The Tenant Opportunity to Purchase Act (TOPA), sometimes known as right of first refusal, Community Opportunity to Purchase Act (COPA) or simply the Opportunity to Purchase Act (OPA), continues to gain momentum across the country.
In 1980, Washington, D.C. became the first city to enact these burdensome requirements which mandate that rental property owners who decide to sell their properties must first offer the sale to current residents. D.C.’s mandate even allows residents to sell their TOPA rights to third parties. While these laws are designed to be an anti-displacement measure, in reality, they rarely result in residents' purchase of property and can add months or in some cases, years to the sale of real estate.
To date, the National Apartment Association (NAA) has identified 11 cities across the country that have enacted such legislation including San Francisco, Chicago, and Philadelphia. Most recently, the Colorado General Assembly voted yes on their own spin on the policy, House Bill 24-1175, Local Governments Rights to Property for Affordable Housing. If the bill is signed into law, property owners of affordable housing built using public funds would be required to provide multiple notices to the local government of qualifying property sales and guarantee their right of first refusal and a right of first offer before the property could be sold on the private market. This is a stepped-down version compared to Colorado’s 2023 proposal, which would have required all owners of multifamily properties more than 30 years old to give notice of intent to sell, a right of first refusal and a right of first offer even when government dollars were not used for construction.
Baltimore also enacted the policy in October 2023. Barely six months after passing the Baltimore ordinance, Maryland became the first state to pass a statewide TOPA law this past April as part of Governor Wes Moore’s expansive housing package. The law requires that the property owner must notify the resident and provide 30 days for the resident or tenant association to submit a written offer to purchase before a residential rental property may be put up for sale. From that written offer, the housing provider has five days to respond and either accept the offer or deliver a counteroffer. Only after the resident has declined to purchase the property or declined the counteroffer may the property be offered for sale on the private market.
TOPA laws add unnecessary red tape to real estate transactions and ultimately increase the cost of housing for renters. These efforts intended to preserve communities and prevent displacement neglect the underlying cause of this problem, insufficient housing supply. Until housing supply is increased enough to meet the 3.2 million home shortage, TOPA and policies like it will continue to be ineffective at best or harmful at worst.
The National Apartment Association applauds its affiliate partners’ efforts to defeat these harmful policies and supports their efforts to encourage responsible and sustainable housing policies instead.
For more information on the TOPA, please contact Joe Riter, Senior Manager of Public Policy.