TOPA UPDATE 2018TENANT OPPORTUNITY TO PURCHASE ACT

SINGLE FAMILY EXEMPTIONPrepared by TOPA Task Force Chairs Marty Stanton, Esq. & Carol Calomiris, Esq.The information expressed within this email is a general resource guide for the members of GCAAR and is

The information contained within this PowerPoint is a general resource guide for the members of GCAAR/DCAR and is subject to change. It is solely for informational and educational purposes. The content of this PowerPoint does not constitute formal legal advice and may not be relied upon as legal advice, and you may not convey or imply otherwise to clients, customers, other real estate professionals or members of the public. For legal advice, contact an attorney licensed in the District of Columbia. DC Government Forms are subject to change and this presentation is updates as of September 2018. ©2018 GCAAR All Rights Reserved.vice and may not be relied upon as legal advice, and you may not convey or imply otherwise to clients, customers, other real estate professionals or members of the public. ©2018 GCAAR All Rights Reserved.

TABLE OF CONTENTS• SUMMARY OF NEW LAW

oWhat is TOPA?oProvisions for Elderly and Disabled Tenantso Important to Remember

• STEP BY STEP PROCESS FOR REAL ESTATE AGENTS AND THEIR LISTINGS

• FORMS

• EXAMPLES

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SUMMARY OF NEW LAW

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Summary of New Law Exempts ALL single-family dwellings from the Tenant Opportunity to Purchase Act of 1980 (TOPA). Single-family dwellings include

a Single-Family house with or without an Accessory Dwelling Unit, a Row House with or without an Accessory Dwelling Unit and a single rental unit in a Condo, Co-op or Homeowners' Association unless occupied by elderly or disabled tenants.

An owner of such an exempted unit must give tenants notice they are selling the property within three calendar days of soliciting or receiving an offer of sale.

Elderly and disabled tenants who signed a written lease agreement to occupy such an exempted unit by March 31, 2018 and took occupancy by April 15, 2018 will have a limited opportunity to purchase or assign their rights.

DC Department of Housing and Community Development's Rental Conversion and Sale Division (“DHCD-CASD”) will determine an elderly or disabled tenant's status.

Elderly or disabled tenants must provide documentation verifying their status.

DHCD-CASD must provide a status letter to the owner, tenant, realtor, or settlement agent upon request.

DHCD-CASD must provide written confirmation of receipt (or non-receipt) of any document required to be delivered to DHCD-CASD upon request.

The Act also prohibits the eviction of any tenant except in accordance with eviction provisions under the Rental Housing Act of 1985 (D.C. Official Code 2001 ed., as amended, §42-3501.01 et seq.)

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What is TOPA?

TOPA provides that before an owner may sell, demolish, or discontinue housing use of a rental accommodation, the owner must give tenants an opportunity to purchase and a right of first refusal to match a third-party contract. Tenants have the power to assign their opportunity to purchase to any party for any consideration a tenant deems acceptable in her sole discretion.

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About the New Law• On April 10, 2018, the District of Columbia City Council passed the TOPA

Single-Family Home Exemption Amendment Act of 2017 (Bill 22-0315 transmitted to Mayor April 24, 2018), which was signed by the Mayor on May 7, 2018 as The TOPA Single-family Home Exemption Amendment Act of 2018 and became effective July 3, 2018. The Act exempts all single-family dwellings from the requirements of TOPA (D.C. Official Code 2001 ed., as amended, § 42- 3404.01 et seq.). The Act carves out an exception for rental units occupied by elderly or disabled tenants, who if they fulfill certain criteria may be entitled to a limited opportunity to purchase.

• Under the Act, single-family rental units, single-family rental units with an accessory dwelling unit and single rental accommodations in a condominium, cooperative or homeowners' association are exempt from TOPA. A single rental unit owner must give tenants notice of sale within 3 calendar days of receiving an offer or solicitation to purchase. This notice is valid for one year. An owner's failure to provide notice attaches to the owner personally and not to the property.

