Q&A: Closing Question

Q I have an accepted offer on a condo in Manhattan, and I have a letter of commitment from my lender. Before proceeding to submit my application to the board, I was instructed by the managing agency that submission of tax returns, payroll stubs, and bank statements are necessary to process the application, in addition to the credit check.

Since the board does not have the power to deny the sale—only the right of first refusal, or finding another buyer under the same terms within a 30-day time frame—what right do they have to collect this information? I’m putting down a 30 percent down payment, and am considering submitting my application via certified mail. On the 20th day I would have my attorney send a reminder that we will be closing in 10 days if they refuse to answer—that would be the acknowledgement of their failure to exercise right of first refusal—and would allow me to close.

I hate to go that route, but will if it’s necessary. Do you have any advice on what my rights are in this situation? What options do I have? If I so forcefully gain entry into the community, (i.e., transfer of deed without going through their procedures, but respecting the 30-day right of first refusal clause), can I run into problems residing there?

-Prospective Manhattan Unit Owner

A According to Guy Arad, Esq. of the Law Firm of Adam Leitman Bailey, P.C. in Manhattan, “A residential unit owner who receives an offer to purchase his or her condominium unit which he or she intends to accept is typically required to give notice to the Board of Managers of the receipt of such offer. Most bylaws require that such notice state the name and address of the proposed purchaser, the terms of the proposed transaction (usually evidenced by a copy of the contract of sale) and “such other information as the Board of Managers may reasonably require.”

“While the Board of Managers of a condominium typically does not have the right to deny the sale—it only has the right of first refusal—the Board of Managers is, in addition to its other rights and powers, empowered to collect common charges from the unit owners, to maintain a suit to recover a money judgment for unpaid common charges and to bring an action to foreclose a lien on a unit for unpaid common charges.

“Therefore, it is reasonable for the Board of Managers, in determining whether to exercise its right of first refusal or to grant a waiver of the right of first refusal, to request financial information, such as tax returns, payroll stubs, bank statements and a credit report, from the prospective purchaser.


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