New York Supreme Court Rules on Right of First Refusal Court Compels Sale of Condo Unit to Board Designee

In an apparent case of first impression, on February 25, 2014, Justice Anil C. Singh of the New York Supreme Court ruled in favor of the plaintiff—The South Tower Residential Board of Managers of Time Warner Center Condominium—holding that the board could elect to exercise its right of first refusal to purchase a condominium unit and then designate a third-party as its nominee to take title to that unit, so long as the exercise of the right of first refusal benefits the condo unit owners.

Taking Title

In or around 2010, the owner of a condominium unit at the South Tower Residential section of the Time Warner Center Condominium began marketing its unit for sale. The adjacent unit owner was interested in purchasing it so he could combine it with his apartment.

Right of First Refusal

Pursuant to the building’s bylaws, if a unit owner entered into a contract with a third party to sell its unit, the sale was subject to the board’s right of first refusal to purchase that unit. The bylaws also allowed the board to assign its right to purchase a unit to a designee. The seller sent the contract of sale to the board. Shortly thereafter, the board designated the neighbor to step into the board’s shoes and purchase the unit. As part of the negotiations between the board and the neighbor, he proposed the board grant a license to exclusive use of a portion of the hallway to incorporate into the combined unit. The neighbor was willing to pay the board almost $400,000.00 for this license.

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