Cohousing-L Mailing List: Re: Right of First Refusal

[Sharon Villines (sharon]

On 18 Apr 2011, at 9:15 PM, Linda S Cooper wrote:

> Our community has a "right of first refusal" in our declaration of condo.
> We have been refused refinancing by the VA because of this issue and are
> told that commercial lenders will be even more strict than the VA. 

That commercial lenders are more strict is not true because people are getting 
mortgages from commercial banks with the clause in place. "Some" may be more 
strict but who knows?

The VA and I think either the Freddie or Fannie refused to lend on this basis 
recently, for the first time, but commercial loans were available to the same 
individual, and others have gotten mortgages with commercial banks in the last 
few years with it in place.

One solution suggested here in the past was to add a clause that exempts banks 
who are foreclosing. That protects the bank but preserves the right of the 
community to act in other situations. Foreclosures are a long time coming — 
they do not happen overnight so the community would presumably know that a unit 
was in trouble and could take action before a foreclosure occurred. And a 
foreclosing bank would certainly be happy to sell to the community anyway. 

What banks are trying to avoid is situations where the condo association is not 
acting but has the right to act — and we all know that that occurs. Even with a 
time limit, once the Board signs a contract they can drag things out with 
various ploys or inabilities. Banks don't want to be held up by that.

We haven't changed our bylaws yet but have explored various wordings and I 
think run them by our lawyer. (I'm not on that team and they haven't reported 
out a final decision. We aren't jumping up and down to do this, as you see.)

Sharon
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Sharon Villines
Takoma Village Cohousing, Washington DC
http://www.takomavillage.org