Which Governing Body Must Approve an Association's Sale of Real Estate?

Real Estate and Assets

Prepared by: Constantinople

An association's purchase or sale of property cannot be left solely to its chair's approval. Article 22 of the Associations Law provides for transactions by board resolution following authorisation by the general assembly. Whether general management authority covers the contemplated property disposition is checked against the specific resolution and constitution. The representative authority of the person signing at the Land Registry and the internal authority of the body deciding on the transaction are different issues. Both must be examined for compliance.

The current constitution, general assembly and board resolutions, title record, encumbrances, manner of acquisition and transaction draft are required. Property acquired by donation may be subject to use conditions or other restrictions. How the sale price was determined, the payment account and the connection between proceeds and the association's purpose are also important. If an administrator passing the resolution is connected with the buyer, the conflict of interest is assessed separately. The property notification required after acquisition is an obligation separate from completion of the title transaction.

Transaction documents should be reviewed before signature to clarify the decision chain and representation document. Where records relate to a branch or the head office acts, the legal entity that is the party must be identified. In a dispute after a title transfer, validity, liability and restitution claims are examined separately; a missing resolution cannot be said to produce the same result in every case.