A condo association has the right to approve or reject buyers, but as in the case of this buyer, it’s important to be aware of your rights.
Q: My mother and I are on the same deed since she added me in 2010. She’s still alive and there is no mortgage on the property. The condo association wants me to fill out a purchaser form, as if I am buying the condo now – seven years after I was legally added to the property. They want to “approve” me as a buyer. What happens if they don’t approve me as a buyer? Do I have to leave? I live with my mom, who is 92 and has dementia.
A: Condominium associations generally have lots of rules. The thing is, some associations strictly enforce their rules while others are more lax about them. You seem to have fallen into a situation where an association is following its rules to the letter.
The issue for you is whether the association really knows its rules and whether those rules apply to you.
Frequently, condominium associations have a provision in their documents stating that they have the right of first refusal on the sale of condominium units in their building. However, many of these same documents also allow transfers of condominium units for estate planning purposes and between family members.
You’ll need to obtain a copy of your condominium association’s documents to determine what the rules require of you. As you search your documents, you’re looking for the condominium declaration (or the document that created the condominium association) and your association’s rules and regulations.
The declaration or operating document may state that the board has the right of first refusal on the sale of any unit — even when the transfer of an ownership interest in the unit is by gift. If the declaration does not have that language, the declaration may have other language that gives the right to the board to review the financials of the prospective buyer and receive an application for that buyer.
There is a difference between these two ways of looking at a buyer. In the first, the condominium association has the right to buy the unit at the price that the unit owner had agreed to sell. In the second, the association merely has the right to review financials and get information, but does not have the right to approve or disapprove of the transfer of title. In cooperative apartment buildings (known as co-ops), the cooperative has the right to approve and disapprove of a buyer. If the board disapproves of the buyer, the homeowner can’t sell his home to that individual.
In a condominium, if the association disapproves of a buyer, the condominium documents typically require the board to exercise its right of first refusal and buy the unit at a market price if the unit is being gifted or at the sales price if the unit is being sold.
For us, the question is why did this come up seven years after the transfer? We would also like to know if the building usually interviews and obtains information on all buyers and owners and has done so in the past.
We’d like you to become more informed about your association, your rights and their rights. If they are only looking for information to have in their files, then it’s probably going to work out fine.
We have seen, however, associations that exercise their powers as a show of force rather than for the benefit of the building. If you believe that the association is out to get you, or out to get your other out of the property, you might want to consult with a real estate attorney about your situation so that you are not blindsided by the association. Better for you to be prepared than to fall into a trap they might have out for you.