The State of DC: TOPA

PoP Sponsor March 8, 2018 at 12:15pm

This column is written by Metro DC Houses, a local real estate team serving DC, MD, VA made up of Colin Johnson, the immediate past President for the D.C. Association of Realtors and Christopher Suranna, the current President for the D.C. Association of Realtors.

TOPA.

It is not a four-letter word but rather four letters that historically represent challenges that faced landlord’s and tenant’s interest throughout the city.

How did we get where we are today with TOPA?

There are 3 categories of TOPA: single family, 2-4 units, and 5+ units. For the purposes of our discussion we will only be discussing single family properties.

The law as it is written requires homeowners with tenants to provide them with first right a refusal and notice of a sale on their home. As it stands this notice and process period could last for 180 days or more and repeats itself if an interested party backs out on single family homes.

There is also a piece of the law that allows for an occupant to assign their rights to another person or entity. This part is very important to allow occupants the opportunity to find a possible non-profit or another owner whom may wish to buy property and then rent back to that occupant.

Because of these 2 major components in the legislation, an industry has evolved that aids tenants in leveraging those rights to the highest bidder or simply stalls the sale. This particular leverage then puts owner in a situation where in order to sell they must pay a tenant or face the potential ongoing loop of tenant rights and maybe never being able to sell.

Where do we go from here?

The DC Council introduced legislation in 2017 to help fix these loopholes while maintaining protections for tenant’s rights.

During the Council’s mark-up hearing on February 21, 2018, they cited: “according to the DHCD spreadsheet, DHCD hardcopy documentation, and the OTR real property tax database, from October 26, 2009 through August 17, 2015, the Committee concluded that there were approximately 19 successful TOPA sales out of 427 TOPA offers, or a rate of 4.45%. Of these 19 properties, 12 (2.81%) appear to be condominiums, and 7 (1.64%) appear to be single-family homes.”

The council has made the decision to vote in favor of the proposed legislation with a 10 to 2 vote.

As of March 6, 2018, the single family exemption with the protection of seniors (62 years or older) and disabled tenants with existing leases as of December 31, 2017 with 2 additional amendments; one by Councilmember T White regarding firming up notice language to seniors and Councilmember Cheh as a three day notice to all occupants of a sale or third-party contract.

Yesterday, Councilmember Nadeau made a recommended amendment to add long term tenants who have resided for ten years or longer to the protected groups and the committee voted to not include such language.

Chairman Mendelson made a comment that this being a noble objective would not work for many reasons; one in particular that in the District of Columbia you are not required to have a written lease, which could lead to confusion on how long a tenant may or may not have been there even with payment receipts.

Many tenant advocacy groups are concerned about the displacement of tenants if TOPA is not saved, but according the council’s report where only 4.45% of tenants actually purchase, this would mean in 95.55% of cases where TOPA is triggered the tenant is being displaced.

In fact, during September 21 public hearing one of the third-party attorney’s that his entire practice focuses on TOPA when asked by Chairman Mendelson whether he has assisted any of his clients in purchasing the properties where they reside and he answered “None.”

Council Chair Bonds mentioned during the legislative meeting on March 6 that she would gladly work with Councilmember Nadeau on more effect displacement protections for tenants, but acknowledged that the current bill was not the most effective place.

I for one am very aware that this is a hotly debated topic and would encourage our readers to educate themselves to the requirements of the current legislation and proposed legislation. I have included many articles and news coverage.