SPECIAL SECTION: POLICYAND LEGISLATION
RIGHT TO PURCHASE
Abolishing Tenant Right-to- Purchase is the Right Decision in D.C. [IndustryOpinion] INVESTORS WILL FIND MORE OPPORTUNITY IN THE CAPITOL THANKS TO THIS DECISION.
by Tammy Phelps
the “right to purchase.” First, TOPA has not been completely eliminated. Renters in properties with more than five units and in buildings with between two and four units retain the option to activate their TOPA rights by meeting certain deadlines and requirements. Second, TOPA process is still time-consuming. Unless you are selling a single-family property, you still must follow notification protocols and processes. For example, If your building has more than five units, you must give tenants time to form a tenant organization with the ability to buy the building. That timeline may be 285 days or longer. Third, certain single-family tenants still qualify for TOPA. Elderly, disabled, and grandfathered tenants still have the right to purchase their homes before sale. Fourth, you still have to notify your residents before you sell. Although ten- ants may no longer have TOPA rights, they still must be notified of intent to sell. The investor must also provide that notice to the D.C. Office of the Tenant Advocate. •
THE TOPIC: The Tenant Opportunity to Purchase (TOPA) Act. TOPA required landlords to notify tenants of the intent to sell and allow them time to negotiate a contract to buy the property. in the Baltimore, Maryland, and Washington D.C. areas. Make your voice heard on this topic on the Think Realty forums at ThinkRealty.com/tr-forums. exchange for signing away their TOPA rights or found ways to prolong the process indefinitely. WHY IT’S “HOT” TODAY: This past spring, the Washington D.C. Council passed a bill that largely eliminated TOPA from single- family dwellings. D.C. was the only city with this law on the books, but many tenant advocacy groups support the concept. The fallout from this change will likely affect public sentiment on this type of legislation on a national level. WHAT INVESTORS SHOULD KNOW: There are exceptions to the The opinions stated are solely those of the author, who is an active investor and owns rental properties Many tenants successfully negotiate large payoffs in
new regulations. Also, as lawsuits inevitably ensue in the wake of the new TOPA rules, investors should watch for weak points in the process. Shore up these points in your own rental processes to protect yourself and your investments.
T
he new TOPA Law in D.C. represents a new and exciting
opportunity for real estate investors and property owners who now no longer have to give tenants the first right of refusal to buy a property. In the past, TOPA could cause a lot of challenges for any investor that wanted to acquire a property in D.C. because associated de- lays often extended the closing process for multiple months. Many investors ultimately had to resort to a “cash for keys” strategy as the only means of enticing a tenant out of the property. This type of unforeseen expense routinely cost investors thou- sands of dollars, negatively affecting profit margins and making it difficult to invest in the D.C. market. Washington D.C. was the only loca- tion in the country that had this law. Now that TOPA has been eliminated, this market represents incredible oppor- tunity for investors! However, there is still some fine print to read before you forget everything you ever knew about
Tammy Phelps is the founder of Capital City REIA, the premier real estate investor alliance and meetup for D.C., Maryland, and Virginia. She is also Think
Realty’s 2017 Commercial Investor of the Year. Email her at tammy@capitalcityreia.com.
38 | think realty magazine :: november 2018
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