Here is an interesting real world example we’ve encountered of condo boards abusing their right of first refusal in New York City.
A wealthy finance executive recently had a divorce with his wife. The wife was now in contract to buy a luxury condo to live in with their children. Even though it was an all cash purchase and the husband made a tremendous amount of money, the condo board wanted to be difficult because the wife had no income of her own. As a result, they came back around 25 days after the condo application had been submitted to ask if the ex-husband could co-sign the purchase. The husband grudgingly agreed since it was for his wife and kids after all. However, after another 20 days or so the condo board came back again and asked to see the husband’s tax returns. This was egregious because the husband was well known and very wealthy, and the condo board knew the husband’s name by now. The husband was furious but ultimately agreed to share his tax returns which were several hundred pages in length. Then after another 20 days or so the condo board asked to see if the husband could put several years of common charges into escrow. This was the last straw, the buyer’s lawyer sent in a letter threatening to sue if the board didn’t dutifully make a decision on their right of first refusal immediately.
This ultimately got the condo board to issue a waiver of their right of first refusal; however, it should be noted that if you decide to litigate you had better be able to follow through on it. If not, your bluff will be called and you will lose all leverage. Also remember that condo boards are usually not afraid to litigate as they are not using their own funds, but are rather being funded through a potentially unlimited levy on all of the fellow condo owners.