From the Forum – Tenant Opportunity to Purchase Act (TOPA)

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Tenant Opportunity to Purchase Act (TOPA):

“So I’ve recently learned that my landlord is seeking to sell and that there is this thing called the Tenant Opportunity to Purchase Act, or TOPA, which gives current tenants the right of first refusal and the right to express an interest in buying the place building before a landlord can solicit offers from non-tenants.

Has anyone had any experience with this? I expect eventually I’ll need to talk to an attorney, but I am interested in how one goes about finding potential third-party investors to pool capital. I understand that one think TOPA permits is the assigning of the right of first refusal and that sometimes tenants work out a shared ownership deal in exchange for assigning the right.

Any personal experiences out there?”

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17 Comment

  • How much value does the right of first refusal have when the landlord can offer to sell the property for whatever he/she pleases?

    • This is what I was wondering. Does the landlord have to let the tenant know what he/she is planning on listing the house for and the tenant can either take it or leave it? When I sold my house it went for way above asking price, so it would sort of suck to HAVE to sell to your tenant.

      • There is not inherent value, it’s more about leverage. There is the initial opportunity through TOPA for a tenant to express interest in buying and negotiate; however, even if that initial right is waived, once under contract the tenant then has the right to match the contract price (but does not have to match the financing terms).

  • talk to housing counseling services or LEDC. They work on these issues all the time. If the building has a lot of low-income tenants they might be able to connect the tenants’ association with a free lawyer; if not, they will know which lawyers specialize in this kind of work.

  • Hire a lawyer ASAP. My understanding is that once you secure your association, you don’t have to raise the money yourselves, rather you accept bids from developers and then assign the right to purchase through your association. If the property is an attractive one, this may include substantial concessions paid by the developer for that right. Hire a lawyer though, things can get shady very quickly.

    • the number of units matter. Also, once they notify you of your right to purchase, it starts a clock for you to activate your rights. I believe if they don’t sell it for the price they offered it to the tenants, they can’t sell it for more than 10% less without offering the tenants another chance to buy. It would be a big mistake to not investigate your ability to purchase through a third party.

  • My understanding is that it was after an offer was received. I didn’t want to buy the house, but an old landlord of mine wanted me to sign a paper stating that I didnt want to buy the house once he got an offer. He gamed it though, he was selling 3 houses in a row to an investor, and he jacked up the the price on the one I was living in and reduced the other two so that I wouldn’t be tempted and ruin his deal.

  • I think you as the owner can sell for whatever you want and just have to offer tenants the first shot at it.

  • I went through this, but did not end up purchasing my unit. You need to send a letter to DCRA claiming your right of first refusal to get the ball rolling. I can’t remember what the timeframe was, but tenants have quite a while to get their act together (I think up to a year) to figure out financing, etc. We had a developer go in on the deal with us, and they bought the two units that the renters did not want to buy and the other tenants bought their units. We used Eisen & Rome PC and they were very competent attorneys. Good luck!

  • Yes, I have a lot of experience with this – my building just went through it, and we hired a lawyer to help us. I second the comment to call Housing Counseling Services ASAP. They can walk you through the initial steps and give you a list of lawyers to interview. If it’s your whole building that’s for sale (not an individual unit) the TOPA rights belong with the tenant association (you will need to form one if you don’t already have one) and not with the individual residents. There are a lot of tight deadlines you will need to meet, including incorporating the TA and getting signatures on the TOPA. We did not find our eventual developer ourselves – our lawyer helped us with this.

    • How did it work with financing the conversion? Did all the residents have money for the downpayments? How much do you need to pony up?

      • We didn’t end up converting. We stayed rental, but chose the buyer ourselves (another TOPA benefit). If we had gone condo, all the residents would have had to pay their downpayment if they wanted to buy their units. We opted against it because the “insider pricing” we were offered was just not that good – $400k for a one bedroom in Adams Morgan, when I know there are one bedrooms in the neighborhood for less.

      • oh, and we also used Eisen & Rome (Eric Rome) as our lawyer.

  • justinbc

    I’ve got experience but only from the purchasing side. We’re closing tomorrow on a 4 unit property, one of which has a tenant who was initially refusing to sign her TOPA. Our agent advised that it could take anywhere up to 6 months to get it resolved, because once you start the “being defiant” phase you are so heavily protected as a tenant in DC. I’m certainly not advocating you take that approach, but hopefully it gives you some perspective in terms of how much the laws can work in your favor once you’re already in place. (We got lucky and she wound up signing the paperwork a week later.)

  • Just went through this on a house we were buying. The seller gave the tenants the TOPA paperwork once we were under contract. This protects the seller if the house gets offers that push it above the listing price. The landlord has no obligation to offer it to the tenants until they have an actual contract in place. The tenants on our place did not exercise their rights. Note that your new landlord has the right to evict you even with a lease in place if their reason for eviction falls into one of 9 or 10 allowable categories (they include things like- major renovation, personal use and occupancy, etc). There is ample info about this online.

  • Happy to help you through this process. We have a legal team that has experience with these types of TOPA concerns. You should definitely consider this an opportunity rather than a burden.

    Please email us at TopaProcess at Gmail dot com

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