October 15 Client Alert

Our most recent Alert (linked here) discussed the proposed reforms to the DC Tenant Opportunity to Purchase Act (TOPA). This Alert provides an update on the reform legislation, as well as a summary of an important TOPA litigation victory for landlords. We also cover the expansion of the DC Housing in Downtown program, an executive order on housing in Maryland, a lawsuit against the Maryland Attorney General, and Prince George's County, Maryland, rent control regulations.

DeMetro v. Vaughan McLean, LLC. On September 30, 2025, the United States District Court clarified the interpretation of single-family accommodations under TOPA. At issue was the bulk sale of about 70% of the units within two adjacent DC condominium regimes. The owner of these condominium units sought to sell the units as single-family accommodations under TOPA. A putative class of plaintiffs sued on the grounds that the sale of those units was inaccurately characterized as the sale of single-family, rather than multifamily, accommodations. Plaintiffs argued that this misclassification deprived them from exercising purchase and/or assignment rights afforded to tenants of multifamily accommodations.

The case stems from a lengthy litigation history—including an administrative proceeding before the Department of Housing and Community Development (DHCD). When the DHCD entered a decision in favor of the property owner, the tenants first petitioned for reconsideration and, following DHCD's rejection of said petition, subsequently appealed to the D.C. Court of Appeals. Later, the tenants filed new claims with the D.C. Superior Court that were removed to the U.S. District Court for the District of Columbia.

The district court held that the TOPA statute included within the definition of single-family accommodation, a rental unit in a condominium. Therefore, the district court held that units at issue were single-family accommodations under TOPA and "[b]ecause each unit in [the property] at issue is a single-family accommodation and because the contested sale concerns those single-family accommodations, no quantity of them can make them otherwise." Thus, the owner correctly provided eligible tenants with an opportunity to purchase their units, rather than provide the tenants the right to register a tenant association to purchase all units being sold. This is an important decision, especially for condominium rental properties.

The district court's full decision can be found here. Litigation on behalf of the owner was handled by Constantinos Panagopoulos and Sarabeth Rangiah, attorneys in Ballard Spahr's Litigation Department. Attorneys Roger Winston, Kyle DeThomas, and Forrest Albiston of Ballard Spahr's Real Estate Department advised the owner as to its TOPA obligations and assisted in the DHCD proceedings.

TOPA Reform. On September 17, 2025, the Rebalancing Expectations for Neighbors, Tenants, and Landlords (RENTAL) Act passed on its second reading. It was expected that the RENTAL Act would then go on to the Mayor for approval or veto. However, in the days after the RENTAL Act passed, the title industry expressed concerns relating to the wording of the bill's TOPA exemption for small buildings with two to four units, as well as single-family accommodations. To address this concern, and possibly other issues, the DC Council has scheduled a third reading on October 21, 2025. If the RENTAL Act passes on the third reading, the DC Council will prepare the final enrolled version of the bill. The enrolled bill will then be sent to the Mayor who has 10 days to sign or veto the RENTAL Act. If the Mayor does nothing, the RENTAL Act goes to Congress after 10 days. After that, Congress has 30 working days (i.e., when both houses are in-session) to review. The Congressional review period, one of the quirks of the DC Home Rule Act, makes it difficult to predict when a law will become effective. Given that Congress is unlikely to receive the RENTAL Act until mid-November, based on the current congressional calendar, the RENTAL Act is not expected to become law until February of 2026.

DC Housing in Downtown (HID) Amendment. The HID program provides incentives for property owners in certain downtown areas converting their properties from nonresidential to rental apartments and condominiums. The three incentives are: (i) a 20-year tax abatement, (ii) limited exemptions from TOPA, and (iii) relief from certain First Source Agreement requirements. For more information on the original HID Program, see our April 2024 Alert. As part of the Budget Support Act for Fiscal Year 2026, an amendment to the HID program passed that expands the boundaries of the HID program to the Central Washington Area, as well as the Near Northwest Area Planning Area. The expanded boundaries include Georgetown and the Dupont Circle Business Improvement District. The amendment also reduces the funds available for fiscal year 2027 from $6.8 million to $5 million. To learn more about the HID Program, please see the link here.

Maryland Housing Executive Order. On September 3, 2025, Maryland Governor Wes Moore signed an executive order aimed at increasing housing production across the state by accelerating the process to build new homes. The "Housing Starts Here" executive order (linked here) includes directives to reduce state permitting timelines, identify specific state-owned properties for transit-oriented development, and work with local jurisdictions to create housing production targets for the state, each county, and each municipality with planning/zoning authority.

Maryland Attorney General Lawsuit. In June of 2025, Bay Management Group sued Maryland Attorney General Anthony Brown, challenging a 2023 law that granted the Attorney General's Office new powers to investigate and enforce civil rights laws. Bay Management Group alleges that the law is unconstitutional because it gives the Attorney General "unlimited and unchecked" power to investigate possible civil rights violations and to force changes to company policies. Bay Management first received a subpoena from the Attorney General's Office in December 2024, that Bay Management alleges would require it to produce nearly every document related to the tenant application process from the past three years, which could be up to 100,000 records (the Attorney General's Office disputes this number). Under Maryland State Government Code § 20-1044, "Before initiating a civil action, the Office of the Attorney General shall conduct a preliminary investigation to determine whether there is reasonable cause to believe that any person committed a civil rights violation." As part of the investigation, the Attorney General may "(1) subpoena witnesses; (2) administer oaths; (3) examine individuals; and (4) compel production of records, books, papers, contracts, and other documents." It is these powers, among others, that Bay Management is challenging as unconstitutional. In response, the Attorney General's Office has stated "[i]n fact, the entire purpose of the subpoena powers in the subpoena statute is to determine if there is reasonable cause to believe a civil rights violation has occurred." The case is still in the early stages of litigation with the court granting a Joint Motion to Extend Briefing Schedule on October 8, 2025.

Prince George's County Rent Control. As reported in our August 2024 Alert, several aspects of Prince George's County's rent control law will not go into effect until the Department of Permitting, Inspections, and Enforcement (DPIE) publishes final regulations, which the law requires by February 1, 2026. Aspects of the rent control law waiting for regulations to become effective include:

• Substantial Renovations: Rental units substantially renovated on or after January 1, 2000, may be exempt from rent control. To be considered "substantial", the renovations must be intended to enhance the value of the building and exceed 40 percent of the total assessed value of the building (i.e., not including the value of the land). However, units within substantially renovated properties are not automatically exempt—DPIE must approve the substantial renovations based on requirements in the rent control regulations. If the renovations are deemed substantial, the property is permanently exempt from rent control.
• Fair Returns: Landlords may seek rent increases in excess of the rent control cap if necessary to achieve "fair returns." To qualify for a fair return increase, a landlord must demonstrate that the landlord's return on investment is not sufficient to offset operating expenses commensurate with returns on investments with comparable risks. If approved, the fair returns increase may provide a temporary relief from the rent control cap, but landlords must submit new fair returns applications each year.
• Capital Improvement Surcharges: Landlords may also be able to recover capital improvement surcharges, if the capital improvements include permanent alterations intended to enhance the value of the unit. Similar to substantial renovations and fair returns, owners must apply for relief. If approved, the capital improvement surcharges are only valid until the landlord recovers its capital costs.

DPIE has been posting drafts of certain policies, including Fair Returns, Substantial Renovations, and Capital Improvements, and requesting public comments here. Currently, DPIE is requesting public comments on the draft of the Fair Return policy. The comment period for the Fair Return policy closes on October 31, 2025. The comment periods for Capital Improvements and Substantial Renovations are closed.

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.