We do a lot of work on the Washington DC tenant opportunity to purchase act, which can also be referred to as the first right of refusal in the District of Columba. TOPA, as it's called, was created out of the Rental Housing Conversation and Sale Act in the early 1980's. It is designed to restrict owner rights and provide benefits to tenants. The benefits for tenants include the option to purchase as well as the ability to assign their right to purchase to a third party.
If you are considering buying a property that is tenant occupied or if you are thinking about renting your property out, you need to familiarize yourself with the Washington DC Tenant Opportunity to Purchase Act. The process can be a challenge to navigate, so it is strongly recommended that you hire an agent or an attorney with experience in handing the TOPA.
If you decide to move forward with purchasing a home that is occupied by a tenant or if you are considering renting your home, the first thing to check is if the property is registered with the Department of Consumer and Regulatory Affairs (DCRA), Rental Accommodations and Conversion Division (RACD). Landlords of Washington DC residential property are required to have the property registered with DCRA. If a property is not registered it can hold up the TOPA process and result in penalties from the DCRA. You can apply for registration here.
Once you determine if the property is registered the next thing to do is to review the lease (if there is one). When a lease expires in Washington DC it automatically goes to a month-to-month lease term and does not end until either the tenant moves out or you give the tenant notice that you are moving back into the property. It is extremely difficult to evict a tenant in Washington DC and the expiration of lease does not give you that ability. You should keep this in mind up front and always remember how important it is to maintain an excellent relationship with your tenants.
Tenants must be given the right to purchase. The paperwork in regards to those rights can be issued prior to a third party making an offer or after a third party offer is received. Under the Washington DC Tenant Opportunity to Purchase Act, you must serve the Notice and Opportunity to Purchase with a Third Party Contract after a third party offer is received. In the interest of not creating additional paperwork, realtors will typically send TOPA documents to DCRA and the tenants after a third party contract is received. These documents and a copy of the sales contract must be sent to all tenants and to DCRA via certified mail. The tenant has 30 days to respond to the package sent to them. It is best to have the tenants sign and notarize and affidavit giving up their TOPA rights. A signed and notarized tenant affidavit is now required by most title insurance companies.