D.C. Law 21-26. TOPA Bona Fide Offer of Sale Clarification Temporary Amendment Act of 2015.
AN ACT
To amend, on an temporary basis, the Rental Housing Conversion and Sale Act of 1980, to clarify that a bona fide offer of sale for a housing accommodation with 5 or more units, for purposes of demolition or discontinuance of housing use, made in the absence of an arm's length third-party contract, shall be based on current, applicable, matter-of-right zoning regulations or laws, or by an existing right to convert to another use, that the offer may take into consideration the highest and best use of the property, and to establish the right of a tenant organization to a determination of the appraised value of a housing accommodation under certain circumstances.
BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this act may be cited as the "TOPA Bona Fide Offer of Sale Clarification Temporary Amendment Act of 2015".
Sec. 2. The Rental Housing Conversion and Sale Act of 1980, effective September 10, 1980 (D.C. Law 3-86; D.C. Official Code § 42-3401.01), is amended as follows:
(a) Section 103 (D.C. Official Code § 42-3401.03) is amended as follows:
(1) New paragraphs (1A) and (1B) are added to read as follows:
"(1A) Beginning January 1, 2014, "appraised value" means the value of a housing accommodation as of the date of the appraisal, based on an objective, independent property valuation, performed according to professional appraisal industry standards.
"(1B) Beginning January 1, 2014, "bona fide offer of sale" means an offer of sale for a housing accommodation or the interest in the housing accommodation, that is either:
"(A) For a price and other material terms that are at least as favorable as those accepted by a purchaser in an arm's length third-party contract; or
"(B) In the absence of an arm's length third-party contract, an offer of sale with a price and other material terms comparable to that at which a willing seller and a willing buyer would sell and purchase the housing accommodation, or the appraised value.".
(2) A new paragraph (12A) is added to read as follows:
"(12A) Beginning January 1, 2014, "matter-of-right" means a land use, development density, or structural dimension to which a property owner is entitled by current zoning regulations or law.".
(b) Section 402 (D.C. Official Code § 42-3404.02) is amended as follows:
(1) Subsection (a) is amended by striking the phrase "Before an owner" and inserting the phrase "Before October 7, 2014, before an owner" in its place.
(2) New subsections (a-1), (a-2), (a-3), and (a-4) are added to read as follows:
"(a-1) Beginning October 7, 2014, before an owner of a housing accommodation may sell the housing accommodation or issue a notice to vacate for purposes of demolition or discontinuance of housing use, the owner shall give the tenant an opportunity to purchase the housing accommodation at a price and terms that represent a bona fide offer of sale.
"(a-2) Beginning January 1, 2014, whenever an offer of sale is made to tenants for a housing accommodation with 5 or more units that is required by subsection (a) or (a-1) of this section before the owner may issue a notice to vacate for purposes of demolition or discontinuance of housing use, and the offer is made in the absence of an arm's-length third-party contract, the following shall apply:
"(1) The sales price contained in the offer of sale shall be less than or equal to a price and other material terms comparable to that at which a willing seller and a willing buyer would sell and purchase the housing accommodation, or the appraised value of the housing accommodation as determined by this subsection.
"(2) An appraised value shall only be based on rights an owner has as a matter-of-right as of the date of the offer, including any existing right an owner may have to convert the property to another use.
"(3) Within the restrictions of paragraph (2) of this subsection, an appraised value may take into consideration the highest and best use of the property.
"(4) The owner of the housing accommodation shall have the burden of proof to establish that an offer of sale under this subsection is a bona fide offer of sale.
"(5)(A) A tenant organization registered according to section 411(1) may challenge the offer presented by an owner of a housing accommodation as not being a bona fide offer of sale, and request a determination of the appraised value of the housing accommodation.
"(B) The tenant organization shall request an appraisal by delivering the request to the Mayor and the owner by hand or by certified mail, within 45 days of receipt of a valid bona fide offer of sale.
"(C)(i) The tenant organization and owner of the housing accommodation shall jointly select an appraiser. If within 14 days after a tenant organization has requested an appraisal, the tenant organization and owner of the housing accommodation have not agreed upon an appraiser, either party may request that the Mayor select an appraiser.
"(ii) A request that the Mayor select an appraiser shall be in writing and delivered by hand or by certified mail to the Mayor and to the owner or tenant organization, respectively.
"(iii) The Mayor shall select the appraiser on a sole source basis within 7 days of receiving the request for an appraiser.
"(D) The tenant organization and owner of the housing accommodation shall pay one-third and two-thirds of the cost of the appraisal, respectively.
"(E)(i) The appraiser shall hold an active license to be a Certified General Real Property Real Estate Appraiser that has been issued by District of Columbia Board of Real Estate Appraisers.
"(ii) The owner shall give the appraiser full, unfettered access to the property.
"(iii) The owner shall respond within 7 days to any request for information from the appraiser.
"(iv) The tenant organization may give the appraiser information relevant to the valuation of the property.
"(F) The appraisal shall be completed expeditiously according to standard industry timeframes.
"(6) Beginning with the date of a tenant organization request for an appraisal, and for each day thereafter until the tenant organization receives the appraisal, the negotiation period described in section 411(2) shall be extended by one day.
