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Capitol Hill Tenant Offering TOPA Rights to the Highest Bidder

by Nena Perry-Brown

image
The block on Capitol Hill where the home is located.

The District is known to have extremely tenant-friendly housing laws, but they don’t always work as intended.

One of the laws renters are able to take advantage of stems from the tenant opportunity to purchase act (TOPA), which was enacted to protect tenants from potentially advantageous landlords and buyers.

Most examples of the law cite clear-cut cases of developers attempting to acquire low-rent, multi-family properties in prime locations to convert into high-priced housing. However, we have come across a case that is, in many ways, the opposite of that narrative.

Real estate agent Jacqueline Battistini recently contacted UrbanTurf regarding a dispute between her client and the tenant of a Capitol Hill house that the client is under contract to purchase.

Specifically, Sarah, the tenant of the property’s basement unit, decided to offer her TOPA rights to the highest bidder, rather than use those rights to purchase the home herself. Battistini’s client Clara has a ratified contract on the home and submitted an offer to purchase to Sarah on August 5th. Three weeks later, Sarah sent over her statement of interest in purchasing the property herself not long before the deal was set to close.

Clara’s intention was not to compel Sarah to move out of the house; in fact, when a home inspection revealed uninhabitable conditions in the basement, Sarah was given the option of moving into the main house with Clara at her current rental rate so that repairs could be made. Once repairs were completed, Sarah could remain in the house at the current $800 per month rent, or move back to the basement unit at market rate.

Clara expressed willingness to purchase the TOPA rights from Sarah for $10,000, but she declined, implying that there were a number of offers for the rights, and so Clara would have to offer a much higher dollar amount.

“Clara probably shouldn’t get her hopes up, that’s how many,” Sarah said in an email when asked how many parties were interested in buying the rights.

To be clear, selling rights is in line with the TOPA process. “Instead of purchasing the building outright, a Tenant can assign or sell his or her rights to other groups,” a TOPA handout from the Office of the Tenant Advocate states. “Using this right, a Tenant can use his or her rights to negotiate better building conditions, limit rent increases or for other benefits.”

Sarah told UrbanTurf that she has not needed to solicit bids, but nevertheless has garnered interest from others to acquire the TOPA rights. In addition to the money, she would like to stay on as a basement tenant for at least 90 days. “[My agent and I] are accepting offers which consider the ratio of time I am able to stay in the home and the buyout amount,” Sarah writes.

With things at a stalemate, Clara has opted to file a lis pendens to retain her rights to move forward with the purchase and block any other sale attempts while the matter goes through court.

UrbanTurf readers, is the tenant abusing her rights under TOPA by attempting to sell off her rights in lieu of negotiating with the prospective buyer who has already begun the process of purchasing the house? Or is this a suitable tactic that the law intended to be utilized?

See other articles related to: topa, tenant rights, right of first refusal, capitol hill

This article originally published at http://dc.urbanturf.com/articles/blog/topa_abuse_or_intended_use/11625

21 Comments

  1. BrianM said at 1:57 pm on Thursday September 1, 2016:

    The tenant is abusing her rights. That is putting it kindly. The tenants actions amount to extortion and are certainly not in the spirit of the law. These situations are becoming common in the market, and the TOPA laws need to be updated/ammended.

  1. Gav said at 2:06 pm on Thursday September 1, 2016:

    This sounds like a complete abuse of the legislation - that I would be stunned if it was the prerogative of the legislators initially. 
    It sounds like she already has such a sweet deal at $800pm - she’ll bring bad karma on herself! - particularly as she was generously offered $10k for the TOPA rights from Clara.

  1. Yogi said at 2:11 pm on Thursday September 1, 2016:

    BrianM nailed it, this is sanctioned extortion.  This is an obvious abuse of a law though I’m sure the City wont see it that way.  There are in fact companies who go around looking for properties ripe for development and then offer the tenants inhabiting the place a buyout of their rights only to turn around and demand a payout from the buyer of the property (developers for the most part) a cost which is easily a multiple of 50-100 times that which the swindler has paid.  If you want to know why cost of living in DC is so high look no further than people and companies like Sarah who add unnecessary costs.

  1. John F said at 2:15 pm on Thursday September 1, 2016:

    Lost a four-unit that I intended to owner-occupy to TOPA. The tenant sold their rights and then they slow-rolled the process to the maximum legally allowed timeline to spite the listing agent.

