RIGHT OF FIRST REFUSAL, P.2

 

"So the board exercised its right of first refusal," Goldstick says. "The buyer and seller were not happy. The board offered to waive its right of first refusal if the buyer paid $75,000 [to the corporation], which he did. So the board added $75,000 to the reserve fund — and only had to pay the state and city transfer tax of 1.4 percent."

Goldstick and Fischer agree that such preemptive strikes are not always worth the trouble. "The board should not do this to make $10,000 to $20,000," Goldstick says. "But if there's a chance to make $75,000 to $100,000 without taxing shareholders, it's a home run."

But if you want to hit it over the wall, you've got to be ready to swing the bat. "Get your money lined up before this happens, whether you're in a condo or co-op," advises James Samson, the board's attorney at Georgetown Mews and a partner at Samson Fink & Dubow. "You've got to be ready to move quickly, and you've got be quick finding a buyer."

Michael Zerka of Blue Woods Management Group, who manages the 302-unit condo The Columbia at Broadway and 96th Street, won't argue with that. When a unit-owner died, the executor entered into a contract to sell the apartment for $900,000, well below market value. Zerka thought it too low, brought it to the attention of the condo's 12-member board. At his urging, a majority of unit-owners voted to exercise the right of first refusal. Five sealed bids were received within the tight, 15-day window allowed in the bylaws. The apartment ended up selling for $1,317,000.

"And $417,000 went into the building's reserve account," Zerka says. "That was a great deal. A home run."

 

Adapted from Habitat March 2010. For the complete article and more, join our Archive >>

Illustration by Marcellus Hall