How the Right of First Refusal Works In A Condo

Legal Talk for Co-ops and Condos

Ingrid Manevitz, a partner at Seyfarth Shaw, is interviewed by Habitat Magazine's Carol Ott.

• What it is. Typically in many condominium buildings, the right of first refusal works like this: when a unit-owner goes to sell or lease their unit they provide a copy of the fully executed lease or fully executed contract of sale to the board, usually by certified mail. The board has a certain period of time in which to exercise its right of first refusal, which means to either purchase or lease the unit on the same terms and conditions that the prospective purchaser or lessee is offering. The procedures for this are in the condo’s bylaws.
• The wrinkle. In order to exercise this right, many condo bylaws stipulate that a board needs unit-owner approval. The bylaws usually state a time period, often 20 or 30 days, to get this done. The clock starts as soon as the package gets submitted, usually to the management company, and doesn’t get to the board quickly. So if the time period is 20 days, it could really be 10 days before the package gets in front of the board. The board will then speak with its lawyer and if it decides to proceed, it has to go out and get all the unit-owners or a majority of them to approve to exercise the right.
• The workaround. The right of first refusal is usually done sparingly, often when there is someone the board doesn't want the apartment leased to or owned by. One way to make this process easier would be to amend the condo bylaws to eliminate the need to seek unit-owner approval. The board would then have sole discretion when to exercise this right.

**Music by 4 AM Party by Alex Gross licensed under a Attribution-NonCommercial-NoDerivatives 4.0 International License.

The business of running a building is demanding work that requires making endless decisions — some that can quickly lead your board into a quagmire of legal difficulties. Legal Talk interviews New York's leading co-op/condo attorneys to find solutions, and get some guidance, on these challenges. For more co-op and condo insights, sign up to receive Habitat's free newsletters or become a Habitat subscriber today!