The Council of the District of Columbia approved the Rebalancing Expectations for Neighbors, Tenants, and Landlords (RENTAL) Act of 2025 (the Act), which makes significant changes to the District of Columbia Tenant Opportunity to Purchase Act (TOPA). The Act is not law yet. It will become effective if Congress takes no action during the 30 legislative days after it is submitted to Congress for approval.
Noteworthy changes to TOPA are:
- All Washington, D.C. multifamily properties are exempt from TOPA for 15 years from issuance of a certificate of occupancy (CO). This has a retroactive effect, so a property that received a CO 10 years prior to the effective date is exempt for another five years after the Act becomes effective.
- Owners of housing accommodations that become exempt upon the effectiveness of the Act are required to provide notice to all tenants within 90 days of the effective date. However, the exemption is not affected by failure to timely give such notice.
- The following types of housing accommodations are now exempt from TOPA: hospitals, convents, monasteries, skilled nursing homes, memory care homes, assisted living homes, senior personal care independent living homes, extended care facilities, convalescent or rehabilitation homes, and dormitories owned or leased by an educational institution.
- All leases for exempt buildings must disclose to the tenant that the building is exempt from TOPA.
Set forth below is a broader summary of the changes to TOPA.
Assignments/Consideration
There are new limitations on the consideration that tenants may negotiate in connection with the exercise, sale, or assignment of TOPA rights. Tenants may only negotiate for relocation assistance (capped at the lesser of one year's rent or $12,000, adjusted annually); building affordability (e.g., caps on rental rates); organizing expenses including reasonable attorneys' fees; and specified improvements/efficiency upgrades. Subject to those limitations, tenants, owners, and assignees retain discretion in how to structure the financial terms of a settlement or assignment.
What Constitutes a "Sale"
Under the Act, transfer of majority ownership (other than solely between or among existing owners) in an entity that owns a rental accommodation as its principal asset constitutes a "sale" for TOPA purposes. "Majority ownership interests" means ownership interests associated with the majority of the value of the capital, profits, and losses of the applicable entity. This provides a new bright-line rule for determining what constitutes a sale. Accordingly, for example, a recapitalization that replaces more than 51% of the capital of a property-owning entity will be deemed to be a sale for TOPA purposes.
Estate planning transfers to family members (surviving spouses or domestic partners or lineal descendants of the decedent or surviving spouse), including trusts or entities controlled by family members, do not constitute a sale for TOPA purposes. Note that a prior exemption for transfer of a housing accommodation from a decedent's estate to a charitable organization was removed and such transfer now constitutes a sale.
New Exemptions From Sale
The most significant new exemption is that a sale of a new building (not just the first sale) will be exempt from TOPA if the sale occurs within 15 years after the issuance of a permanent CO. This has a retroactive effect to the effective date of the Act (which is not yet determined). Accordingly, a housing accommodation that receives a CO after the effective date of the Act will be exempt for 15 years thereafter. A housing accommodation that received a CO prior to the effective date of the Act will be exempt from TOPA for that portion of the 15 years after the CO was issued that occurs after the effective date of the Act.
Another key change is that certain categories of residential buildings are now completely exempt from TOPA — namely, any housing accommodation that is used or licensed as: a hospital, convent, monastery, skilled nursing home, memory care home, assisted living home, senior personal care independent living home, extended care facility, convalescent or rehabilitation home, or in a dormitory owned or leased by an educational institution.
Also exempt is any sale of a building in which the buyer enters into a binding recorded covenant to maintain at least 51% of the housing units in the building at no greater than 80% area median income or median family income for a period no less than 20 years following the transfer.
The Act codifies a court case that held that the transfer of interests among existing owners of a housing accommodation (where no interest is transferred to a new third party) is exempt and does not constitute a sale.
As to Low-Income Housing Tax Credit (LIHTC) and comparable covenants, the Act excludes from the definition of sale certain post-credit-period and rehabilitation/new-credit-period transfers when ownership control remains the same and long-term affordability covenants remain in place.
