The Condominium Board at the Time Warner Center Condominiums was allowed to exercise its right of first refusal and purchase a condominium unit on behalf of a prior prospective purchaser who was unable to purchase the unit from the Seller who had hired a real estate attorney.
In The South Tower Residential Board of Managers of Time Warner Center Condo. v. The Ann Holdings, LLC, the seller, Ann Holdings, had been, through her real estate attorney, in negotiations with a prospective buyer for the purchase of a unit at $7,800,000. When negotiations floundered, the seller sought to sell the unit to another buyer for the price of $7,400,000. Pursuant to the condominium’s by-laws, the Seller gave notice of the sale to the Condominium Board so that it would waive its right of first refusal. The Condominium Board however exercised its right to acquire the unit and entered into an agreement with the first prospective purchaser to assign the unit to him for additional consideration. When the Seller discovered this, it refused to close and the Condominium Board sued for specific performance.
In his decision, Judge Anil Singh ruled that the Condominium Board was within its right to acquire the unit and then exercise its right to assign the unit to the prior prospective purchaser for an additional fee. The Court ruled that this additional fee was in the interests of the Condominium’s unit owners and was protected under the business judgment rule applicable in the State of New York. The fee generated for the unit owners was in furtherance of their interests and benefited the Condominium. Thus, the Court had no authority to interfere with the good business judgment of the Condominium.
Peter Moulinos indicated that this case was significant as it insulated a condominium board from liability in a decision taken which contrary to the interests of a unit owner but in furtherance of the interests of the entire Condominium.