By DAVID A. RAHNIS
Pursuant to the District of Columbia’s Rental Housing Conversion and Sale Act of 1980, as amended (D.C. Law 3-86, Section 42-3401.01 et seq. 2001, commonly known as “TOPA”), D.C. residential tenants are provided with certain special rights.
Before the owner of a tenant-occupied housing accommodation can sell the accommodation, the owner must first provide the tenant or tenants with the opportunity to purchase that residence. In essence, owners of residential property in D.C. who rent the property to tenants own their real estate subject to tenant TOPA rights. TOPA applies to multi-unit apartment buildings and to “single family accommodations”, which includes single-family homes and condominium or cooperative apartment units. TOPA does not apply to hotels, motels or other structures used for transient occupancy.
Under TOPA, prior to the sale of a housing accommodation, the owner must send, by first class mail, a written offer of sale to each tenant and the Mayor of the District of Columbia. The bona fide offer of sale must contain the asking price, a statement that the tenant has the right to purchase the accommodation, the material terms of the sale as well as certain specific representations. An owner of an accommodation may not request a waiver of the right to receive an offer of sale. The D.C. Department of Housing and Community Development publishes TOPA tenant notice and offer of sale forms on its website. The forms vary depending upon whether the property owner already has a third party contract in place and how many units are included within the housing accommodation. In most cases, notices to tenants occur after an owner has already reached an agreement with a third party purchaser and the sale terms have been established. The timeframes during which the parties are required to take action vary depending upon the type of housing accommodation involved.
In the case of a single-family home, condo or coop unit, upon receipt of the written offer of sale, the tenant has 30 days to provide a written statement of interest to purchase the property to both the owner and the mayor. If the tenant fails to timely provide a written statement of interest, the tenant’s rights under the offer of sale will expire.
If the tenant does submit a written statement of interest to purchase, the tenant has a minimum of 60 days from the date of submission to negotiate a contract of sale with the property owner. The negotiation period may be extended if the owner fails to furnish the tenant with specific required information. TOPA also provides the tenant with not less than 60 days from the date of contracting to secure financing. Under certain circumstances, the owner may be obligated to provide the tenant with an extension of time to obtain financing. Furthermore, the tenant has a separate 15-day absolute right of first refusal to match any third-party contract to purchase the accommodation, which right cannot be waived. This means, for example, that the 60-day negotiation period described above may be extended by 15 days if the owner enters into a contract with a third party during the negotiation period.
If the owner has not sold or contracted for the sale of the accommodation within 180 days from the date of a valid offer of sale, the owner must once again comply with the requirements of TOPA, including the issuance of a new offer of sale to each tenant and the mayor. Also, it should be noted that if an owner contracts to sell the accommodation to a third party at a purchase price more than 10 percent less than the price offered to the tenant (or for other terms which constitute not bargaining in good faith), the owner is required to provide a new offer of sale to the tenant and the mayor.
TOPA contains additional tenant protections. For example, tenants are not required to demonstrate their financial ability to actually purchase the accommodation prior to entering into a contract. In addition, TOPA allows tenants to assign their rights to purchase to a third party (e.g., a developer).
However, there are several exceptions to the applicability of TOPA. An inter-vivos transfer between spouses, parent and child, siblings, grandparent and grandchild or domestic partners is not considered to be a “sale” subject to TOPA. Also, a transfer of legal title into a revocable trust, without actual consideration for the transfer, and where the transferor is the current beneficiary of the trust is not considered to be a “sale” under TOPA.
The TOPA statute is specific with respect to the parties that need to be notified and the timing of each notice. Moreover, TOPA states that third-party purchasers are presumed to act with full knowledge of these extensive tenant protections. Residential property owners, buyers and tenants all need to be aware of TOPA’s requirements in order to assure that all parties’ expectations are met when leased residential property is sold in D.C.
This is part of a series of monthly articles by Jackson & Campbell on legal issues of interest to the LBGT community. Jackson & Campbell is a full-service law firm based in Washington with offices in Maryland and Virginia. If you have any questions regarding this article, contact David A. Rahnis at 202-457-1673 or firstname.lastname@example.org. If you have any questions regarding our firm, please contact Don Uttrich, who chairs our Diversity Committee, at 202-457-4266 or email@example.com. The contents of this article are intended for general informational purposes only and should not be considered legal advice.