  1. Mk said at 2:30 pm on Thursday September 1, 2016:

    I feel somewhat sympathetic to the tenant here.  Post notes that she is currently renting an uninhabitable apartment.  Seems to me that an abusive tenant would not put up with that.  If she wants to stay in her home (which is what TOPA is intended to allow), then it’s both well within her rights (and not poor form) for her to assign her rights to someone else (perhaps someone who will let her stay in her current situation).  Situations like these are why TOPA has rules allowing you to sell your rights.  Offering to let her move twice (up and then down) with a presumably higher rate after the contemplated basement renovation doesn’t sound like a real offer since the new market rate will presumably be much higher.  Landlords are always welcome to raise this issue with the legislature, or purchase rental properties in Virginia (where TOPA is not a thing), of course.

  1. JC said at 3:59 pm on Thursday September 1, 2016:

    Based on UrbanTurf’s own article regarding TOPA rights, the process wasn’t correctly followed by the property owner/seller.

    “For a single unit, the tenant has 30 days to respond. For 2 to 4 units, the tenants have 15 days to respond jointly, and an additional 7 days to respond individually. [To purchase 2-4 units, if an association does] not [exist], ...the tenants must form an association and also, through the new association, respond to the Offer within 45 days. ...The negotiating period for 2 to 4 units is 90 days.”

    How is this a discussion between the current “contracted” buyer and the tenant. The timeline described in this article implies the property owner placed the home on the market without first offering to the tenant. (S)he screwed up when they realized the tenant knew about TOPA, tried to get the tenant to play ball, and now it’s all coming to a head.

    Seems like another slumlord story to me and an even more unethical attempt by the realtors to pressure the tenant into “playing ball” by reaching out to UrbanTurf for some good ol’ fashioned muckraking.

  1. NS said at 4:52 pm on Thursday September 1, 2016:

    You got it wrong, JC.  The tenant knew all along that the house is for sale. It is her obligation to allow Open Houses and such.  This tenant never wanted to purchase the place.  She waited until that somebody submits an offer and this offer is ratified. At this time the tenant receives the copy of the ratified offer and has 30 days to match it. After that she loses her right to purchase.

    The tenant spent 3 weeks trying to figure out how to screw up the deal and while she couldn’t match the offer, she could—according to the sick DC TOPA law—sell her write to match the offer to any taker.

    It is no brainer, that the selling price was below market value, because the unit is tenant occupied. I am sure that the tenant launched manipulative negotiations with the outsiders promising to leave in 3 months so that the new potential owner would have something in return for cash bribe to the tenant.

    Of course in the place of a prospective purchaser I would never trust this tenant, because after 3 months she would want to extort more money for renewed promise to leave. But that is a different story.

    This tenant knows her rights way too well and praises the DC landlord-tenant laws for making otherwise a crime to be legally correct and even a subject for discussion among some of us,  the people who are honestly confused.

  1. JC said at 5:37 pm on Thursday September 1, 2016:

    NS,

    Maybe you’re reading a different article than me? The one I read (hint, scroll up) contains no information to support your accusations of tenant’s conduct or your assumptions of the sale history.

    So I’m going out on a limb here and going to assume you are either 1) a rube, or 2) know more about the situation than what’s been shared. I’ll go out on a limb and guess it’s the latter. Which, by your apparent attitude, means you’re obviously biased against the tenant since you most likely have a stake in this matter. 

    The article specifically states that the “TOPA bidding” has been unsolicited. I think, within the spirit of the law to protect low-income/less advantaged individuals, trying to get the best settlement for being forced into moving is completely understandable. It’s pretty hypocritical to be pissed at someone trying to get compensation for feeling the consequences of another person trying to make a buck. From that logic, I can argue that the seller should lower the price so the tenant can afford to purchase the residence.

    So, full circle, the offer was contracted on August 5th. You state “the tenant receives the copy of the ratified offer and has 30 days to match it. After that she loses her right to purchase”. I’m not great at math, but I don’t think it’s been 30 days yet. If the tenant is trying to figure out financing… maybe by forming an association or group to purchase, which would require “selling” the TOPA rights to that group, than her conduct is completely reasonable.

    This isn’t news, sorry if laws made to protect tenants are inconvenient for you.

