Condo Board Found Liable to Prospective Buyer in Broken Deal
Can a condo board ever end up liable to the prospective buyer of a unit after the deal didn’t go through? It apparently could in New York.
A state court there allowed such a lawsuit to proceed against a board that didn’t exercise its right of first refusal but allegedly also didn’t provide a document that was required for the buyer’s loan to close.
The buyer, who has young children, alleged that the president of the board owns and lives in the unit directly below the unit she wanted to purchase and that he didn’t want children living above him.
She also asserted that he didn’t want a sale for the price that she had negotiated because it would appear on the public record and reduce the value of other units in the community. The contract was subject to short sale approval by the bank holding the first lien on the unit; the short sale had been approved by the seller’s bank.
Specifically, the buyer alleged that the board didn’t choose to exercise its right of first refusal on the unit — but wouldn’t provide the document it ordinarily provides that states the board wasn’t exercising that right. Without this document, the buyer’s mortgage bank refused to close.
As a result of the delay, the buyer claimed, the holder of the second lien on the unit foreclosed. The unit was sold at auction two months after the buyer was supposed to close.
Learn the full details of the case, including why the court’s ruling could be considered somewhat alarming: