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Condominium Properly Exercised Right Of First Refusal; Tort Claims Against Board And Board Members Dismissed

A condominium board of managers’ proper exercise of the right of first refusal provided under the By-Laws does not give rise to any claim against the Board of Managers or its members. Bittens v. Board of Managers of the Octavia Condominium, 2015 N.Y. App. LEXIS 7600, 2015 N.Y. Slip Op. 07540 (1st Dep’t Oct. 15, 2015).


            In this case, the plaintiff contracted to purchase a condominium unit from its owner.  As required by the governing documents of the condominium, the selling unit owner notified the Board of Managers of the pending sale.  The Board of Managers decided to exercise its right of first refusal to acquire the unit.  The would-be purchaser then sued the Board of Managers, the individual board members, the managing agent, and the Condominium’s attorneys for tortious interference with the contract of sale and for fraud.


The court dismissed the suit.  The claim for tortious interference was properly dismissed because the contract of sale was always subject to the Board’s right of first refusal, so the exercise of that right did not constitute a breach of contract that could give rise to a tortious interference claim.  Moreover, the court observed, “[t]he board properly exercised the right of first refusal, financed the purchase at the original contract price through its designee and ultimately purchased and resold the property for profit, all in accordance with the condominium’s bylaws.”


The purchaser contended that the Condominium’s exercise of the right of first refusal was tainted because one Board of Managers member was also a member of the purchaser selected by the Board.  The court held that despite this fact, “the record shows that the board’s action was ‘taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes.’”  Finally, the fraud claim was dismissed because the purchaser “failed to show any knowing or material false representation by defendants.”