Tenants in the District of Columbia have various rights that are activated when their landlord decides to sell the building they live in. These rights are generated under the Tenant Opportunity to Purchase Act (“TOPA”). TOPA is intended to (1) reduce the impact of displacement of tenants that can occur when neighborhoods experience gentrification, and (2) to encourage tenants to become homeowners.
These goals are accomplished by providing tenants with various rights when apartment buildings are either converted into condominiums or sold to new owners, and through these rights, providing tenants with significant bargaining power that can be converted into various benefits that prevent, or alleviate the effects of, displacement.
When the owner decides to sell, the tenants get first crack at buying the accommodation. TOPA provides that before an owner of a housing accommodation may sell, the owner shall give the tenant an opportunity to purchase the accommodation at a price and terms which represent a bona fide offer of sale. Additionally, if an owner already has entered into a contract to sell the accommodation to a third-party, then the tenants have a right of first refusal with respect to the contract. This gives the tenants the right to step into the shoes of a third-party, and to purchase the accommodation on the terms set forth in the third-party contract.
To perfect their TOPA rights, tenants who receive an offer of sale from an owner must take various steps and must do so within some very tight time-lines. Tenants who live in a building with five or more units, must form a tenant association if they do not already have one, and the tenant association can then negotiate with the owner to purchase the building. When the tenants receive an offer of sale, they must form an appropriate tenant organization and take the following actions, within 45 days:
Form a non-profit corporation
Adopt bylaws and appoint officers
Sign-up a majority of the tenants
File the application for registration
Notify the owner
When tenants are successful in taking these steps within 45 days, then additional deadlines are triggered. These including deadlines for the negotiation of a contract of sale between the tenant organization and the owner of the accommodation (in accommodations with 5 or more units, a minimum of 120 days), and deadlines for obtaining finances and going to closing on the sale of the accommodation (in accommodation with 5 or more units, a minimum of 120 additional days, subject to extensions up to 240 days). Thus, the entire process of negotiating for the purchase of the accommodation, obtaining finances, and going to closing can take up to a full year after the tenant organization is organized.
TOPA rights are extremely valuable not only because the District of Columbia suffers from a rental affordability crisis – studio apartments in Washington D.C. can range from $1,500 a month and two bedroom apartments can be as much as $6,000 a month – but also because TOPA provides tenants with substantial negotiation leverage and can help tenants with financial resources not otherwise available to them. Among the resources are the ability to become a homeowner, or in some cases, a cash settlement or an agreement to remain in the rental unit at below market prices. An experienced attorney can help tenants protect their rights under TOPA and assist them in negotiating the best deal under those rights. Aziz Jewell & Mendoza represents tenants in TOPA matters, assisting them with the formation of tenant associations, letters of intent, and negotiations with potential developers.
The information contained in this article is for informational purposes only and is not intended to constitute legal advice or create an attorney-client relationship. Further, the materials in this article are general in nature and may not apply to your particular circumstances. Every case is different and prior results do not guarantee future success.