Understanding the right of first refusal

On Behalf of | Jul 25, 2023 | Real Estate Transactions

Selling and buying a condo can take some time. Unfortunately, just because everything seems to be going well does not always mean you can certainly close the deal. After all, the condo board might exercise its right of first refusal (ROFR) and stop the sale.

What is the right of first refusal?

Before you can complete the sale of a condo, the condo board can step in and invoke the ROFR. It allows the condo board to match a condo’s selling price, effectively denying a pending sale and buying the condo for itself. The board usually has to do this within a specific deadline, and the ROFR should be in the building’s by-laws for it to be legal.

Why would the condo board invoke the ROFR?

There are several reasons the condo board may decide to use the ROFR. Some boards use it to bar specific persons looking to buy the condo. This might especially be the case if, after conducting a background check, the board discovers the buyer has unstable finances, a violent criminal record or any other factor that may compromise other homeowners in the building.

The board might also use the ROFR if they believe the condo provides more benefits to them, the building’s owner, or other homeowners. For example, they might want to transform the condo into a common area or use it as a home for the superintendent. The board may also rent out the condo to earn some income.

The ROFR can complicate a condo sale. If you believe there was an issue with how a condo board used it, an attorney can help clarify any confusion. They can also explain your rights and help assure you of fair and reasonable outcomes.