Avoid Legal Battle Over Leasing and Sales Transaction Denials

Avoid Legal Battle Over Leasing and Sales Transaction Denials

If the board of directors of the community association you manage has the authority to approve or deny proposed leasing and sales transactions, you might be wondering whether, if there is a denial, you should disclose the reasons behind it. And, if so, what is the best way.

This will depend on a variety of factors. Like yours, many community association boards have the authority under their governing documents to scrutinize proposed leasing and sales transactions and to approve or deny them. Before you decide whether to disclose the reasons for a denial, remember that this can be fuel for legal battles.

Boards are often advised by legal counsel that it’s safer to simply say that an application was “denied” without going into the details surrounding that denial. If the property owner wishes to know the reason for the denial and pursues it legally, then yes, the board will have to provide that reason.

One school of thought is that providing reasons for a denial could fuel unnecessary legal fights. The other school demands transparency and the reasons that the board is exercising its authority to deny when screening renters and purchasers. There may be legitimate reasons to support a denial, and by failing to articulate them, a potential purchaser or renter can leap to an incorrect conclusion that a discriminatory motive was involved.

For more information about the regulations that may give rise to claims, and tips for using an abundance of caution, see “Disclosing Denial of Leasing and Sales Transactions,” available to subscribers here.