David, Here in the CV when a condo goes up for sale, the assoc. has first right of refusal, am I correct? Is this binding? After a Purchase and Sale Agreement has been signed by the buyer, notice goes up on the bulletin board. A person in the assoc. decides to use the rule of first right of refusal and buy the unit within the 30 days allotted for the stated price of the orginal purchase and sales agreement. Can the original buyer then do another purchase and sales agreement upping his orginal offer by several thousand dollars.
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Admin. Response.
Hi Marilyn,
This is an interesting question; and somewhat misunderstood.
The Florida Condominium Act: 718 FS speaks to "Right of First Refusal" only in the context of
Condominium Conversion from a rental format.
REF: Florida Statutes - 718.612
Extract follows:
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718.612 Right of first refusal.--
(1) Each tenant, who for the 180 days preceding a notice of intended conversion has been a residential tenant of the existing improvements, shall have the right of first refusal to purchase the unit in which he or she resides on the date of the notice, under the following terms and conditions:
(a) Within 90 days following the written notice of the intended conversion, the developer shall deliver to the tenant the following purchase materials: an offer to sell stating the price and terms of purchase, the economic information required by s. 718.614, and the disclosure documents required by ss. 718.503 and 718.504. The failure by the developer to deliver such purchase materials within 90 days following the written notice of the intended conversion will automatically extend the rental agreement, any extension of the rental agreement provided for in s. 718.606, or any other extension of the rental agreement. The extension shall be for that number of days in excess of 90 days that has elapsed from the date of the written notice of the intended conversion to the date when the purchase materials are delivered.
(b) The tenant shall have the right of first refusal to purchase the unit for a period of not less than 45 days after mailing or personal delivery of the purchase materials.
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No mention of this "right" is made in the context of straight "in fee simple" sales from one unit owner to another.
All this means is that this "right" must appear in your Bylaws.
The provision in our bylaws gives the "right" to the Board of Administration or to their designated assignee (could be another Unit Owner) who is ready, willing and able - to purchase under the same conditions offered by the prospective buyer.
The primary purpose of this Bylaw is to prevent Unit Owners (or more likely children of deceased Unit Owners) who just don't care to be bothered, from dumping the Unit at a rediculously low price and thus depressing property values.
There is no provision for - nor prohibition of the buyer making a counter-offer, other than the obvious fact that the contract - once executed is binding, and for the Seller to seek ways to accept would be unethical and deceptive.
A bidding war in Century Village would be a welcome relief from the depressed pricing we have been experiencing.
Dave
Monday, February 18, 2008
First Right of Refusal
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4 comments:
Rod Tennyson drafted the 1999 UCO Model Documents and clarified the original confusing language regarding the right of first refusal contained in Article XI of the original Declaration of Condominium. He created a broad right of first refusal under Article XI of the Declaration and specified in Article IX of the Bylaws how this option could be exercised.
The amended Article XI of the Declaration clearly gives the Association the right of first refusal meaning that if the association receives a fully executed purchase agreement and application for a new purchaser the Association has the right, within 30 days,to either accept the application, reject the application for good cause, or exercise it's right of first refusal and to purchase the unit following the proceedures of Article IX of the Bylaws.
Article IX of the Bylaws states that if the Association, as a corporate entity, exercises the right to purchase the unit it must first obtain a 60 percent vote of the unit owners present in person or by proxyat a duly called meeting.This vote could actually be a low number because only 51 percent is needed for a quorum and just 60 percent of that 51 percent is needed to approve the purchase. Of course the Association needs to have the funds to make the purchase before it exercises this option.
Article IX of the Bylaws also gives the Association the right to assign it's right of first refusal TO ANY OTHER PERSON. The Association can designate a person who could be a unit owner, a non-unit owner, another corporation, or any other business entity or natural person. When the Board is designating such person it needs to have the permission and concurrence of that person that they agree to purchase the unit under the SAME TERMS AND CONDITIONS AS THE EXISTING CONTRACT. Once the Board has that permission and authorization the Board can then desigate that person and provide that seller of the unit with the designation, ALL WITHIN 30 DAYS OF THE ORIGINAL APPLICATION. THE SELLER MUST THEN ACCEPT THAT PERSON AND CLOSE THE UNIT ON THE SAME TERMS AND CONDITIONS.
There is a common misconception that any owner in an Association has the Right of First Refusal. This right is exclusive to the Board and cannot be usurped. Designation by the Board is the only way it can be exercised. Also, Mr. Tennyson does not believe that the Association has any duty to give priority to unit owners over non-unit owners but the Board does have an obligation TO MAKE SURE THE PERSON THEY DESIGNATE IS A READY, WILLING AND ABLE BUYER TO ASSUME THE CONTRACT.
The original declaration has a 10 day time limit to “...designate the Association, or the association may designate on or more persons then unit owners, or any other person(s) satisfactory to the Board of Directors of, the Association, who are willing to purchase...”
Unless the Association has amended their declaration to extend this investigation period to 30 days, then the designation period is 10 days. Additionally, Associations should be aware that they should amend their documents if they are still bound by the ten day period because applicants can slip through the cracks if investigation and approval exceeds this time frame. The rejection of an applicant after the ten day time limit could create a liability to the association for damages by the applicant and property owner. The “unlawful restraint on alienation” can be costly. Know the content of your governing documents!
Hi Randall
I believe the time limit, to evaluate an applicant, for "rejection" or approval is very important! That means the BOARD must decide within the TIME ALLOWED! Failure to complete the "rejection" would be viewed, in all likelihood, as an automatic approval.
You may not send rejection notices after the time permitted for evaluation, without enabling the buyers recourse to proceed legally against you Association.
While we are saying the same thing, I believe the option “to reject” disappears when the time limit expires!
Ed
Since we do not know all the facts in this matter, I would suggest to the seller that they contact an attorney to get the proper advice in this matter in order to protect their rights in the proposed sale. The last thing a seller wants to do right now is blow a deal.
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