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Can my condo really reject my buyer for no reason?

By Virginia K. Smith  | October 26, 2015 - 12:59PM

Q: I'm selling my condo, and the board gave me a release form for buyers saying they can be rejected for any reason. I thought only co-ops could reject buyers in this way? And there's no clause about this in our building's by-laws. Is this legal?  

A: While your condo board may have what's known as the "right of first refusal" on your sale, it would have to be specifically laid out in the building by-laws to be legal, say our experts.

As a rule, you're correct that condos usually don't have the right to reject prospective buyers in the same manner that a co-op does. "Instead, many condominium declarations and/or by-laws provide the condo with a right of first refusal, which is a right to purchase the apartment on the same terms as have been offered to the third party purchaser," says Jeffrey Reich, an attorney with Schwartz, Sladkus, Reich, Greenberg Atlas LLP.

However, this policy needs to be clearly stated in your building's by-laws to be legit. "The Board cannot a assert right or impose a requirement that is not set forth in the by-laws," explains Kevin R. McConnell, an attorney with Himmelstein, McConnell, Gribben, Donoghue, & Joseph. Have your lawyer give the building's by-laws another read, and if there's no clause about the right of first refusal (or that release form), the board has no grounds to smack down your sale.

"It sounds like the board may be exceeding its authority" in requiring this kind of release form, adds Reich.  Bottom line? While many condo buildings have quietly been following the lead of co-ops to tighten the reigns, in order to do so legally, the building's by-laws have to be updated accordingly.


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