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Can You Sell Your Right of First Refusal?

by Lark Turner

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UrbanTurf recently got a question from a reader that piqued our interest: Can a tenant sell his or her right of first refusal, the provision of the Tenant Opportunity to Purchase Act that lets tenants make and match offers on the property they live in when a landlord decides to sell?

Here’s the question from our reader:

“I presently rent the English basement apartment of a rowhouse in Columbia Heights. My landlord — who lived in the main house above me — passed away unexpectedly. I received my formal offer to purchase today. If I’m not interested in or able to purchase the house, is it legal to sell away my right of refusal? That is, if there’s someone who is interested in purchasing, is it legal to enter into a formal agreement, so that I may make a profit on turning over the right?”

Aaron Sokolow, an attorney at Battino & Sokolow in DC, told UrbanTurf that the tenant’s answer is a definite yes.

“It’s done all the time,” Sokolow said. “The advantages are that the tenant can be in control of the situation even if the tenant doesn’t have the ability or the desire to go through with the purchase themselves.”

The right can be purchased in exchange for money, a guarantee that the tenant can stay in the apartment or another arrangement with the purchaser. But usually, Sokolow said, the exchange is in cash. The cash value of the right can vary enormously depending on how desirable the property is, and prices usually spike the most when the property is being eyed by investors.

“I’ve seen it run the full spectrum, from $50 to the high tens of thousands of dollars,” Sokolow told UrbanTurf. “It’s case-by-case, but development opportunity, that’s the big variable for valuation of properties in DC.”

See other articles related to: topa, right of first refusal

This article originally published at http://dc.urbanturf.com/articles/blog/can_you_sell_your_right_of_first_refusal/9779

10 Comments

  1. MJ said at 11:20 am on Friday April 17, 2015:

    Regardless of whether it can be one or not, I think it is a d-bag move. If you don’t intend to buy it, why should you make money on it???? To me, that is taking advantage of your landlord. Especially considering the situation (that the current owners lost a loved one!). Anyway, because there are predators like this, looking for opportunities to take advantage of their landlords,  that I wish TOPA should be eliminated.

  1. Kes said at 1:40 pm on Friday April 17, 2015:

    Just because you don’t intend to buy it doesn’t mean that you, the person who lives there and does not wish to move, shouldn’t have some input on the person who does eventually end up buying the property. Right of First Refusal is a protection of tenants’ rights, not “taking advantage” of landlords, who will be able to sell the property eventually in any case. The landlord does not lose money if the tenant recruits a buyer for them for a finder’s fee paid by the *buyer*. In plenty of cases, it probably expedites the selling process.

  1. MJ said at 2:21 pm on Friday April 17, 2015:

    @Kes - The OP asked “is it legal to sell away my right of refusal? That is, if there’s someone who is interested in purchasing, is it legal to enter into a formal agreement, so that I may make a profit on turning over the right?” This person is not trying to procure a buyer. He/she is just trying to profit from the seller’s sale, and possibly stalling the sale for a long time to make a buck. That’s not a protection. That’s ludicrous to me.

  1. Jamie said at 2:48 pm on Friday April 17, 2015:

    http://ota.dc.gov/sites/default/files/dc/sites/ota/publication/attachments/TOPA - Single Unit (FINAL).pdf

    There is nothing good about TOPA from the point of view of a property owner. Tenants can manipulate this process legally to greatly extend the length of time they have before vacating. I suspect in practice, the “sale of TOPA rights” has nothing to do with finding another buyer (which I am pretty sure someone only needs a realtor for) and everything to do with stalling the exit process.

  1. Jamie said at 2:49 pm on Friday April 17, 2015:

    * What I mean is tenants will force owners to pay them to leave, under threat of exercising these rights indefinitely.

  1. MJ said at 3:19 pm on Friday April 17, 2015:

    @Jamie - I agree 100%!

  1. hoos30 said at 3:20 pm on Friday April 17, 2015:

    This just happened to a friend of mine. She had a home in Columbia Heights that she was renting. She gave her tenants the required TOPA notice. She found a buyer, a family, who was willing to let said tenants stay in the basement apartment.  At the last possible moment, the s$##%y tenants sold their TOPA rights to an out-of-town investor for a whole $1,200. 

    In the end, the sale was delayed two months, which my friend struggled through financially. The tenants got evicted by the new investor owner (hope that $ goes a long way). And the original buying family got screwed out of a home that they wanted to live in (oh, they also had a condo they were selling, don’t know how that turned out).  TOPA is crappy law.

  1. wrath said at 6:56 am on Saturday April 18, 2015:

    The fact that a homeowner could be threatened with this “right” seems to tell it all. The extreme renter’s rights in DC caused me to turn many people away before renting out my apartment—why take the risk that some sleazy person would abuse the system in DC and become a nightmare tenant? Ultimately, all of these artificial interferances in the landlord-tenant relationship by the DC government only makes apartments more expensive in DC.

  1. monademarkpv said at 10:32 am on Saturday April 18, 2015:

    Just one more thing that makes it hard to be a landlord in this city and another reason they will never solve the affordable housing issue.

  1. Terry said at 4:52 pm on Sunday April 19, 2015:

    TOPA is why I would never have a rental property in the District. That tenants can sell their rights is pure extortion. I’m afraid that Urban Turf has tipped more people to this extortion racket.

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