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Provisions for Elderly and Disabled Tenants• Elderly and disabled tenants who signed a written lease agreement to occupy a single rental unit

by March 31, 2018 and took occupancy by April 15, 2018 will have a limited opportunity to purchase or assign their rights.

• The owner must serve each elderly and disabled tenant with a written offer of sale and serve a copy on the Office of the Tenant Advocate (OTA). An owner's failure to do so would be a violation of the law and would affect the title of the property.

• OTA will try to contact the tenant and provide information to assist with the purchase decision. The tenant must respond with a written statement of interest, negotiate a contract with the owner, and then make financing and settlement arrangements within designated time periods.

• Elderly and disabled tenants have a limited power to assign their right to purchase. The only available consideration is the right to immediately use and occupy the tenant's unit for one year following the sale of the single unit rental accommodation at the rate of rent charged to the tenant as of the offer of sale date. If the elderly or disabled tenant assigns their TOPA rights, the recipient may only further reassign their rights to a private or nonprofit corporation or partnership of which the assignee or buyer is an owner, managing member, or an officer of the entity. No further consideration is available for a secondary assignment.

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Provisions for Elderly and Disabled Tenants cont.

• Elderly or disabled tenants must provide documentation verifying their status, including but not limited to proof of age identification documents and a physician's disability statement or a disability award letter from the federal government. DHCD-CASD must provide a status letter to the owner, tenant, realtor, or settlement agent upon request. The Act also imposes an obligation on DHCD-CASD to provide written confirmation of receipt (or non-receipt) of any document required to be delivered to DHCD-CASD upon request by an owner, tenant, realtor, or settlement agent. DHCD-CASD will provide a letter of qualification or non-qualification to tenant within 30 days of receipt of documentation from tenant.

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Important to Remember

* This law did NOT change any of the Landlord Tenant Laws in the District of Columbia. All those laws remain the same. For this reason, it is important to remember the Act also prohibits the eviction of any tenant except in accordance with eviction provisions under the Rental Housing Act of 1985 (D.C. Official Code 2001 ed., as amended, § 42-3501.01 et seq.). The only two ways to evict a tenant who is honoring the terms of the lease is through a 90 Day Notice for Personal Use and Occupancy or a 90 Day Notice for the contract purchaser who intends to occupy the property as their principal residence. There are other ways of giving notice for renovations and demolition of properties, but they are not applicable for this presentation.

* This law DOES NOT EXEMPT 2-4 Unit Properties and Properties with 5 or more units. TOPA is applicable and the same process that has been in place is still in place for these properties.

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STEP BY STEP PROCESS FOR REAL ESTATE AGENTSAND THEIR LISTINGS

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Step by Step Process For Real Estate and their Listings1) Sign a Listing Agreement

a. Within 3 calendar days of signing the Listing Agreement, Seller/Landlord must deliver to Tenant(s) Form 1 with attached Forms 2 and 4 (“Tenant Package”) by certified mail or a delivery service providing delivery tracking confirmation.

b. Simultaneously, the Seller/Landlord must also deliver a copy of the Tenant Package along with written evidence of the date of delivery to the Tenant of the Tenant Package (i.e. FedEx/UPS tracking information or USPS certified mailing receipts for Tenant’s package) to DHCD-CASD and OTA by certified mail or a delivery service providing delivery tracking confirmation.

2) If Tenant does not deliver Form 2 to Landlord and DHCD-CASD within 20 days of Seller delivering Form 1, then Tenant has waived their TOPA rights. Form 1 notification to the Tenant(s) is valid for 12 months.

3) In order for Tenant to qualify they must deliver Form 2 within 20 days of Seller delivering Form 1 and meet the following requirements:

a. Tenant signed a written rental agreement for the accommodation on or before March 31, 2018; andb. occupied the accommodation by April 15, 2018; andc. are elderly (62 years of age or older) or have a disability

4) If Landlord and DHCD-CASD receive Form 2 from Tenant within 20 days, then TOPA under this ACT applies.

