The Right of First Refusal What Your Board Should Know

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 Basics

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.”

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11 Comments

  • If a board exercises it's right of first refusal to block a below market sale . . .it is inherently buying it for the same price and terms. The same "below market" sale price will be recorded and still show up as a sale for the next transaction to see and use as a "comparable" value and appraisal value. So, what was the point of exercisng its ROFR?
  • I'm not sure, but I think, if the board wants to prevent a below-market sale, they should offer to buy the place for what they think is fair market value.
  • If the board buys the property it wouold then have to flip it at the higher price. The appraisal would not count against the sale of the same unit...I guess?
  • Anyone heard of a variation on a rofr which allows other condo members to buy a condo directly? Or know where I can see some samples? I own a small condo on the first floor of a four story condo. I'd love to have a rofr for the condo adjacent, above, or below, so I might double the size of mine. Others in the condo might wish to have a shot at a first floor unit, etc. We could work out terms for which a member of the condo has first right, (highest bidder?) and make for a narrow window of time for response. Thanks, KenE
  • Our sale is being blocked by a condo associations application wanting our social security numbers to rum credit checks. We will not release that information. It is not in there by-laws or documents recorded with the county. Do they have a right to a credit check? This is a powerful decision by one man. Please comment
  • Question: What rights does the Board have in refusing to grant the waiver of 1st refusal, if the Buyer completes the Board package and his accountant warrants his financial status, he shows bank & investment account statements & and can show appropriate earned income. The Board wants to see Trust fund documents but his Trustee refuses to release them. What then? If nothing else does the seller have to give back the deposit or can he claim the buyer has not complied w the terms of the board package & refuse to return the deposit. Please comment.
  • As senseless as this question or comments seems, why can't the right of first refusal be given or or match the offer right after the seller accepts the offer, the purchaser gives the assurance to pay by way of bank account verification of down payment deposit, financials and prequalification on mortgage letter from an authorized bank. Seems redundant if the purchaser goes through all the time consuming effort for a mortgage approval letter for condo and they decide to make an offer which happens quite often where there is a condo board underlying the application. Seems a bit underhanded to go about things.
  • What ethical requirements under FL law are CAM required to abide by? I had a CAM steer over 100 potential purchases at his Condo assoc.(using the 1st right of refusal) to the Sec/ Treasurer on his board.
  • Our condo asn. does not have ROFR, but...we do require an application process to screen the buyers for criminal history. To date, we have not had any criminals try to purchase a unit.
  • I am a resident of palm beach florida. I would like to know if a condo board can refuse to allow a condo sale without giving the buyer or seller any reason.
  • I am a buyer for a condo in Miami, I am purchasing under my corporation name. I applied to the association a few weeks ago, the seller informed me yesterday that the condo association is implementing the rigth of refusal, and an attorney has sent her an offer from another owner in the complex. What are my rigths? I had not been contacted by the association. The seller is a very close friend of mine, and will rather not sell at this time, especially at the price that she offered it to me. How can We legally cancel this contract? Can the seller be force to sell to the other party?