Florida Condo Sales: What Is the Board’s Right of First Refusal?

What Is a Condo Association and Board of Directors?

Before we dive into the right of first refusal, it's essential to understand who holds this right.

A condominium association is a legal entity comprising all unit owners within a building or community. Its primary role is to manage the property, enforce rules, maintain common areas, and oversee the association's financial health. The association is governed by a board of directors, a group of elected owners responsible for making key decisions, including whether to exercise the right of first refusal.

What Is the Right of First Refusal?

The right of first refusal gives the condo association, its board of directors, or even a designated unit owner the opportunity to step in and purchase a unit under contract before it is sold to an outside buyer. This right preserves the condo community's character, financial strength, or policies.

This clause is often embedded in the association's governing documents, including the declaration of condominium, articles of incorporation, bylaws, or rules and regulations. The association may use this right for various reasons, such as preventing a sale to an unqualified buyer or maintaining owner-occupancy ratios.

How It Works in Practice

Here's how the right of first refusal typically unfolds in a Florida condo transaction:

1. Seller Accepts an Offer

2. The seller signs a contract with a prospective buyer to purchase their unit.

3. Buyer Submits an Application

4. The buyer must complete a detailed application for the condo association. This typically includes a credit report, background check, personal and financial information, and a copy of the executed purchase agreement.

5. Association Review Period

6. The association's board of directors reviews the application and has a set timeframe, usually 10 to 30 days, to decide whether to waive or exercise their right of first refusal.

7. Decision Is Made

   • If the association waives the right, the sale can proceed as planned.

   • If the association exercises the right, the condo is sold to the association, a current owner, or another designated buyer under the same contract terms.

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This process is not a renegotiation. The board must accept the terms as written or allow the original transaction to proceed.

Who Can Exercise the Right of First Refusal?

• The Condo Association itself may buy the unit

• A current unit owner may be assigned the right to buy it instead

• The board may select a third-party designee

The board typically makes these decisions according to the governing documents.

How to Know If a Condo Building Has the Right of First Refusal

Unfortunately, this clause usually does not become apparent until you're in the middle of a transaction. Most real estate listings for Miami condos do not disclose whether the right of first refusal exists.

To determine if a building has it, you will need to:

• Review the condominium documents, especially the declaration and bylaws

• Ask the property manager or board of directors, though they may not provide a clear answer without a formal request

• Have your attorney review the documents early in the process

What This Means for Buyers

• You could have your offer replaced by the association or another party

• The review period could delay your closing timeline

• You should include contingencies in your contract related to association approval

What This Means for Sellers

• You must notify the association and follow all required steps in the sale process

• The sale is not final until the association waives or exercises its rights

• Failing to comply with the association's process could result in a voided sale or legal issues

Final Thoughts

The right of first refusal by condo associations and their boards is a key clause that can influence buyers and sellers of Miami condos and properties across Florida. It adds a layer of complexity that many do not expect until it's too late.

If you buy or sell a condo, ensure your real estate professional or attorney requests and reviews the association's documents early, to avoid surprises.