HOA Nut House

Non-binding Village Board action is intended to make it easier to obtain FHA financing

By Joseph Sjostrom | Special to the Chicago Tribune

The Oak Park Village Board this week passed a resolution intended to promote easier financing for condominium purchases by doing away with the authority known as "the right of first refusal."

The resolution, proposed by real estate brokers, urges condo boards and associations to relinquish their authority to prevent the sale of a condo unit to a buyer who's not to their liking.

The right of first refusal is normally contained in condo bylaws or in a contract between the condo board and individual unit owners, said Gary Mancuso, president of the Oak Park Area Association of Realtors.

However, if a condo board blocks a particular sale, bylaws typically require that the board buy the unit from the owner at the price the owner and buyer agreed upon.

Mancuso told the board that the provision has often stifled condo sales in Oak Park.

He said the Federal Housing Authority will not guarantee a loan for the sale of a unit in a building in which the board holds the right of first refusal, Mancuso said.

Consequently, condo units in such buildings are effectively outside the reach of prospective buyers who need the special rates and low down payment possible with an FHA loan, he said.

Tammie Grossman, the village's manager of housing programs, told the board that the FHA dislikes the right of first refusal because it could enable a condo board to block sales on illegal grounds such as race.

Village Trustee Greg Marsey urged the board to reject the resolution, arguing that the right of first refusal allows a condo board to block a sale to unqualified buyers at harmfully low prices.

The right of first refusal "allows condominium associations to prevent a free fall in the value of [their] units," he said.

Mancuso said there are 273 condominium associations in Oak Park, and that only 14 percent of them are approved for FHA loans.

The resolution, which is not binding on condo associations, passed on a voice vote with only Marsey voting against it.

Also at Tuesday's meeting, the Village Board approved a resolution calling on the Illinois attorney general to investigate what it calls "price manipulation and anti-competitive activities" by companies selling road salt this fall.

Village staff members told the board that road salt is already in shorter supply and much more expensive than last winter, when frequent snowstorms and a shortage of salt forced Oak Park and other communities to cut back on salting.

The resolution states that the price of road salt last winter was about $40 per ton. It also states, without naming sources, that this year Wisconsin and Michigan communities have received quotes of $49.85 and $45.26, respectively, per ton of salt but that northeastern Illinois communities have been told to expect prices of up to $232 per ton.

The salt industry's explanation that the higher prices are because of higher diesel fuel costs is "clearly not supported by the facts," the resolution states.

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