Do You Want to Buy That Home You Are Renting?

by Michele Lerner


Washington, DC is widely considered a tenant-friendly city, with local laws and regulations designed to protect the interests of renters. Among the many rights that tenants can use to their advantage is the Right of First Refusal, which essentially gives the renter the first crack at making an offer on their place if the landlord decides to put it on the market. Established by the Tenant Opportunity to Purchase Act (TOPA), the rules for the right of first refusal vary slightly by property type. However, no matter if the property is a house, condo or co-op, the landlord must provide the inhabitants of the property with an offer of sale. The tenants then have 30 days to respond to the offer.

For one DC resident (who prefers to remain anonymous) the rules worked to her advantage. Seven months into a one-year lease on her Kalorama condo, the owners called to let her know they would be putting the condo on the market. After a moment of panic at the unexpected prospect of becoming a homeowner, she contacted an attorney and a lender and discovered that she would be able to finance the purchase with monthly payments just $5 above what she was paying in rent. While condo fees and various repairs and maintenance on the property were not factored in, no real estate agent fees had to be paid on either side.

The rules for an offer of sale require that within seven days of the tenant requesting information, the owner must produce: a floorplan of the home (if one is available); an itemized list of monthly operating expenses for the home; utility consumption rates and capital expenditures for the previous two calendar years; and the most recent rent roll including a list of tenants and vacant units in the building. (Of course, some of these rules wouldn’t apply to a single-family home.)

The tenant and landlord have a minimum of 60 days to ratify the contract, and then the tenant has another 60 days to arrange financing. From the time the initial offer of sale is made, the tenant has a total of 180 days to reach settlement. If the tenant does not respond to the initial offer of sale within 30 days and another offer is accepted, they have 15 days (this is the right of refusal) to match the third-party sale contract.

Also, if the owner sells the property or signs a contract for a sales price that is more than 10 percent lower than the originally offered price, or if the deal includes some other terms of sale that indicate the owner has not been bargaining in good faith, then the tenant must be given a new offer of sale. Lastly, if 180 days pass without a contract or settlement, the entire process must start again.

The forms for the offer of sale and the right of first refusal, along with instructions, can be found at the DC Department of Housing and Community Development website.

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See other articles related to: right of first refusal, renting in dc, dclofts, dc condos

This article originally published at http://dc.urbanturf.com/articles/blog/do_you_want_to_buy_that_home_you_are_renting/1587


  1. hoos30 said at 12:00 pm on Thursday December 10, 2009:

    Talk about good intentions gone bad. TOPA is one of the dumbest laws man has ever put to paper. 180 days???  Can you imagine any other business where the local government can hold up a transaction for 180 days or more without providing any compensation to the owner?

    “Uh, excuse me Ms. Sculptor, I know you have a signed contract to sell your latest work of art, but Johnny down the street here would really like to buy it instead. He may or may not be able to afford it, but I’m sure it wouldn’t hurt you to hang around for six months and find out.”

  1. jj said at 2:30 pm on Thursday December 10, 2009:

    i’ve seen this not work twice. the first one, the owner marked up the price of the one bedroom 760 sq foot condo to $1.8 million, just so he could get through the right of first refusal and get the tenant out. he then rerented at 2k more than the last tenant was paying. in the second instance, the seller threatened to sue the tenant if they didn’t vacate. the tenant, not knowing they must be offered the option to purchase, vacated and the unit sold for a price the then-tenant could have afforded had they been given the option.

    most renters get that eventually the unit they’re renting will be put up for sale, but by that time, they’ve realized the “issues” with the unit, building or both.

  1. Felicity said at 3:44 pm on Friday December 18, 2009:

    Very interesting article!

  1. mona said at 2:01 pm on Sunday February 14, 2010:

    If I ever decided to sell one of my rentals in particular I would love to have my tenants purchase it. It would come with automatic rent from the basement apt. I actually look forward to presenting them with an option of purchasing it without realtors involved. Could be really nice experience

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