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Step by Step Process For Real Estate and their Listingscont.

5.) If TOPA applies, then Landlord delivers either Form 3A with a Third-Party Contract or Form 3B without a Third- Party Contract to the Tenant within 60 days of delivering Form 1 to the Tenant.

6.) Tenant has 20 days from receipt of Offer of Sale to submit Form 4 to DHCD-CASD which includes the following:

a. If they are claiming they are 62 years or older, then they provide proof by enclosing:i. Passport, orii. Birth Certificate, orii. District-issued Driver's License, oriii. District-issued identification card.

b. If they are claiming they are disabled, then they provide proof by enclosing:i. Award letter for disability benefits from the U.S. Social Security Administration; orii. Letter from a physician stating that they have a disability.

7.) Tenant must also deliver to both the Owner and DHCD-CASD a written statement within 20 days from receipt of Offer of Sale accepting the Offer.

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Step by Step Process For Real Estate and their Listingscont.

8.) If Tenant submits both Form 4 and a written acceptance after receiving Offer of Sale Form 3A with a Third-Party Contract within 20 days then:

a. They can negotiate to purchase the property with the following timelines:i. 40 days to negotiate and ratify contract (includes 25 days to negotiate and 15

additional days under the First Right of Refusal) ii. 45 days to obtain financing and go to settlement with an additional 30 days

added (total of 75) if Lender provides Tenant letter they can render a decision within 75 days of Contract acceptance

iii. If all timelines are used to their fullest, total time is 135 days

b. They can allow their rights to expire

c. They can assign their right to stay in the property for up to one year at the current rent as of the date of the offer of sale

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Step by Step Process For Real Estate and their Listingscont.

9.) If Tenant submits both Form 4 and a written acceptance after receiving an Offer of Sale Form 3B without a Third-Party Contract within 20 days then:

a. They can negotiate to purchase the property with the following timelines:i. 25 days to negotiate and ratify contractii. 45 days to obtain financing and go to settlement with an additional 30

days added (total of 75) if Lender provides Tenant a letter that they can render a decision within 75 days of Contract acceptance

iii. If initial negotiation does not result in a Contract and Seller obtains a Third-Party Contract, Tenant will receive Form 3C and get 15 additional days under the First Right of Refusal to match the Third Party Contract

iv. Total timeline will depend on the gap of days between when Form 3B was delivered and when Form 3C was delivered

b. They can allow their rights to expire

c. They can assign their right to stay in the property for up to one year at the current rent as of the date of the offer of sale

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FORMS

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EXAMPLES

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Example 1Terry Tenant executed a lease with Oliver Owner on April 1, 2018 and then occupied the accommodation on April 16, 2018. Oliver Owner signs a listing agreement July 3, 2018 with Ralph Realtor to sell the property.

Question: What should Oliver Owner do once he executes the listing agreement?Answer: Within 3 calendar days after executing the listing agreement, Oliver Owner must deliver Form 1

with Form 2 and Form 4 as attachments to Terry Tenant by one or more of the following methods:1. Hand Delivery2. Certified Mail3. First-Class Mail4. Delivery service providing delivery tracking confirmation

Question: Will Oliver Owner need to follow up with Form 3A or 3B?Answer: No, Terry Tenant did not execute a lease by March 31, 2018.

Practice Point: It may be necessary to provide proof that Form 1 was sent to Terry Tenant, therefore it is suggested that the best methods for delivery are certified mail or delivery service with delivery tracking confirmation.

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Example 2Terry Tenant executed a lease with Oliver Owner on March 31, 2018 and occupied the accommodation on April 15, 2018. Oliver Owner signs a listing agreement July 3, 2018 with Ralph Realtor to sell the property.

