Real estate Q&A: Can condo board force sale to another owner instead of a family member?

Gary M. Singer, South Florida Sun Sentinel on Sep 26, 2024

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Q: My cousin is getting married and agreed to sell me her apartment for a great price. We drew up a contract so that I could get a mortgage loan, and I interviewed with the condo board. Now, the condo tells us that my cousin must sell it to another owner who already lives in the building. She is only selling it at a discount because we are family. Can the condo do this? — Sean

A: Yes, they can probably enforce this, but you may still have options.

Community associations are formed to help maintain the standard of living of their residents and the property value of their homes. Associations have many tools at their disposal to achieve these goals. For example, they can levy fines for violating the community rules and even foreclose and take a resident’s home under certain circumstances.

Most associations will require a buyer to be screened for fitness to live in the community and their ability to pay the dues. Some associations take it further and include a “right of first refusal” in their toolbox.

When an association has this power, it or a community member has the right to purchase the property under the same terms as the current buyer. Essentially, the community buyer will step into the shoes of the original purchaser.

Theoretically, this arrangement should not bother the seller since they are being paid the same amount — the community, however, benefits by being able to choose its members.

The association can exercise this right because your cousin agreed to follow the community’s agreements and rules when she purchased the property. The rules apply to everyone, including the board of directors, so carefully review the condominium declaration and other formative documents to confirm that the condominium actually has the right of first refusal and the details under which it can be used.

That said, I have seen many instances where an association either did not understand its rules or intentionally misused them.

Even if the condo followed the rules to the letter, you and your cousin may be able to escape this problem because you are family and are transferring the property under market value.

Unfortunately, you have unintentionally become entangled in a thorny legal predicament that will likely require an attorney’s assistance to unravel.