Capitol Hill Tenant Offering TOPA Rights to the Highest Bidder

• September 1st 2016

by Nena Perry-Brown

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?

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