Overview
The right of first refusal lets a condo association, its board, or a designated buyer step in and purchase a unit under contract before it's sold to an outside buyer, on the same terms the outside buyer agreed to. It's not something listings typically disclose, so it often surfaces mid-transaction rather than upfront. Understanding whether a building has this clause, and what happens if it's exercised, matters for both buyers and sellers of Miami condos.
What Is a Condo Association and Board of Directors?
A condominium association is the legal entity made up of all unit owners in a building, responsible for managing the property, enforcing rules, maintaining common areas, and overseeing the association's finances. It's governed by an elected board of directors, who make key decisions on the association's behalf — including whether to exercise a right of first refusal.
What Is the Right of First Refusal?
This clause gives the condo association, its board, or a designated unit owner the option to purchase a unit under contract before it's sold to an outside buyer, preserving the community's character, financial strength, or ownership makeup. It's typically written into the association's governing documents — the declaration of condominium, articles of incorporation, bylaws, or rules and regulations. Associations use it for reasons like preventing a sale to an unqualified buyer or maintaining owner-occupancy ratios.
How It Works in Practice
- Seller accepts an offer: The seller signs a contract with a prospective buyer.
- Buyer submits an application: This typically includes a credit report, background check, personal and financial information, and a copy of the executed purchase agreement.
- Association review period: The board reviews the application and has a set window, usually 10 to 30 days, to decide whether to waive or exercise the right of first refusal.
- Decision: If the association waives its right, the sale proceeds as planned. If it exercises the right, the unit is sold to the association, a current owner, or another designated buyer, under the same contract terms already negotiated.
This isn't a renegotiation. The board has to accept the terms as written or let the original sale go through — it can't counter-offer or change the price.
Who Can Exercise the Right?
- The condo association itself may buy the unit
- A current unit owner may be assigned the right to purchase instead
- The board may select a third-party designee
Which option applies typically depends on the specific language in the building's governing documents.
How to Find Out If a Building Has This Clause
Unfortunately, this usually doesn't become apparent until you're already in the middle of a transaction, since most Miami condo listings don't disclose it. To check ahead of time:
- Review the condominium documents, especially the declaration and bylaws.
- Ask the property manager or board directly, though they may not give a clear answer without a formal request.
- Have your attorney review the documents early in the process, before you're deep into negotiations.
What This Means for Buyers
- Your accepted offer could still be replaced by the association or another party.
- The association's review period can delay your closing timeline.
- It's worth building association-approval contingencies into your contract to protect yourself.
What This Means for Sellers
- You're required to notify the association and follow its specific process.
- The sale isn't final until the association waives or exercises its right.
- Skipping the required process can put the sale at risk of being voided or lead to legal complications.