  1. LD said at 8:28 pm on Thursday September 1, 2016:

    I have to agree with JC on this one.  NS’ tone alone says that (s)he has a stake in the matter, let alone that (s)he seems to know more about this ordeal than the article provides.  I wouldn’t give his/her comment any more thought ‘cause it’s clearly bias beyond repair.

  1. NS said at 9:34 pm on Thursday September 1, 2016:

    I read between the lines because I have recently been involved in a similar case.  My son has purchased a little tenant occupied studio in Foggy Bottom. TOPA process had been followed to the letter. After the purchase my son discovered that there are 5 tenants living in the studio of 300 sq.ft. The previous owner was a Foreign Service Officer and a founder of a charitable foundation for widows. I guess he treated the tenants as the charity. However a couple of months after the purchase and probably after reading a similar article these tenants discovered that they could have made “a buck” from the deal and they decided to make up for that. They sued the previous owner and his real estate agent for a supposedly missing page in the ratified offer, that they did not received. When the page was produced, they claimed that the signature there was forged.

    The previous owner, who had crystal reputation in his line of work, took these accusations to close to his heart. He died 5 days after the hearing in the court August.

    I learned how to read between the lines in TOPA cases hard way. Any owner would be thrilled to sell the place to the tenant. It saves him lots of aggravation both before the sale and after, as it is in this case. Tenant does not want to buy. Also, tenant can not sell his right to match the offer until there is a buyer whose offer is accepted.That means that the buyer negotiated the price, was approved for the mortgage, had inspection… just to find out that somebody makes a “deal” with the tenant behind his back and receives “cart blansh”.

    This is a country of opportunities, and may be it is just another opportunity to get rich. The Capital Heights tenant rejected the offer of $10,000, I would be curious, what would be acceptable for her…

  1. Jacqueline Battistini said at 11:04 pm on Thursday September 1, 2016:

    JC,

    A landlord is not required to offer the tenant opportunity to purchase prior to listing a property for sale. Delivery of Opportunity to Purchase subject to Third Party Contract is the perfectly legal alternative, and many homeowners decide to issue TOPA this way.

    The conversation between the buyer and the tenant began after the tenant offered her email address out for further questions. The buyer hoped to find a solution acceptable to all parties. The buyer never expressed a desire to kick the tenant out.

    Through that discussion it became clear the tenant was negotiating multiple offers for her TOPA rights. Selling to another party would prevent the current buyer from purchasing the home, despite efforts to reach a solution with the tenant.

    The tenant was offered the opportunity to comment to Urban Turf. She confirmed she wanted a deal that garnered the most money for her rights.

    No one is debating the legality of the tenant’s actions. Everything the tenant has done is legal under TOPA regulations. However, the ethics of her actions are highly questionable.

  1. LD said at 8:03 am on Friday September 2, 2016:

    Jaqueline Battistini, I appreciate that you’re defending your client in the comment section of an article you solicited.  But, there’s two likely reasons that someone would solicit an article like this: (1) you wanted to start a public discussion to garner support for changing TOPA rights in DC; or (2) you wanted to use it to try and publicly pressure the tenant to accept Clara’s most recent offer (whatever that is). 

    If it is the former, I would ask the public jury you solicited to give your opinions little weight while they consider whether to support TOPA reform.  I’m happy to hear more facts and what your role has been in this. But, your clearly bias toward your client, a buyer,—and that’s your job so I don’t fault you for that.

    However, if it is the latter, I would fault you for that as it would be pretty unethical to pressure an individual to accept a contract through public pressure, built up using a one-sided story and more of your own one-sided opinion.

    Hopefully, it’s the former and JC, NS, and I can get back to discussing TOPA rights/reform. You’ve said your piece, but the comment section is the jury room.  So get out.

  1. AT said at 11:04 am on Friday September 2, 2016:

    I’m disappointed in Urban Turf for allowing this realtor to publicly shame a tenant, no matter how “unethical” the tenant may appear to be. Posting a picture of the block and using her first name? That is not ethical either. I don’t blame the tenant for not wanting to comment and getting into a very public argument on a private dispute. A policy discussion is one thing, shaming is another.

