Co-op boards are notorious for scrutinizing potential shareholders. Condos, on the other hand, are often thought of as more lenient—and thus more desirable—by buyers because condo boards lack the power to probe too deeply into a buyer’s personal business. While this might be attractive to purchasers, it means the board has less control—and often little say—in who resides in their building.
But your board doesn’t have its hands entirely tied when faced with a sale it doesn’t approve of. Nearly every condo has the right of first refusal or (ROFR) written into its bylaws, but exercising it should not be done hastily. Here’s what you need to know.
The first right of refusal is available to nearly all condo boards, and is written into the condo bylaws. It can be exercised for a number of reasons.
“The right of first refusal exists to enable a condominium to exercise some degree of control over the transfer or leasing of apartments,” says attorney Aaron Shmulewitz, Esq., of Belkin Burden Wenig & Goldman, LLP in Manhattan. “In other words, to enable a condominium to control to a limited extent who owns and occupies apartments in the building. Most condominiums have a right of first refusal, but a small number do not.”
Most commonly, there are three reasons a board would want to exercise its right of first refusal. According to Stanley M. Kaufman, at Kaufman Friedman Plotnicki & Grun LLP in Manhattan, a board would invoke its right of first refusal: “First, to allow the condo board to prevent sales to persons considered undesirable. Second, to allow the board to acquire space that may be needed for condominium purposes—such as a superintendent’s apartment. And third, to possibly enable the board to make money on a resale if the unit is being sold below value.”