A primer for the sale of DC residential rental property
Selling tenant occupied residential property in the District of Columbia can be a challenging experience filled with potential pitfalls. For the novice and veteran Realtor®, due care must be taken at every step of the process.
When approaching a client for a listing, always inquire as to whether the property is registered with the Department of Consumer and Regulatory Affairs (DCRA), Rental Accommodations and Conversion Division (RACD). All D.C. residential landlords are required to be registered with DCRA and failure to register can result in complaints issued by the Agency or the tenants.
While owners who offer four (4) or fewer rental units for rent are subject to the small landlord exemption from the rent stabilization provisions (rent control) of the Rental Housing Act, all landlords must register and are subject to other provisions of the Act including but not limited to the proscription against retaliation against tenants.
After ensuring that the client is properly registered, the next step is to understand and appreciate that District of Columbia law provides few grounds for evicting a tenant. Forget about the notion that a lease is due to expire.
Provided a tenant pays all lawful, non-retaliatory rent increases and otherwise abides by all terms and conditions of the lease, the tenancy does not end unless and until the tenant seeks to leave. Knowing this at the outset will help you explain to your client the importance of establishing and maintaining a cordial and cooperative relationship with the tenants.
A common misconception is that tenants are required to be provided notice and opportunity to purchase the property in advance of or contemporaneously with the MRIS listing of the property. Not only is this not true but this is a bad practice which could result in the tenants forcing the sale at a price significantly below the actual fair market value as established by third parties.
While the cooperation of the tenants should be obtained to facilitate showing the property, they are free to bid with other third parties to establish the market and should not be given any special treatment in advance of receiving a third party contract unless the client knows that the tenants have the interest and the wherewithal to purchase.
Once a third party contract has been procured, Notice and Opportunity to Purchase with a Third Party Contract must be delivered to all tenants with copies personally delivered to Linda Harried at the Conversion and Sales Division of DCRA at 941 North Capitol Street, N.E. Personal delivery is highly recommended, due to the history of that office losing documents filed.
If your contract purchaser intends to occupy the premises as a principal residence, then contemporaneous with the delivery of the Notice and Opportunity to Purchase with a Third Party Contract, the seller should deliver to the tenants a 90-day Notice to Vacate for Personal Use and Occupancy of the Contract Purchaser, a form which contains an affidavit which must be executed by the contract purchaser(s).
This short-cut can save your deal from collapsing as this process, while in no way depriving the tenants of their rights to purchase, nevertheless advises them that in the event they do not want to purchase, their tenancy will be terminated by the contract purchaser.
While there is no assurance that the tenants will timely leave, once this notice is provided, the clock is running and if they don't leave, then you can get into court and otherwise work to preserve your sale.
About the author
Marc S. Moskowitz, a third-generation Washingtonian, has been engaged in the general practice of law in the District of Columbia and Maryland for over twenty years, with special emphasis on real estate disputes in general and landlord and tenant disputes in particular. As a former Hearing Examiner at the Rental Accommodations and Conversion Division of the Department of Consumer and Regulatory Affairs, Marc routinely adjudicated disputes between landlords and tenants and he continues to be appointed by the Superior Court as a mediator and arbitrator to help resolve disputes in that court.
This information is deemed reliable, but not guaranteed.