Hundreds testify that DC needs to #fixTOPA, but does it need to be fixed? If so, how?

Hundreds of DC residents testified at a 7+ hour hearing on September 22 about a proposed bill that would reform the Tenant Opportunity to Purchase Act (TOPA), a law that gives tenants the opportunity to buy their residence before the owner sells it to a third party. The 40-year-old law has staunch defenders in the District but critics have increasingly been calling for reforms, especially regarding the sales of single-family homes.

Right now there is an ongoing debate in DC about TOPA. Critics say some tenants are abusing their rights to negotiate, and argue the law was intended to be used by owners of larger-scale housing. Supporters rejoin that TOPA is a vital tool for protecting renters and affordable housing more generally, and say it should not be weakened.

This fall, there are two TOPA reform bills up for debate in the District, by Councilmembers Anita Bonds (at large) and Brianne Nadeau (Ward 1). Both carve out different kinds of exemptions from TOPA for single-family homes, and would shorten deadlines those tenants must meet.

At the hearing last week on Councilmember Bonds’ bill, it became clear early on that many of the TOPA critics who came to testify wanted a simpler solution, one that Chairman Phil Mendelson supported strongly from the dias: “a flat-out exemption for all single-family houses” from TOPA (something that neither bill fully proposes).
So what about TOPA should be reformed? What are the risks of reform? To make sense of this complex issue, we asked two of our contributors: Should TOPA should be amended for single family homes, and if so, how?

Jessica Wilkie, GGWash contributor and realtor:

As a realtor who who has dealt with first-hand the some of the negative consequences of TOPA, I’m strongly in favor of the proposal to exempt single family dwellings from TOPA requirements. The law is overly burdensome to homeowners who choose to sell their rental property (which is sometimes their primary residence, in the case of basement rentals or even roommates who are entitled to TOPA rights). It’s not fair to impose these regulations on individuals, who are not commercial investors, who just want to sell their homes.

TOPA laws give tenants, who may or may not have the capability to actually make the purchase, the power to muck up a sale with extended time frames and ambiguous terms. The timelines are completely archaic. If an owner gives notice of sale to a tenant, tenant has seven days to request information, then 30 days to indicate to interest, and then sixty days after that to secure financing and get to closing. In a market where the typical closing takes thirty days, a buyer off the street is not going to wait out a tenant who wants to exercise his TOPA rights. This is why owners are forced to buy the tenants out and have them assign their TOPA rights back to … the owner (and this is where these exorbitant payouts are coming into play).

Here’s a recent example I’ve dealt with. A couple bought a condo to live in several years ago and then, as happens, they left the area for work out of state and rented the place out for a few years. Now they’ve decided to sell, and now they’ve got a TOPA headache.

We’re not through it yet, but so far the tenant is nearly impossible to get a hold of. After significant effort he finally allowed us into the place to see it, and it’s a complete disaster zone, with his junk and stuff literally covering the entire floor. We can’t list the place with him in it if the owner wants to get anything close to market value — but with his stuff out of there and a good scrubbing it’ll show just fine.

As required, we let the tenant know he’s got TOPA’s right of first refusal on this property, and he’s said he’s interested in purchasing. He hasn’t talked to any lenders though and has dodged all of our follow-up efforts to contact him. It’s a strong guess that he won’t qualify for the loan. Nonetheless, we’ll be forced to carry out TOPA with its extended timelines unless owner reaches an agreement with him and offers some type of “incentive” to get him to move. We’ll see how much he wants, but since it’s also nearly impossible to evict tenants in DC, even after the lease has gone month-to-month, the tenant is holding some pretty strong cards. All this has been an extremely unpleasant surprise to the owner, who thought he could just sell his condo.

At very least, the TOPA timelines should be modified and shortened to reflect today’s real estate norms. I’d also venture to say that owners deserve more rights when it comes to vacating their place for the purpose of selling (once their lease is up).

Carolyn A. Gallaher, GGWash Contributor and author of The Politics of Staying Put:

I don’t think the District should rewrite its TOPA legislation to deal with abuses of legal grey areas by a particular lawyer and his/her clients. It would be better to seek a regulatory fix to the problem. There have been a variety of actors who have tried to circumvent TOPA’s spirit over the years. Some of Council’s attempts to amend the legislation have created unintended consequences.

When you hear single family homeowners and realtors critique TOPA, it is easy to feel sympathy for the hurdles and delays they face. However, it is also worth understanding what TOPA is designed to do and why we should defend these goals despite the inconveniences they may cause.

As a general rule, urban landlords have significant leverage over their renters. In most cities tenants have no or limited rights when their landlord decides to sell a rental property. He/she can give their tenant three month’s notice, for example, but in most cities they’re not even legally required to give one month’s notice. There aren't many supports to help with a tenant's moving expenses either, even in cases when they receive short notice. In short, tenants are at a big disadvantage.

TOPA was designed, in part, to level this playing field. The City Council that wrote the TOPA law recognized that finding, securing, and keeping stable housing should not be such a precarious endeavor. It also realized that in a city with trenchant race and class divides, losing one’s house or apartment could also mean being pushed out of the city. TOPA can’t prevent all precarity, or keep everyone in the city, but it gives tenants time and yes, leverage, in a context where they usually have none.

Today the city is much wealthier than it was in the early 1980s when the TOPA law was written, but in many ways TOPA is even more necessary today than it was then. The city has lost half of its affordable housing over the last decade, and it remains as divided by race and class. When considered in this light, the push to eliminate or weaken TOPA’s protections for renters in single family dwellings feels misguided. Landlords may point out that tenants shouldn’t be able to negotiate for moving costs, for example, but it’s worth remembering that tenants, especially low income ones, are ill-prepared to cover the costs of moving, securing new housing, and keeping their home and work lives stable. What do we have in place as a city to support tenants in these moves? We often see tenants willing to stay in place no matter how horrible the living conditions become simply because there is nowhere else to easily go in the city. TOPA is tenant friendly, but it’s also fairness friendly.

The better the District regulates TOPA (establishes norms, beefs up its enforcement capabilities, etc.), the easier abuses are to detect and stop in their tracks. I also think the ongoing negotiations between a working group of tenant advocate groups and DCAR representatives convened by Councilmember Bonds remains the responsible way to resolve the issue.

What do you think?

GGWash readers: What do you think about these bills? Should TOPA be amended, and if so, how?