Q: Can you clarify the status of the so-called "right of first refusal," which I understand is built into District law? If I am exempt from the rent control provisions, does this right still apply? Are there similar rights in Maryland and Virginia?
A: To the best of my knowledge, there are no such rights of first refusal in Maryland or in Virginia.
In the District of Columbia, as a result of the rent control legislation, there is a "right of first refusal" that must be given to tenants under various circumstances. It really does not matter whether you are covered under the other provisions of rent control - and even if you own but one single-family residence, the provisions of the right of first refusal apply.
Here's how it works:
In a single-family house, the owner must give the tenant an apportunity to purchase at a price that represents a "bona fide" offer of sale. This means that the landlord must offer the property to the tenants at a reasonable market value price.
The landlord must give a written offer to the tenant. This offer to purchase must include the asking price for the house, and a statement of the tenants' right to purchase under the laws of the District of Columbia. Tenants must be given at least 45 days in which to make a contract with the landlord at a mutually agreeable price and under mutually agreeable terms.
Additionally, the tenant has the right of first refusal during the first 15 days after the landlord has received a valid sales contract or other written offer to purchase from any other prospective purchaser.
And, if the housing accommodation is not sold during the six-month period following the original offer to the tenant, and if the housing accommodation is still being offered for sale, the landlord is required to make another offer to the tenant in the same manner as described above.
In most situations, this should not be create any problems for landlords. In fact, most landlords who decide to sell their property are delighted if tenants want to purchase - providing the prices are right.
In the case a of a housing accommodation of four or fewer rental units, the landlord has a similar obligation to give the tenants an opportunity to purchase the entire housing accommodation at a price that represents a home fide offer of sale.
Tenants must be given at least 45 days in which to contract with the landlord. At the end of this 45-period, the landlord must provide an additional 15-day period during which any one of the current tenants may contract to purchase. Thus, for all practical purposes, there is a 60-day period in which this right of first refusal applies.
In the case of larger apartment complexes, where there are more than four rental units, the landlord must give the tenants an opportunity to purchase, but only if they are an organization of tenants with the "legal capacity to hold real estate," and they have given the landlord written notice of their interest in purchasing the building.
There are many interesting questions which have not yet been resolved in the Dstrict. For example, must the landlord of a building containing three commercial tenants and one residential tenant give the residential tenant a right of first refusal? The law is unclear, but it certainly doesn't hurt the landlord to give the right of first refusal anyway. After all, if you want to sell your building, does it really matter who buys it, as long as you get your price?
Benny L. Kass is a Washington attorney. Write him in care of the Real Estate section, The Washington Post, 1150 15th St. NW, Washington 20071.