Right of First Refusal
From: Joani Blank (joaniswansway.com)
Date: Thu, 12 Oct 2006 00:32:39 -0700 (PDT)
I want to clarify something about right of first refusal as I understand it. Because I'm right now in the process of selling a unit in a cohousing community (Don't worry, I'm not leaving cohousing. This unit is in another state), I had reason to learn more about the right refusal that the community has.

It turns out, in this case at least, that the HOA can exercise that right for only two reasons, neither of which is that they don't like the buyers or that they think they'd be bad cohousers or anything like that (which would clearly constitute discrimination). The two reasons are as follows: One would be if I were offering the unit for sale at a price that is significantly below the market value, the rationale being that that would have a negative impact on the resale value of all the other units in the community. The second legitimate reason for exercising the right would be if the buyer was clearly stating in advance that he/she/they did not intend to follow the rules of the community as stated in the CC and Rs or Bylaws, or pay their homeowners dues, or something like that.

The best protection against having someone completely inappropriate move in to your community, is that the current residents be encouraged to sign an agreement (formal signing of such an agreement has to be voluntary) that they will not sell their unit to anyone who will not agree to participate (whatever participate means in your community. Everyone also agrees to make sure that any potential buyer understands what it is like to live there. And almost all communities do that by having a potential buyer attend a couple of common meals and perhaps some other community activity such as a meeting or a work day or both. To my way of thinking this is an extensive set of disclosures that are not required by law but taken as a whole are designed to assure that any buyer knows pretty much exactly what he or she is getting into. This is hardly discrimination As a matter of fact, whether the prospect ends up loving the community (and becomes a great cohouser), OR realizes that this community is not for him or her and decide not to buy, we have done him or her a great service by being open with them about life in our community.

I'm surprised to hear that people are having a hard time getting mortgages because a cohousing community they want to move into because the community has a right of first refusal. Perhaps if state law does not put narrow limits on the exercise of that right, we ought to be clear that our rights of first refusal DO not give us a right to buy a unit "out from under" someone just because we don't want to have that particular buyer in our community."

One more word about discrimination. I understand that housing discrimination--or any kind of discrimination for that matter--is illegal only if it is directed against a person or household because of their membership in a "class" of people who are frequently discriminated against such as people of color, women, gays and lesbians, people with children, etc. Am I wrong about that?

Joani Blank
Swan's Market Cohousing
Oakland, CA

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