Neighboring Condominium Unit Owner Properly Exercised Right Of First Refusal; Immediate Deposit Of Down Payment Was Not Required
In another recent case involving sale of a condominium unit, an appellate court also held that a right of first refusal had been validly exercised. In Bond & Broadway, LLC v. Funding Exch., Inc., 2015 App. Div. LEXIS 7597, 2015 N.Y. Slip Op. 7541 (1st Dep’t Oct. 15, 2015), the By-Laws of the Condominium provided that if any unit owner contracted to sell its unit, a right of first refusal must be accorded to the contiguous unit owners. When the owner of Unit 5 at the Condominium entered into an agreement to sell the unit, the owner of contiguous Unit 4 gave notice that it was exercising the right of first refusal. The Unit 4 owner indicated that it was prepared to enter into a purchase contract on the same terms as the existing contract, but it did not deposit a 10% down payment at the time it gave notice of its exercise of the right of first refusal. The contract purchaser had made a 10% down payment which was being held in escrow, pursuant to its contract of sale.
The existing contract purchaser sued to enforce its contract of sale, contending that the Unit 4 owner had not validly exercised the right of first refusal because, among other things, it had not immediately made the 10% down payment. The court rejected this contention, finding that the Unit 4 owner was not required to make the down payment as a condition of exercising the right of first refusal. Rather, the contiguous owner “would be bound by the requirement to make a 10% down payment only after entering into a contract of sale with [the Unit 5 owner] on the same terms and conditions” as the contract that was being matched. Moreover, the existing contract purchaser would not be a party to any contract between the Unit 4 and Unit 5 owners, and therefore “would have no standing to sue for breach of that contract” in any event.