New Notice Provisions
As noted above, owners of housing accommodations are required to provide notice to all tenants of the building within 90 days of the property becoming exempt, including by reason of the effectiveness of the Act.
All leases presented to prospective tenants must state that the housing accommodation is exempt.
Where a TOPA sale notice is given to tenants of a housing accommodation (a Sale Notice), the Sale Notice must disclose to the tenants the availability of no-cost technical assistance and training and list all certified Tenant Support Providers (TSPs). The new concept here is that, for tenants who seek to evaluate their TOPA rights, the District of Columbia government will make experts available to them to provide free counseling and advice.
Sale Notices may now be sent by "delivery service providing delivery tracking confirmation, return receipt requested." Although the intent seems to be to permit the use of Fedex or UPS, an alternative to the U.S. postal service, the use of the term "return receipt requested" raises questions about whether Fedex or UPS qualifies. Sale Notices and notices of transfer must be posted within the housing accommodation for occupants without written leases (on the same day as notices are given to other tenants with written leases).
Notices of Transfer
If a sale transaction is exempt under the Act, the basic rule remains that the owner of the housing accommodation must nevertheless deliver a notice of transfer to the tenants and the mayor's office prior to the transfer. A notice of transfer does not require, as in the past, that "all material facts" be disclosed to tenants. However, the notice of transfer must disclose whether the transfer changes management, rents, or affordability requirements. LIHTC-related notices of transfer must describe the subsidy and transaction steps.
Definition of Tenant
The definition of "Tenant" has been revised to limit its scope to any person who, under a written lease (current or expired), is (1) entitled to occupancy and (2) is liable to the owner to pay rent. This simplifies the process of determining who is a tenant for notice and voting purposes. Previously, a tenant included anyone entitled to occupy a rental unit.
Mandatory Filings With DHCD
Any agreement or contract with tenants under TOPA (including development agreements) is unenforceable unless specified deal data (address/ward, unit count, price, rent-stabilization/affordability details, etc.) is filed with the District of Columbia Department of Housing and Community Development (DCHD) within 30 days after signature by all parties.
TOPA Transparency Portal
The Act requires the mayor to establish a public, searchable database tracking various TOPA filings and data, including offers of sale, association registration, selected purchaser, deal duration, negotiated outcomes, and final sale filings.
New Actors, Conduct Rules, and Process Guardrails
Tenant Support Providers (TSPs). The Act establishes a cadre of government-funded TSPs to assist tenants in navigating the TOPA process. The mayor will certify TSPs (four-year terms), publish a list, and police conflicts. TSPs cannot act adversely to tenant interests or in buildings where they have (even potential) financial interests.
Interference Prohibitions and Disclosures. In a new general rule broadly intended to protect tenants, any party (e.g., a developer or lawyer) approaching tenants must disclose ownership/governance interests and financial connections to the housing accommodation. In addition, owners and third-party purchasers are prohibited from interfering with tenant rights (including organizing to steer outcomes without full disclosure or omitting notice of no-cost training/TSP consultation).
Third-Party Negotiations. Third parties may negotiate assignments/waivers only with clear advance disclosures of their identity, including that they are not tenant organizers and that tenants have a right to training with a certified TSP before negotiations.
Administrative Certifications
Upon request, the mayor must issue written certifications (receipt or non-receipt) of TOPA notices and provide copies to impacted parties. This codifies an informal practice already in place at DHCD.
Effective Date and Funding Notes
If, as expected, the Act is approved by the mayor, the Act will be sent to Congress for a review period of 30 legislative days. During this period, Congress can elect to pass a joint resolution disapproving the Act. If the president approves such joint resolution, the Act does not become law. If, after the review period, Congress does not pass a joint resolution, or such joint resolution is not approved by the president, the Act will become law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
