Resale restrictions placed on industrial condominium buyers by the condominium association’s bylaws are designed to protect the integrity, functionality, and financial health of the development. These restrictions help ensure that new owners meet community standards, maintain appropriate use of the units, and do not disrupt operational harmony. Before purchasing a unit, buyers must be aware of these conditions as they directly affect ownership rights and future exit options. Below are five categories of common resale restrictions found in association bylaws.
1. Right of First Refusal
- The association may hold a right of first refusal on any proposed resale.
- Before completing a sale, the seller must offer the unit to the association under the same terms.
- This provision allows the association to control undesirable buyers or maintain balance.
- The association typically has a limited window (e.g., 15–30 days) to respond.
- If declined, the seller may proceed with the original third-party buyer.
2. Buyer Approval Requirements
- The bylaws may require association board approval of any new buyer.
- Buyers may need to submit applications, business details, or usage plans.
- The board can deny approval if the buyer’s use is incompatible with zoning or association rules.
- Some bylaws restrict sales to owner-operators only, discouraging speculative or investor resales.
- Approval delays or denials must follow procedures outlined in the governing documents.
3. Usage and Occupancy Restrictions
- Resale may be limited to buyers who intend to use the unit for permitted industrial activities.
- Certain units may be restricted to light manufacturing, storage, or logistics, depending on zoning.
- The association may prohibit resale to businesses involving hazardous materials or high-traffic operations.
- Occupancy limits or specific tenant mix requirements may affect buyer eligibility.
- Violations may result in fines or voiding of the sales transaction.
4. Transfer Fees and Disclosure Obligations
- Sellers or buyers may be required to pay transfer fees or administrative charges to the association.
- Full disclosure of the resale, including sales price and buyer details, must be submitted in advance.
- Escrow agents may be required to withhold a portion of proceeds until approval is granted.
- Some associations require up-to-date dues payments and compliance certificates prior to resale.
- All association documents must be disclosed to the buyer before closing.
5. Leasing and Hold Period Restrictions Post-Sale
- Some associations impose minimum hold periods before a new owner can resell (e.g., 12–24 months).
- This discourages short-term flipping and promotes stable ownership.
- If leasing is allowed, restrictions may apply to timing or conditions after resale.
- Resale limitations may reset with each new transfer, creating long-term compliance expectations.
- These clauses are usually enforceable if included in recorded governing documents.
