Cohousing-L Mailing List: Re: ROFR

[Kay Argyle (Kay.Argyle]

> We got rid of the ROFR from our bylaws.
"Why did you get rid of it?"  Rebecca

We don't know that we ever actually lost any sales for lack of FHA approval.
After all, when some person on the tour who asked about FHA financing
doesn't call again, was that the reason, or something else? We'd had sales
that fell through when a buyer couldn't get financing; maybe some of them
might have qualified for FHA if we were an approved project.

We did know that we could easily have lost a sale. Fortunately the buyer
qualified for a conventional mortgage, and wanted to join us enough to gulp
and take it instead of a cheaper VA loan (the VA rubberstamps anything with
FHA approval).

Balanced against the nebulous possibility that a Right of First Refusal
might, at some unknown time in the future, give us a tool to fend off a
theoretical hostile sale by a theoretical disaffected ex-resident or
indifferent heirs, we had an instance of it causing actual harm (higher
interest), and a clear potential for it being a drawback in other cases.

It was at that point we first seriously discussed removing the ROFR from the
bylaws, although we didn't pursue it once we discovered the FHA also doesn't
like one entity owning more than ten percent of the units. We weren't about
to tell one resident he had to toss out his tenants, active members of the
community, pursuant to selling his two rental units. (We were under the
impression at the time that that rule would also apply to our
income-qualified units, partially owned by the condo association, but it
doesn't.)

Last year we had a test case -- a unit for sale by a relocation company,
with a realty agent who didn't know what cohousing was and didn't want to
know. It seemed like a time, if ever, when the ROFR might finally come into
its own. 

It dawned on us that exercising the ROFR meant coming up with over $200K to
buy the unit. Er .... 

(Fortunately a buyer found us on the intentional communities list, before
the realtor found anyone -- not that he was trying very hard.)

There didn't seem much point in keeping the troublesome clause, particularly
since, the landlord having sold one unit to a heretofore renter, the ten
percent rule was no longer a separate obstacle. So we revised the bylaws. 

Kay
Wasatch Commons
SLC
 
 

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