Q. We own one house in the District of Columbia, which we have been renting out for a number of years. We now plan to sell this house, but are very confused about the legal requirements to give our tenants the right of first refusal. What are these rights, and how much time do they have?
A. It has often baffled me why landlords sometimes worry about selling their property to their tenants. Regardless of how the tenant has treated you or your property, does it really make a difference whether you sell to the tenant or to an outsider-so long as you get your price and the settlement date is not unnecessarily delayed.?
Thus, landlords contemplating selling property should approach their tenants with an offer, in writing, indicating that the property will be sold, and that the tenant has an opportunity to purchase at the asking price. Of course, the price-according to the D.C. rent control law-must be a "bona fide offer" which means that it must be at the same price as being offered to the general public.
Tenants must be given at least 45 days, the minimum in D.C., in which to enter into a contract with the landlord for the purchase of the property.
If the tenants do not want to buy, you should have them give you a letter specifically waiving their right to purchase.
Once they have waived their rights, you have complete freedom to offer the property to outsiders, so long as the offering price is comparable to that which was offered the tenant.
However, if you still have not sold your house after six months following the original offer to your tenant, and if you continue to offer the property to the public, you are required to give your tenant another right of first refusal.
Once you receive a valid sales contract from a third party, and if the tenants have not waived their rights to purchase, the tenants have an additional 15 days' right of first refusal to match that offer.
Thus, if a tenant does not waive the right of first refusal, there is a 45-day plus an additional 15-day period in which the tenant has to exercise the refusal right.
This is not really as complicated as it sounds. In the final analysis, offer the property to your tenants first, and if they don't want to purchase try to get them to sign the written waiver of their rights.
Additionally, keep in mind the fact that if you enter into a contract with your tenant, your earnest money deposit can be no more than 5 percent of the sale price. This deposit must be refundable to the tenant in the event of any "good faith failure of the prospective buyer to perform under the contract." And settlement must take place no less than 60 days after the date of the purchase contract-unless the tenant wants an earlier settlement date.
Can you evict the tenant if they do not want to purchase the property? Yes, but the tenant must be give 90 days' notice from the date that you have signed a contract to sell.
Living with the rent control laws in the District of Columbia is not that difficult. Once you learn the rules, you will find they are not too onerous-providing you anticipate the various time limits required for the protection of the tenant.