Our Clients Ask Us: Can We Stop Delinquent Owner From Purchasing Other Units

Question:  

We have a delinquent owner who is trying to buy up more properties in the association instead of paying back the delinquent maintenance fees already owed.  Can we stop the owner from purchasing any other units?

Answer:

Maybe.  The first question to ask is whether the association has a right of first refusal in your governing documents.  If so, this might be one of the rare occasions where we might advise the association to exercise the right, which would provide that the association would have to buy the property from the current owner on the same terms as the new owner. Depending on how your governing documents are written, this may require a vote of the membership rather than just the board, and require that the association have the funds available.

Otherwise, keep in mind that if the owner is delinquent on one unit, we may obtain a judgment against them which would eventually attach to all units the person owns. While this situation may become more complex if the owner has placed the units in title to an LLC or trust, there are still means available in certain circumstances to pierce the corporate veil to reach other assets of the owner. 

Overall, it is best to follow a strict collection policy and let the owner know that they are not going to get away without paying on yet another unit.

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