Quarky, LLC v. Gabrick.
2024 COA 76. No. 23CA2005. Common Interest Communities—Recorded Declarations—Right of First Refusal—Third-Party Offer.
July 18, 2024
Glickman, Quarky, LLC, and Gabrick were each owners of individual condominium units in the Silver-Glo condominiums (the condos). The condos are governed by a declaration that contains a right of first refusal (ROFR) in favor of the current owners (declaration). The ROFR requires a selling owner who has received a bona fide offer from a prospective purchaser to first offer to sell their unit on the same terms and conditions to the remaining condo owners. Glickman entered into a contract with Gabrick to purchase Gabrick’s unit for $1,075,000. Consistent with the declaration, the title company sent notice of Glickman’s offer to all condo unit owners advising them of their right to exercise their ROFR in accordance with the declaration. The next day, Glickman paid the title company a down payment of $55,640 as required by her contract with Gabrick, and she also exercised her own ROFR as an existing condo owner. Quarky similarly notified the title company that it was exercising its ROFR to purchase Gabrick’s unit and tendered a matching $55,640 down payment to the title company two days later. Both Glickman and Quarky then took additional actions to attempt to complete their purchases of Gabrick’s unit: Quarky wired the title company the full purchase price for Gabrick’s unit, and soon after, Glickman executed and delivered closing documents to the title company and tendered payment in full.
Quarky filed this lawsuit and a notice of lis pendens against Gabrick while the title company’s 20-day notice period was open, seeking specific performance and claiming that Gabrick was legally obligated to sell the property to Quarky. The district court granted Glickman’s motion to intervene, and she sought a declaratory judgment that she alone was entitled to purchase Gabrick’s unit. Quarky and Glickman filed cross-motions for summary judgment, and the district court entered summary judgment for Glickman because she was the first to exercise her ROFR.
On appeal, Quarky contended that the district court erred by granting summary judgment for Glickman because an ROFR may only be exercised by a person who isn’t already a party to the contract subject to the ROFR, and it strictly complied with the ROFR requirements while Glickman didn’t. An ROFR must be strictly construed because it necessarily restricts the free transfer of property. The court of appeals held that absent specific language in the declaration or other instrument containing the ROFR, a condominium unit owner who offers to purchase a selling owner’s unit is not a third party whose offer triggers a right of first refusal held by the remaining owners. Here, the declaration does not specifically provide that a Silver-Glo unit owner’s offer to purchase a fellow owner’s unit triggers the ROFR. Accordingly, Glickman’s offer to purchase Gabrick’s unit didn’t qualify as a third-party offer that triggered Quarky’s ROFR, and Glickman was entitled to summary judgment.
Quarky also argued that triggering the remaining owners’ ROFR when a fellow owner makes an offer on a neighbor’s unit helps ensure that all owners receive the highest possible price when they sell. However, nothing in the declaration suggests that its purpose was to allow an owner to sell their unit on favorable terms.
The court granted Glickman’s request for her costs under C.A.R. 39 but denied her attorney fees under C.A.R. 39.1 because her complaint in intervention sought only declaratory relief.
The judgment was affirmed.
The full opinion is available at https://www.coloradojudicial.gov/system/files/opinions-2024-07/23CA2005-PD.pdf.