Saturday, 23 September 2017

The Tenant Opportunity to Purchase Act: Friend Or Foe?

Written by Posted On Tuesday, 22 March 2016 20:37

You either love it or hate it. The Tenant Opportunity to Purchase Act (affectionally known as TOPA) is a law in the District of Columbia that gives tenants the right to purchase the property in which they reside.

When a landlord wants to sell a rental property, the tenants must be provided with a TOPA notice telling them of their rights. If you live in a single family house, you have 30 days after receiving the notice to advise your landlord you are interested in buying. You then have 60 days to enter into a real estate contract, and yet another 60 days to go to closing. If your lender needs additional time, you can get 30 more days before settlement takes place.

If you live in a property with 2 to 4 residential apartments, the tenants have 15 days to advise the landlord they would like to purchase. However, if the tenants collectively fail to do so, an individual tenant has an additional 7 days to put the landlord on notice of the intent to purchase. A contract must be in place no later than 90 days after the landlord was provided notice, and settlement must take place not less than 90 days thereafter. However, once again, this deadline can be extended by another 30 days if a lender needs more time.

Finally, if you live in an apartment building with 5 or more rental units, a tenant association (TA) must be established and incorporated, and only that corporation has the right to speak and negotiate for the tenant member. The times for the TA are considerably much longer.

This column will address a problem exclusively related to single family homes. Lets look at this example: you are the property owner and get a job in Chicago. You rent your house for one year. During your stay in Chicago, you learn that your job will require you to periodically come back to Washington to work in the DC office. Your tenant's lease is for one year. Obviously, you would like to stay in your own home. What can you do?

There is a provision in TOPA that allows landlords to re-occupy their own home. According to the law, a landlord (strangely referred to as a ‘housing provider') "may recover possession of a rental unit where the person seeks in good faith to recover possession... for the person's immediate and personal use and occupancy as a dwelling". The law requires the landlord to give the tenant 90 days to vacate. And the tenant can only be required to vacate once the term of the lease has expired.

If the tenant does not vacate, the landlord can seek court assistance to legally evict the tenant. The landlord can then move back into the property but cannot rent it for at least one year. When the City Council enacted this legislation, they did not want landlords -- under the guise of wanting to move back in– to remove a tenant, only to immediately re-rent for more money.

Luis Irene rented his Columbia Heights condominium unit to Mr. and Mrs. Rubio back in 1994. Mr. Irene lives in New Jersey, and works full time in New York. He served the Rubio's the 90 day notice, claiming he wanted it for his "immediate personal use and occupancy. The Rubios refused to leave, and the matter went to court.

According to a court opinion, Irene wanted to visit his Washington family on a periodic basis, and especially his brother who lives in the same condominium complex. In court, Irene argued that the law does not require that such use be a primary residence. Judge Neal Kravitz ruled against Irene.

The Judge, conceeding that TOPA does not require primary use, ruled that Irene did not meet the "immediate" requirement of the law. "The intended use", Kravitz wrote, "is not ‘immediate'; it is too sporadic to constitute ‘occupancy'. The operative terms (of the law) suggest a far more robust use of the premises than presently contemplated by Mr. Irene.

Accordingly, the tenant was allowed to stay and Irene -- the property owner -- was not allowed to use his own property as he wished.

The decision was based on an interpretation of TOPA. One important provision of that law is that any ambiguity is to be construed -- interpreted -- in favor of tenant rights.

This case was decided on the facts; TOPA still allows landlords the right to regain their own home if they want to move back in. Perhaps the situation where the homeowner needed to use his apartment when he was periodically in Washington for business will be decided differently, but based on the Kravitz decision, the law remains unclear. The Council should clarify this, since -- especially in Washington -- there are many transient owners who need to come to Washington for business, and would not like to be displaced from their own home.

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Benny L. Kass

Author of the weekly Housing Counsel column with The Washington Post for nearly 30 years, Benny Kass is the senior partner with the Washington, DC law firm of Kass, Mitek & Kass, PLLC and a specialist in such real estate legal areas as commercial and residential financing, closings, foreclosures and workouts.

Mr. Kass is a Charter Member of the College of Community Association Attorneys, and has written extensively about community association issues. In addition, he is a life member of the National Conference of Commissioners on Uniform State Laws. In this capacity, he has been involved in the development of almost all of the Commission’s real estate laws, including the Uniform Common Interest Ownership Act which has been adopted in many states.

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