapporteur IANNELLO EMILIO

Conclusion

The tenant's commercial pre-emption applies when the landlord intends to sell the leased property for consideration and the conditions for the protection of goodwill are met.

The essential points are:

• formal communication of the owner by a bailiff;

• indication of the price and the real conditions of the sale;

• exercise of pre-emption within 60 days;

• payment of the price within the next term provided for by law;

• redemption within six months of registration in the event of failure or irregular communication;

• payment of the redeemed price within three months;

• substitute effect and ex tunc of the redemption;

• distinction between pre-emption for sale and pre-emption for new lease;

• distinction between pre-emption, redemption and compensation for loss of goodwill;

• particular attention is paid to co-ownership, sale with company, block sale, family transfers and insolvency proceedings.