Q&A: Buying Power

Q We have a few units going into short sale and one of the unit owners mentioned she was interested in buying two of them. However, I was also told by one of the unit owners that a real estate agent was telling some of the owners that one person was interested in buying all of the units. My question is: is there a limit to how many units one person can own? After a point, when one person owns more than 50 percent how can you even operate an association when one person has majority control. I couldn't find anything in our bylaws that addressed the issue, but if one person can basically veto any rules or suggestions, what is the point of having an association or board? Also, can they buy the units for less than market value? If these units are sold through the short sale, the current unit owners are willing to sell for less than current market value thereby devaluing the rest of the units.

—Concerned in Chicago

A “Generally in an association's declaration, there is not a cap in the number of units that may be purchased by any one owner,” says attorney Robert B. Kogen of the law firm of Kovitz Shifrin Nesbit in Buffalo Grove. “If there is no such language in the association's declaration, the one person may own as many units as they purchase. In order to curb owners from purchasing a block of units, the board may want to consider enacting a leasing restriction amendment. This will help curb investor owners from purchasing units in the association.

“In addition, the owner asked whether a person is able to purchase a unit for less than market value. A person may purchase a unit for the price the seller is willing to convey the unit, which could be under market value. Some associations in Illinois have a right of first refusal. This would require the seller to advise the board of the contract-price for the unit prior to the completion of the sale. The board with the consent of the owners would have the ability to purchase the unit upon the same terms and conditions as the potential purchaser. Generally, associations do not exercise their right of first refusal as it does not make financial sense for the associations to do so. However, if a unit is selling for well under market value, the board may want to consider exercising the right of first refusal.”