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I am currently in a contract situation with buyers who may lose their purchase becase of a condo regulation, that neither I nor the buyers, or the listing agent knew about. The sellers didn't mention it when they signed the contract, they didn't think it was an issue.
However it has come to light now, as I received a phone call from a realtor who is also an owner there.
It appears that the association has first right of refusal to buy any condo that is sold to anyone outside of the current ownership! I now have a neighboring unit owner wishing to buy out the contract. This is very very frustrating to me, not only do my clients lose their dream beach condo, have wasted a two week overseas trip and have to start all over, but I stand to lose them as clients and any income from a sale that we had been working two weeks on every day.
Has anyone come across this ruling before, I had heard of approval but never this right to buy? I wondered why so few of these condos had changed hands over the years, but clearly understand why now!
Has anyone ever successfully challenged a HOA over a matter like this?
DM if you have I'd be interested to hear your take on any action my clients could take - without incurring major legal costs.
There is a condo building in my area that has a stipulation like that -- they require that existing residents be give the first opportunity to purchase a unit that's offered for sale, but there's a time frame that goes along with it - can't remember but I think it's for 30-90 days from the day the unit is made available for sale. Any other "outside" purchasers have to wait to see if someone else comes forward from existing ownership that might want to purchase the unit. I would have thought the owners of your condo would know about that kind of rule and should have disclosed it up front.
I agree that usually there is a time frame and I've never heard of anyone being able to bump a contract out of the way. They just get "first dibs" or preference.
Read the fine print of the HOA by-laws. Seller should have diclosed it, and it should have been on the MLS.
It certainly is misrepresentation on the part of the seller.
Last edited by Silverfall; 03-29-2008 at 11:39 AM..
Reason: Addition
Yes - I have heard of this condition / requirement. And, unfortunately, it may cost the buyers their dream condo.
This condition / requirement would be, IMLO, a "material" issue that should have been disclosed to the buyer. At the same time, the listing broker / agent also had IMLO an obligation to disclose this. They WILL argue that they did not know - BUT, if it is part of the CC+R's, it could be argued, IMO successfully, that the listing broker / agent should have been familiar with this material issue.
My advice? Consult with legal counsel - there may be, not saying "will be" - but may be grounds for litigation to collect a commission -
I would be surprised if the listing broker did not go after the seller for commission -
Would it be possible to allege that the neighboring unit owner exercised the right of first refusal because of the nationality of the buyers. This would be in violation of Fair Housing Laws and thus would be able to override the Right of First Refusal.
I know this is a bit out there but the threat of a fair housing suit could possibly scare them enough to just let your buyers have the unit.
Would it be possible to allege that the neighboring unit owner exercised the right of first refusal because of the nationality of the buyers. This would be in violation of Fair Housing Laws and thus would be able to override the Right of First Refusal.
I know this is a bit out there but the threat of a fair housing suit could possibly scare them enough to just let your buyers have the unit.
Mike - you raised an interesting point. The problem however is, Fair Housing would not cover another owner buying the unit.
It would cover the Seller, and the Sellers broker if they got him to buy it for that reason - but, not the neighbor.
Mike - you raised an interesting point. The problem however is, Fair Housing would not cover another owner buying the unit.
It would cover the Seller, and the Sellers broker if they got him to buy it for that reason - but, not the neighbor.
Actually with first right of refusal it could cover another unit owner stepping in to buy after someone else had made writtten a contract on it.
Because their action prevented someone from a protected class from purchasing the unit the first right of refusal in this case could be deemed to be in violation of the fair housing act.
Of course this is just my Saturday afternoon lawyering at work. I could be dead wrong.
thanks to all of you, I will see what transpires. As for the nationality, that wont hold water, the sellers are British too (or maybe the rest of the HOA have had enough of the colonials)
I am currently in a contract situation with buyers who may lose their purchase becase of a condo regulation, that neither I nor the buyers, or the listing agent knew about. The sellers didn't mention it when they signed the contract, they didn't think it was an issue.
However it has come to light now, as I received a phone call from a realtor who is also an owner there.
It appears that the association has first right of refusal to buy any condo that is sold to anyone outside of the current ownership! I now have a neighboring unit owner wishing to buy out the contract. This is very very frustrating to me, not only do my clients lose their dream beach condo, have wasted a two week overseas trip and have to start all over, but I stand to lose them as clients and any income from a sale that we had been working two weeks on every day.
Has anyone come across this ruling before, I had heard of approval but never this right to buy? I wondered why so few of these condos had changed hands over the years, but clearly understand why now!
Has anyone ever successfully challenged a HOA over a matter like this?
DM if you have I'd be interested to hear your take on any action my clients could take - without incurring major legal costs.
yes i heard of this rules....but most of the time....it is just a formality (most of the time exisiting owners dont want to buy another condo within the same building)...existing owner may want or may not want to buy the property. but if they do...y do u care? u working for the seller right? so u will be getting the commission anyway and the owner of the condo will get the asking price of his condo and u will get ur commission.
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(or maybe the rest of the HOA have had enough of the colonials) 