"(7)(A) The determination of the appraised value of the housing accommodation in accordance with this subsection shall become the sales price of the bona fide offer of sale for the housing accommodation, unless:
"(i) The owner and the tenant organization agree upon a different sales price of the housing accommodation; or
"(ii) Within 14 days of the receipt of the appraisal by the owner, the owner elects to withdraw the offer of sale.
"(B) The owner shall withdraw the offer of sale by delivering a letter of withdrawal to the Mayor and a member of the board of directors of the tenant organization, by hand or by certified mail. Upon such election, the owner shall reimburse the tenant organization for its entire share of the cost of the appraisal within 14 days. An owner who withdraws an offer of sale in accordance with this paragraph, shall be precluded from making a subsequent offer of sale to the tenant organization without an arm's-length third party contract, for 6 months from the date of the election to withdraw the offer of sale.
"(8) Within 30 days of the receipt of the appraisal conducted by an appraiser selected by the Mayor according to this subsection, either the tenant organization or the owner of the housing accommodation may appeal the appraisal as being in violation of the requirements of this subsection, to the Superior Court of the District of Columbia for the court to take any appropriate action the court may deem necessary.
"(a-3) Notwithstanding subsections (a-1) and (a-2) of this section, for a tenant organization that before the effective date of the TOPA Bona Fide Offer of Sale Clarification Emergency Amendment Act of 2015, passed on emergency basis on June 2, 2015 (Enrolled version of Bill 21-222), has registered the tenant organization with the Mayor according to section 411(1), and has requested an appraisal of the housing accommodation by delivering the request to the Mayor and the owner by hand or by certified mail, the following shall apply:
"(1) Beginning January 1, 2014, before an owner of a housing accommodation may sell the accommodation, or issue a notice of intent to recover possession or notice to vacate for purposes of demolition or discontinuance of housing use, the owner shall give the tenant an opportunity to purchase the accommodation at a price and terms that represent a bona fide offer of sale.
"(2) If within 360 days of the date of the issuance of a bona fide offer of sale pursuant to this subsection, an owner has neither sold, or is in the process of selling, the property pursuant to that bona fide offer of sale nor taken possession of the property, the owner shall comply anew with the requirements of this subsection before the owner may again act to sell the housing, or issue a notice of intent to recover possession or notice to vacate for purposes of demolition or discontinuance of housing use.
"(3) For the purposes of this subsection, in the case of multi-unit housing, the term:
"(A)(i) "A bona fide offer of sale" means a sales price that is less than or equal to the appraised value of the real property, multi-unit housing, and any other appurtenant improvements ("property") plus, except as provided in sub-subparagraph (ii) of this subparagraph, the amount of liens existing before the sale or transfer; provided, that the liens shall be satisfied by the seller in the sale or transfer transaction.
"(ii) If the seller and the purchaser agree that the purchaser shall assume the liens, if any, a bona fide offer of sale means a sale price that is less than or equal to the appraised value of the property less the amount of any lien assumed by the purchaser.
"(B)(i) "Appraised value" means an objective property valuation based on the current state of the property and existing zoning, building, and occupancy permits that is no more than 6 months older than the date of issuance of the offer of sale that has been determined by 2 independent appraisals performed by 2 appraisers qualified to perform multi-unit appraisals.
"(ii) Of the 2 appraisers required by sub-subparagraph (i) of this subparagraph, one shall be selected by the owner and one shall be selected by the tenant. If the appraisers fail to agree upon a fair market value, the owner and the tenant shall jointly select and pay a third appraiser, whose appraisal shall be binding, or agree to take an average of the 2 appraisals.
"(C) "Multi-unit housing" means housing with 5 or more units.
"(a-4) Subsection (a-3) shall expire on October 9, 2015.".
(c) Section 411(4) (D.C. Official Code § 42-3404.11(4)) is amended by striking the phrase "the owner has not sold or contracted for the sale of the accommodation" and inserting the phrase "the owner has not sold or contracted for the sale of the accommodation, or in the case of an offer of sale given for the purposes of demolition or discontinuance of housing use, has not issued a notice to vacate for demolition or discontinuance of housing use, pursuant to section 501(g) or section 501(i) of the Rental Housing Act of 1985, effective July 17, 1985 (D.C. Law 6-10; D.C. Official Code § 42-3505.01(g) or (i))" in its place.
Sec. 3. The Tenant Opportunity to Purchase Temporary Amendment Act of 2014, effective February 26, 2015 (D.C. Law 20-166; 61 DCR 11101), is repealed.
Sec. 4. Fiscal impact statement.
The Council adopts the fiscal impact statement of the Chief Financial Officer as the fiscal impact statement required by section 602(c)(3) of the District of Columbia Home Rule Act, approved December 24, 1973 (87 Stat. 813; D.C. Official Code § 1-206.02(c)(3)).
Sec. 5. Effective date.
(a) This act shall take effect following approval by the Mayor (or in the event of veto by the Mayor, action by the Council to override the veto), a 30-day period of congressional review as provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December 24, 1973 (87 Stat. 813; D.C. Official Code § 1-206.02(c)(1)), and publication in the District of Columbia Register.
(b) This act shall expire after 225 days of its having taken effect.
