TOPA Laws in DC impacting a transaction for an investor

[Juan Zabala]

I was wondering if anyone has had any issues with the TOPA laws in DC. For those who don't know, TOPA stands for the Tenant Opportunity to Purchase Act. This law gives the tenants of properties in Washington DC the first right of refusal to purchase the property. So let's say a seller puts their multi-family property on the market for $500,000, the tenants have the right to purchase it. The tenant can forfeit their rights to purchase the property or they can assign their rights to a third party who can purchase on their behalf. Here's the dilemma, the person who gets those rights assigned to them can hold back the process up to 6 months without ever purchasing the property. What these folks who get assigned the TOPA rights do is try to negotiate the leases for the current tenants and/or negotiate a buyout. They'll say, "pay me $20,000 and don't increase the rents on the tenants for the next 2 years". The seller will then have to agree to these terms in order to sell the property or wait nearly 6 months to sell the property. I have been working on a deal for a buyer in DC and we have been unable to get a clear title because of the TOPA laws and the clearances. Has anyone had to deal with these type of issues in DC or anywhere else around the country? If so, how did the transaction turn out for you?  Also, please feel free to correct me if I am misinterpreting how the TOPA system works. I appreciate y'all!