When renters of single-family homes, which include condos and co-ops, were notified that their landlord intended to sell, they would sometimes demand lots of money to release their TOPA rights.
Last month, the D.C. Council sought to remedy this problem. It passed a bill that, to a large extent, eliminated TOPA from single-family dwellings. The council relied, in part, on a study that showed from Oct. 26, 2009, through Aug. 15, 2015, out of 398 TOPA offers only 19 were successful. In other words, although landlords complied with TOPA, less than 5 percent of renters ended up buying their home. The law is awaiting Mayor Muriel E. Bowser’s signature. Once she signs it, there will be a 30-day period of congressional review before it becomes final.
In simple terms, the new law abolishes TOPA as it applies to single-family dwellings, which includes condominiums and co-ops. Accessory dwelling units (ADU), such as basements or garage apartments separate from a main home but with their own bathrooms, kitchens and entrances, are exempt from the law, even if there are renters in the main house and the ADU.
Under the new law, renters will still have to be notified of their landlord’s intent to sell. But unlike the TOPA notice, it does not trigger a right to purchase. A notice also must be provided to D.C.’s Office of the Tenant Advocate.
The law differs for renters who are 62 or older or have a disability. For those tenants who signed a lease to occupy a single-family dwelling before Dec. 31, 2017, and occupied it by Jan. 15, 2018, a modified TOPA still exists. They must respond within 20 days after receiving notice the landlord intends to sell. If the tenant wants to buy the property, he would have 25 days to negotiate a sales contract, and closing must take place 45 days thereafter. However, if a lender needs more time, the tenant can have an additional 30 days in which to get lender approval and take title.
The D.C. Council was sensitive to the concerns of the real estate industry — and many homeowners — that tenants were flipping (assigning) their rights to speculators for large sums of money and also delaying closing. The new law is clear: The only consideration an elderly or disabled tenant can receive for selling his tenant rights is the “right to immediately use and occupy the tenant’s unit for a period of 12 months following the sale and at the same rent charged at the date of the offer.”
Before the law, TOPA covered single-family properties, properties with two to four units and buildings with five or more units.
The latter two remain in place. Renters in those properties still have the right to purchase their property under TOPA, although those who live in a building with more than five units must be represented by a formal tenant association. The time-frames in which the tenants (or their association) must respond vary. For example, if you live in a building with two to four units, all renters must express an interest in buying to trigger TOPA. If not everyone is interested or if 15 days elapse since the TOPA notice was given by the owner, any tenant can assert his right to buy his home, but he must do so within seven days thereafter.
The tenant (or tenants) have 90 days to negotiate a contract to buy, and if a contract is entered into, the buyer has another 90 days to go to closing. If a lending institution notifies the tenants in writing that it needs more time, the settlement can be extended for another 30 days.
The TOPA process involving buildings with more than five units is even more complex. After the tenants receive a TOPA notice, they have 45 days to form a tenant organization with the legal capacity to hold property. They then have 120 days to enter into a contract, and another 120 days to take title. Once again, if a lender needs more time, the landlord must extend the deadline in accordance with the lender’s estimate of how long it needs.
Since its enactment, TOPA has been the subject of hundreds of lawsuits, some brought by landlords and others by tenants. I suspect that litigation will continue when it comes to buildings that still fall under the TOPA regulations. It is too soon to tell how the new law will affect renters and landlords of single-family properties.