Most shelters and rescues do that. They don’t want a dog going to a family/person that can’t reasonably take care of it. A large, energetic dog living in a small condo with no yard will be destructive and cause problems. That type of situation will be very hard on a dog, and even harder if the owner becomes frustrated and either abandons or beats the dog. It’s better off dead then in a situation like that.
Also, the org I foster for also has similar provisions in the contract as stated previously in the thread.