In last month's column I wrote about a very outdated Bylaw that is contained in most condo Association‘s Declarations. This Bylaw, "the right of first refusal" is preventing the majority of qualified buyers from purchasing condos that are currently on the market.
With the current real estate market being in the state it is in today most qualified condo buyers need to come up with at least 10 % down for a conventional loan. These buyers are good buyers with great jobs but simply do not have the ability to come up with a 10% down payment.
However, they most likely can come up with at least 3% down and the only loan product that exists for them is the FHA loan. Well, according to FHA guidelines, condo Associations cannot in any way have this "right of first refusal" contained in the Declarations. It is looked upon as potentially discriminating. I also mentioned that in my entire career as a Realtor, I along with my colleagues I spoke with, have never seen "the right of first refusal" exercised.
Since last months column ran I have been approached by many people applauding the fact we need condo associations to amend the Bylaws. These people are Realtors, local lenders, mortgage brokers, real estate attorneys, Title companies and yes, the general public.
Please understand by amending your associations Bylaws to strike out "the right of first refusal" you will be doing a multiple of good. You will get condo units in your building exposed to a much greater pool of very qualified buyers, you will help in getting these units sold faster, you will be preserving and most likely increasing the value of you entire building's units and finally helping a fellow neighbor who may be in dire straits to sell his or her unit. Please view this as an absolute win for everyone involved.
There are many condo associations in our 3 villages of Oak Park, River Forest and Forest Park. Most likely there are more than 100 condo associations and very few of them are FHA approved. It is important to note that the condo buildings that do not have this bylaw are the recent condo conversions and new construction developments. Why is this? It is because these developers get it. They want to attract the greatest number of buyers and if you visit these buildings you could never tell the difference between a conventional owner or a FHA owner. It is simply the different type of financing a buyer wishes to use.
There is another wrench in this whole mess and that is the VA loan. These are loans especially designed for our service men and women. VA guidelines also do not allow the "right of first refusal" to be contained in a condo's bylaws. How sad it is that these great Americans, some coming back from the war can't qualify to purchase a condo using a VA loan.
I understand that most condo associations probably don't realize the possible implication of this bylaw with never thinking for a moment that they would ever exercise this option. I too live in a great condo building that is run by a very qualified and diverse group of people. I could never think they would ever kick out a qualified buyer and buy the unit using association monies.
I encourage our local governments to support in some way a resolution to assist and encourage condo associations to drop this archaic, useless, and potentially discriminating Bylaw. We need this done now and I would me more than happy to help. However, ultimately this is the condo association's decision and I respect that decision whatever it may be.
Gary Mancuso is the current president of the Oak Park Area Association of Realtors and is a Realtor with Re/Max In The Village, Realtors.
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