The Board of Managers of the Oceana Condominium No. Two learned recently that withholding the waiver of the right of first refusal cannot be used to block an unwanted condo sale.

In this particular condo, the President of the Board owns and lives in the unit directly below the unit being sold, and he allegedly did not want children living above him. The prospective purchaser has young children, and the President also allegedly did not want a sale for the low sales price. The contract was subject to short sale approval by the bank holding the first lien on the unit, a short sale which had been approved by the seller􏰅s bank. The purchaser claimed that the Board was troubled that it would appear in the public record and lower the value of the units in the development, so the Board interfered with her contract with the selling unit owner, so she was not able to purchase the unit. The condo board did not choose to exercise their right of first refusal, but they would not provide the document which this development ordinarily provides, stating that they were not exercising their right of first refusal. Without this document, the purchaser’s lender refused to close. The sale was lost as a result of the Board’s delay, the holder of the second lien on the unit foreclosed on the unit, preventing the purchaser from closing and the purchaser sued.

The Court threw out all of the claims against the Board and individual Board members except for a tortuous interference with contract claim against the Board. So, the litigation continues, with escalated legal fees and costs escalating because of the decision making by the Board or its President. In this particular case it appears that directors and officers insurance responded with a defense but even then the condo is responsible for paying a deductible and claims like this can impact future insurability and/or the cost of insurance. In some cases, we’ve seen individual board members ask for their own counsel because of possible conflicts of interests considering the Board President there seems to be the primary culprit.

With some good legal advice and management guidance, this situation could have been contained and avoided. For the Oceana Condominium No. Two, the saga continues.

Read the decision here.