  1. Districtre.com said at 11:41 am on Friday September 2, 2016:

    I’m not an attorney so I can’t comment on legalities, but I don’t believe the property address was disclosed in this article, so no privacies seem to have been violated in that regard. As to abuse of the law, if the law provides gray areas, folks will always take advantage of them. I’ve always been disappointed with the poor structure of the TOPA law. The law calls for the tenant to submit their desire to purchase. If the tenant states they wish to purchase, then starts an auction for the rights, it seems to me an unfair and misrepresentative action on the tenant’s part, but there is no provision against this in the law. Some clearer provision for this needs to be made in the law, or that portion of the law should be struck. As to wanting to stay in the property, this sort of transaction can create a lot of ill will between the owner, tenant and buyer that is not likely to bode well for future relations. Clear laws make better outcomes. You can read about TOPA at http://districtre.com/tools-2-use/dc-topa/

  1. JBG_IMG said at 11:44 am on Friday September 2, 2016:

    This isn’t the first time a tenant has sold their TOPA rights to the highest bidder and will most likely won’t be the last case either. I know of at least several such cases just in the past year. Matter of fact, there are a couple of firms in DC that help tenants navigate their rights and match them with highest bidders.

    I also don’t think the tenant is doing anything unethical. She is using her legal rights to make money that will most likely be used to assist in relocation costs, moving fees, rental deposit, etc. 99% of the people that have commented negatively on this article would do the same if given the chance.

    and I agree, UrbanTurf should at least redact parts of this article to hide the identity of all parties.

  1. Mark Wellborn said at 2:41 pm on Friday September 2, 2016:

    AT,

    To be clear, the tenant did comment to us and was aware that we were writing an article.

    Mark Wellborn
    Editor

  1. Jamie said at 2:48 pm on Friday September 2, 2016:

    “I also don’t think the tenant is doing anything unethical. She is using her legal rights to make money that will most likely be used to assist in relocation costs, moving fees, rental deposit, etc”

    Oh come on. So if she was going to use the money to buy a Lexus, then it wouldn’t be ethical I suppose? Since when are people entited to their landlord paying for moving expenses? What bearing does her intented use of the money have to do with the ethics of abusing a law?

    It’s been clearly established that she’s not breaking the law. Nobody’s disputing that. The question is, is it a good law? Does the fact that it lends itself to uses that are far outside its indended purpose—to allow existing tenants to purchase their home at a fair market value—speak to the need to revise the law?

  1. NS said at 6:11 pm on Friday September 2, 2016:

    “The question is, is it a good law?”
    or is it an invitation to a scam and the encouragement to the scamers?

    My son’s female friend in NYC happened to rent an apartment in a 12 apartment building. The owner was a developer and offered every tenant an undisclosed sum of money. 11 tenants accepted and moved out. My son’s friend remained the last person in the building. She hired a lawyer and on his advise she kept rejecting the offers. The last offer that she rejected was $60,000.00 as her lawyer believed that she can get more (thanks to the law!)

    This story has a happy ending, at least for me as I believe in karma. The totally frustrated owner sold the building to a Hassidic Jew. Supposedly their community is known in NYC as tough non-negotiators. The deal was off the table!

    I wouldn’t be surprised that the next step for this tenant is to take her lawyer to the court for the money she paid him and for the loss of profit. That is a perfect example of a modern age tenant operating legally in the maze of obscure and unfair landlord-tenants laws. The involvement of the lawyer indicates that the law turns into the profitable industry.

    I believe that the right to sell “the right to purchase” goes against the spirit of the intention of the law. It should be repealed.

  1. _JH_ said at 3:28 pm on Wednesday September 7, 2016:

    Maybe a silly question, but how does a property owner get rid of a tenant in DC? Can the owner tell the tenant that after the lease term is up that they must vacate the rental unit after a reasonable period of time has passed? I can imagine that owners may want use of their basement unit for their personal use at some point.

    What happens to the TOPA rights in this case? In the situation described in the article, could the owner have asked the tenant to leave, wait until the required amount of time passes, and then sell the unit? Do TOPA rights stick for a period after a tenant leaves?

  1. ocie gibson said at 9:16 pm on Sunday November 13, 2016:

    I had the same issues on a property I was trying to sell. The best advice I can give is get you a good attorney.  I hired this Brian Gormley check out this link if you need help. Good luck

    https://youtu.be/LqmvWG0yX6s
    The topa laws do need to be revisited

  1. DCpetworth said at 10:28 am on Monday November 28, 2016:

    JBG_IMG - care to share the name of the firms? Landlord is not being reasonable in my transition/departure and I’d like to understand my options.

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