Washington DC's Tenant Opportunity to Purchase Act (TOPA) Can Affect A Property Buyer's Ability to Complete a Real Estate Sale
BETHESDA, Md., Feb. 20, 2014 /PRNewswire/ — When buying a tenant-occupied property in Washington DC, it is essential to be familiar with the DC Tenant Opportunity to Purchase Act (TOPA). Tenancy issues that are not immediately apparent can have a serious effect on a buyer's ability to complete the sale. Every situation is different so a thorough understanding of TOPA is essential from the very beginning of the buying process. Retaining a Buyer's Agent who can anticipate potential TOPA issues before they happen can help buyers navigate past potential pitfalls.
Enacted in 1980, TOPA gives the tenant the first right of refusal to purchase a property when the landlord wants to sell. Well intentioned as the act might be, TOPA has had unintended consequences for both sellers and buyers. Since a tenant has the first right of refusal to purchase the property they have the ability to slow down or stop the deal even if they have no intention of buying the property or don't have the means to do so.
Under TOPA, when a landlord decides to sell a residential property they must alert the tenant and offer them a reasonable sale price. This price must be similar to what the owner would offer an outside buyer. The occupants must then respond within a set period of time indicating whether or not they are interested in purchasing the property. "What is critical in this process is determining when the seller gave the notice to sell to their tenants," explained Ben Stern of Buyer's Edge, a leading Bethesda, MD-based Exclusive Buyer Brokerage firm. "Until 30 days have passed from the date of issuing notice, the tenants might still decide to exercise their TOPA rights. No title insurance company will issue a policy until that deadline has passed and a buyer won't be able to settle on their property. When determining a settlement date, TOPA must be considered."
"The fact that the property is not currently occupied by a tenant does not mean that TOPA is a non-issue," continued Stern. "When the owner decided to sell, a tenancy may have existed. The previous tenant must be served a TOPA notice."
There is a lot of room for dispute over the interpretation of TOPA rights and the courts have consistently sided with tenants whenever ambiguity exists. "The process can be a challenge to navigate," said Steve Israel, President of Buyer's Edge. "Our agents are very familiar with TOPA. We have guided clients through all kinds of different TOPA issues and if we don't know the answer to a TOPA question we know how to find the answer. So, if someone is considering buying property in DC and wants to make sure the buying process doesn't come to a grinding halt because of issues involving TOPA, it's wise to retain experts in the area. At Buyer's Edge, as exclusive buyer's agents, it is our duty to make sure that the buyer's interests are protected."
For further information, contact Ben Stern, Buyer's Edge, 4849 Rugby Avenue, Bethesda, MD 20814, USA. Phone: 301.657.1475 or 800.207.6810 (toll free), Fax: 301.657.4494, e-mail or visit www.buyersagent.com.
About Buyer's Edge
Buyer's Edge is metropolitan Washington DC's only buyer broker real estate company, exclusively representing Home Buyers in Maryland, Northern Virginia and the District of Columbia since 1992.