Hurdles for Condo Buyers
By: Lisa Prevost
October 3rd, 2013
In New York, buyers intent on getting a co-op know to brace themselves for the notoriously invasive approval process. But increasingly, condominium buyers are also being asked to fill out lengthy applications and provide detailed financial information to buildings’ governing boards.
Although condos don’t have the same right as co-ops to reject buyers at will, they do have a right of first refusal. This means that on any pending sale, the condo association has the right to step in, through its board, and match the offer.
In allowing the condo to be sold to an outside buyer, the board issues a waiver of its right of refusal. Before doing so, however, it may at this point in the process demand information about the buyer, including financial statements, employment history, personal references and other details…
What’s more, many condo bylaws limit a board’s ability to get financing, or may require a unit owner vote to do so, said Adam Leitman Bailey, a lawyer who represents condos in New York. Though he has helped condos obtain loans, financing is difficult because usually the only collateral for a loan is the common charge, he said…
Mr. Bailey says he wields the right of refusal “as a weapon” to ward off potentially troublesome buyers. “If they don’t want to provide the tax returns and fill out the questionnaires and give the references,” he said, “then they’re not getting the waiver of right of first refusal. I need to protect the building before they enter it.”
Mr. Bailey says he has also started asking buyers to sign riders in which they agree to terms that may not be in the condo bylaws, like smoking or pet prohibitions.
He has no problem holding up a waiver if a buyer refuses to comply. Could a buyer sue him for damages as a result of a lost interest rate? Possibly, Mr. Bailey says, but the process would be so lengthy that it would hardly be worth it. “It’s very rare that we get push-back,” he said…