Question: What should Oliver Owner do once he executes the listing agreement?Answer: Within 3 calendar days after executing the listing agreement, Oliver Owner must deliver Form 1

with Form 2 and Form 4 as attachments to Terry Tenant by one or more of the following methods:1. Hand Delivery2. Certified Mail3. First-Class Mail4. Delivery service providing delivery tracking confirmation

Question: Will Oliver Owner need to follow up with Form 3A or 3B?Answer: It will depend on whether Terry Tenant delivers Form 2 to Oliver Owner and DHCD-CASD within 20 days of receipt of

Form 1.

Question: What happens if Terry Tenant DOES NOT deliver Form 2 to Oliver Owner and DHCD-CASD?Answer: No further action is required from Oliver Owner and Terry Tenant will have waived his TOPA rights.

Question: What happens if Terry Tenant DOES deliver Form 2 to Oliver Owner and DHCD-CASD?Answer: Oliver Owner will need to decide if he wants to deliver Form 3A or Form 3B to Terry Tenant.

Practice Point 1: It may be necessary to provide proof that Form 1 was sent to Terry Tenant, therefore it is suggested that the best methods for delivery are certified mail or delivery service with delivery tracking confirmation.

Practice Point 2: DHCD-CASD must provide a status letter to the owner, tenant, realtor or settlement agent upon request that will provide written confirmation of receipt (or non-receipt) of any document required to be delivered to them. It is suggested that such a request be made by the Oliver Owner so that there is clarity that Terry Tenant has not delivered Form 2 to DHCD-CASD.

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Example 3Terry Tenant executed a lease with Oliver Owner on March 31, 2018 and occupied the accommodation on April 15, 2018. Terry Tenant is elderly and/or disabled. Oliver Owner signs a listing agreement July 3, 2018 with Ralph Realtor to sell the property.

Question: What should Oliver Owner do once he executes the listing agreement?Answer: Within 3 calendar days after executing the listing agreement, Oliver Owner must deliver Form 1 with Form 2 and Form 4 as attachments to Terry Tenant

by one or more of the following methods:1. Hand Delivery2. Certified Mail3. First-Class Mail4. Delivery service providing delivery tracking confirmation

Question: Will Oliver Owner need to follow up with Form 3A or 3B?Answer: It will depend on whether Terry Tenant delivers Form 2 to Oliver Owner and DHCD-CASD within 20 days of receipt of Form 1.

Question: What happens if Terry Tenant DOES NOT deliver Form 2 to Oliver Owner and DHCD-CASD?Answer: No further action is required from Oliver Owner and Terry Tenant will have waived his TOPA rights.

Question: What happens if Terry Tenant DOES deliver Form 2 to Oliver Owner and DHCD-CASD?Answer: Oliver Owner will need to decide if he wants to deliver Form 3A or Form 3B to Terry Tenant.

Question: What are Terry Tenant’s options once he asserts that he is entitled to TOPA rights and is given Form 3A or Form 3B by Oliver Owner?Answer: Terry Tenant can:

1. Elect NOT to purchase the property by allowing his TOPA rights to expire without acting2. Elect to purchase the property within the timeframe allowed by either Form 3A or Form 3B and in the method prescribed

in the applicable Form3. Assign his TOPA rights to a third party under the limited assignment provision of the law

Practice Point 1: It may be necessary to provide proof that Form 1 was sent to Terry Tenant, therefore it is suggested that the best methods for delivery are certified mail or delivery service with delivery tracking confirmation.

Practice Point 2: DHCD-CASD must provide a status letter to the owner, tenant, realtor or settlement agent upon request that will provide written confirmation of receipt (or non-receipt) of any document required to be delivered to them. It is suggested that such a request be made by the Oliver Owner so that there is clarity that Terry Tenant has not delivered Form 2 to DHCD-CASD.

Practice Point 3: Assignment to a third party is limited in the conversion. The only consideration allowable for assignment is the right to immediately use and occupy the unit for a period of 12 months following the sale of the single family accommodation at a rate of rent charged to the tenant as of the date of the offer of sale.

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