When buying or selling a condo in Miami or anywhere in Florida, one legal clause you may encounter is the right of first refusal. This clause, often held by the condo association or its board of directors, can affect a real estate transaction's timing, approval, and outcome.
Whether you're a buyer looking at Miami condos or a seller listing a unit in a high-rise, understanding how the condo association's right of first refusal works is essential for a smooth experience in Florida real estate.
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:
Seller Accepts an Offer
The seller signs a contract with a prospective buyer to purchase their unit.
Buyer Submits an Application
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.
Association Review Period
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.
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.
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
At Allioo, we're developing a solution to make this easier. Our Miami Condo Database helps you determine whether a building has a right of first refusal, rental restrictions, reserves, or known special assessments, saving you from surprises later.
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, check if the building is listed in the Allioo Miami Condo Database during your condo search.