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The D.C. Council is about to Amend the Law Protecting Tenants’ Rights

The D.C. Council enacted the Tenant Opportunity to Purchase Act (“TOPA”) in 1980 with the worthy goal of empowering tenants to defend themselves from developers that were forcing people from low-income housing. Under TOPA, tenants have the right of first refusal to buy their homes when the property is offered for sale. Through numerous—sometimes convoluted—amendments since enaction, tenants’ rights have been further strengthened, much to the chagrin of agents, title companies and property owners.

Unfortunately, the law which was initially drafted to level the playing field for tenants against developers is now arguably being abused by some. In what is termed “blackmail” by landlords and others harmed by the law, renters now sometimes exploit the law’s protections by offering their right to purchase to the highest bidder. Due to the timelines required by the statute, sales drag on and often fall through. Developers or property flippers will sometimes solicit tenants with an offer to buy their rights to the property, paying tens of thousands of dollars. This raises transaction costs, exacerbating the issue the law was designed to remedy: the accessibility of low-income housing.

 

Amendments Under Consideration

Now, the D.C. Council, with input from stakeholders and legal experts, is working to amend TOPA yet again to ameliorate some these specific problems. Two bills which are currently under review are the Home Sale Facilitation Amendment Act of 2017 and the TOPA Accessory Dwelling Unit Amendment Act of 2017. While similar in effect, each bill has a slightly different objective. Here are the highlights:

The Home Sale Facilitation Amendment Act of 2017

  • Exempts single-family accommodations from TOPA when the owner maintains it as a “primary residence,”
  • Defines “primary residence” as a dwelling in which the owner resides a majority of the time and establishes it as his or her principal place of residence on all official records,
  • Shortens the time limits specified in the law by which tenants of single-family accommodations may exercise their right of first refusal, including reducing the time allowed for tenants to obtain financing.

The TOPA Accessory Dwelling Unit Amendment Act of 2017

  • Exempts certain owner-occupied single-family homes with accessory dwelling units from TOPA provisions if they meet specific requirements, including:
    • The home has two dwelling units
    • One dwelling unit contains at least 2/3 of the home’s total square footage
    • The larger unit is occupied by the owner
    • The smaller unit is a basement, carriage house, converted garage or similar unit
  • The maximum payment to a tenant of a property meeting these requirements is $500 per room for each room of at least 100 feet, up to $1,500 total.

Potential Problems with the Amendments

Critics of these amendments maintain that they do not go far enough to protect landlords. For example, the TOPA Accessory Dwelling Unit Amendment Act’s requirement that the landlord lives in a larger, upstairs apartment, rather than the basement apartment, is unduly burdensome because the landlord could charge more rent for the upstairs unit.

Even more importantly, neither the current law nor the proposed amendments define the term “tenant.” This leaves some sellers vulnerable to TOPA claims from short-term renters, such as Airbnb guests, or even, potentially, squatters.

D.C. Council members realize that the pending amendments are only a band-aid on a much bigger problem. Yet, the proposed amendments are worthwhile as even small steps that lead to improvement are steps in the right direction.

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John E. Reid

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