Q: We own a small, six-unit rental property in the District of Columbia. Each unit has two bedrooms, and the tent for each averages $310 per month. Because of our concerns about rent control, we are considering converting the property into a condominium, selling all of the units , and getting out of the rental market in the city. Can you tell us whether we can convert, and if so what steps must we take?
A. Before I respond to your specific question, I must answer you in general terms - and perhaps let off a little steam at the same time.
There are too many people here in the District who are convering their rental units into condominiums, and blaming rent control for their actions. Frankly, I don't believe our rent control laws are all that bad. There are many landlords who are able to live with the legislation, and have not been forced into the porthouse.
While there is nothing wrong with converting into condominums, we should try to be a little more objective - and not put all the blame on the City Council.
Turning to conversions, the District of Columbia Condominium Act of 1976 specifically authorized the conversion of existing housing accomodations if one of three tests are met:
The housing accommodation is a high-rent building, or the rental unit is located in a high-rent building. The Council has recently redefined "high-rent" to mean monthly rents at least $174 for efficiency rental units, $228.50 for one-bedroom units, $287 for two-bedroom units, and $403 for units with three or more bedrooms.
Obviously, since your apartment complex appears to be such a "high-rent" accommodation, I suspect you will have no trouble obtaining a certificate of condominium eligibility from the District government.
If the city government has determined that the current apartment vacancy rate in the city is higher than 3 percent. There is a formula to be used in making this determination, and thus far no such decision has been made for the city.
If a majority of the heads of households actually residing in your building (as of the date on which the condominium conversion application is filed) sign a written agreement consenting to a conversion. Here, a landlord should be cautioned that no force or other coercion shall be used to "persuade" a tenant to sign such a consent form.
Assuming, then, that your rental units qualify for conversion, you must file a formal request to the Neighborhood Improvement Administration, which is a part of the District's Department of Housing and Community Development. A standardized form - available from the District - must be filled in, notarized, and submitted in triplicate.
Whereas the District government does not always act with the greatest of speed, the Neighborhood Improvement Administration should be commended for its rapid handling of most certificates of eligibility. It usually takes only a couple of weeks.
Once you receive the certificates, a lengthy application and disclosure statement must be completed. No condominium development is permitted to sell any new condominium unit without giving a prospective purchaser a document known as a "public offering statement" and this material must be approved by the District government, prior to any sales.
It should also be pointed out that your tenants must be given at least 120 notice of the conversion before you can serve them with a notice a vacate. During the first 60 days of this period, your tenants have an exclusive right to purchase your condominium units - and at the same terms as are being offered to the general public.
Here's a suggestion to consider - whether you own a few units or several hundred. If it is clear that you will sell your apartment complex, approach your tennants early. It may very well be that they might want to buy the building themselves - and they will convert it into a condominium or co-operative.
All too often, two qualifications are missing in the relationship between landlord and tenant, namely, communications and public relations. Perhaps, with those qualities, we wouldn't need all the legislation.
Benny L. Kass is a Washington attorney. Write him in care of the real estate section, The Washinton Post, 1150 15th St. NW, Washington, 20071.