Last week, I had the privilege of attending my first D.C. Council meeting as part of a contingent of roughly 200 real estate agents, attorneys, tenant advocates and homeowners.
The topic: D.C.’s Tenant Opportunity to Purchase Act (TOPA) of 1980.
The premise of the Act was a noble one. In response to burgeoning gentrification within the District it gave a tenant the first right to purchase the home in which he resided upon being informed by the owner that it was being sold. Notification procedures, transparency requirements and lengthy deadlines would ensure the tenant would have sufficient time to negotiate a contract, obtain financing, and settle on the home.
Embedded in the law was a provision whereby the tenant could transfer her purchase rights to another individual if she chose. What began as an avenue for the tenant to secure a qualified buyer who would allow her to remain or receive a reasonable stipend from the seller to assist her in moving to a new location devolved into a “pay to play” situation.
Real estate agents began to see abuses of the Act. Tenants would seek substantial sums of money for their rights to purchase, which resulted in a new way to earn a living, both for the tenants and for the attorneys who represented them, and often held a sale hostage while negotiations took place.
With the assistance of the District of Columbia Association of Realtors (DCAR), TOPA finally found its way into local television news. A three-part investigative series prompted the D.C. Council, spearheaded by Council member Anita Bonds, to focus on how the law had gone from protecting tenants to hurting homeowners, raising the cost of housing, and reducing D.C. housing stock for the very tenants TOPA was designed to protect.
As a result, a task force made up of real estate agents, attorneys and tenant advocates was formed. Two amendments to TOPA were ultimately sponsored by members of the Council and became the reason we were all seated in Room 500 of the Wilson Building on the morning of Sept. 21.
The TOPA Accessory Dwelling Unit Amendment Act of 2017, sponsored by Council member Bonds and six other members, including Chairman Phil Mendelson, provides for an exemption from TOPA requirements for certain owner-occupied residences with accessory units such as basement apartments, carriage houses and converted garages. It also caps payments to tenants in those units at $1,500.
The Home Sale Facilitation Amendment Act of 2017, sponsored by Council member Brianne Nadeau, reduces the lengthy timelines currently in effect, streamlines the process, and exempts single-family dwellings that are the seller’s primary residence from TOPA requirements.
The Council meeting began with testimony from the co-chairs of the DCAR TOPA Task Force. As local title attorneys, they explained the impact of a confusing and costly process, the difficulty in confirming compliance, and the uncertainty of a timely sale.
Tenant advocates from AARP and the Legal Aid Society spoke out against the amendments, arguing that TOPA promotes homeownership, yet they, the title attorneys, and the real estate agents all agreed that it was seldom that a tenant bought the property they inhabited using the provisions of TOPA.
A homeowner adversely affected by TOPA tearfully told a horror story of renting her home to a family of three who proceeded to allow unauthorized people and pets to live there, broke appliances and fixtures, lived in filth, and failed to report leaks that resulted in mold. Repairs to the property totaled $7,000.
Despite being offered an additional sum to relocate, the tenants refused. The homeowner, who is now retired and living out-of-state on a fixed income, is still unable to complete the sale of her home. Her sentiment, that she would never again rent a D.C. home to anyone, was echoed by others who testified or sent letters to be read into the record.
A local attorney whose business is to seek out tenants who have been served TOPA notices proudly testified that, for a one-third contingency fee, he negotiates an average of $30,000 for the purchase of a tenant’s TOPA rights and often obtains debt forgiveness of up to $20,000. At this point, the audience erupted in anger.
Is it any wonder that people are shying away from renting their D.C. homes and looking for investment property in nearby Maryland or Virginia? Ironically, in an area where 52 percent of residents are renters, TOPA laws, instead of protecting tenants as intended, are reducing the amount of housing available to them.
So where do we go from here? A mark-up of the proposed amendments, a vote by the Council, and a 30-day review by the U.S. Congress. Stay tuned.
Valerie M. Blake is a licensed Associate Broker in D.C., Maryland and Virginia and Director of Education & Mentorship at Real Living| At Home. Call or text her at 202-246-8602, email her at Valerie@DCHomeQuest.com, or follow her on Facebook at TheRealst8ofAffairs.