Right of preemption

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This is the right to be given the first opportunity to buy an interest in land, if the prospective seller decides to sell. Typically such a right would be contained in a Contract and, like any other contract, must be supported by Consideration. Unlike an option to purchase, a right of preemption ('right of first refusal') cannot compel the proprietor to sell. Consequently, there is some doubt about whether it is, in itself, an interest in land. This is an important issue, because if it is not an interest in land, it cannot be protected by the entry of a Notice against the registered title. This means that if the person who granted the right of preemption then sells the land to someone else in contravention of that right, the right is lost. The balance of authority until 2002 was that a right of preemption did not create an interest in land.

s.115 of the LRA2002 states that a right of preemption may be enforceable against successors in title, from the moment of its creation, provided that its priority is protected in the usual ways. Whether this makes it an interest in land or not in still unclear, the practical question whether it can be protected on the register is now answered in the affirmative.

Contract Law
Land and Property Law