Assignment OF TOPA Rights vs. TOPA Affidavit
I am often asked which is preferable – Assignment of TOPA Rights or a TOPA Affidavit?
The answer is it depends on multiple factors i.e. is Owner/Seller/Landlord willing to pay consideration to a tenant; is there a ratified contract; how much time is there before settlement; etc.
TOPA rights can be assigned with or without a contract – there must be consideration of at least $300 per current underwriting guidelines and this consideration can be in the form of cash, forgiven rent, waiver of rent, moving expenses, etc. If the rights are to be assigned before there is a contract, the agent must send out TOPA Form B via certified mail prior to the tenant signing the Assignment. Form C will not be necessary, as the rights of first refusal will be assigned at the same time as the rights to purchase. If there is a contract, the agent must send out TOPA Form A via certified mail prior to the tenant signing the Assignment.
Please note NOTICE either FORM A or FORM B MUST BE SENT VIA CERTIFIED MAIL TO MEET THE STATUTORY GUIDELINES AND TRIGGER THE RIGHTS SO THEY ARE ASSIGNABLE. Once the Assignment is fully executed, settlement can happen immediately – no waiting period.
If the agent wants to use the Affidavit, the appropriate TOPA forms must be sent via certified mail. Ideally, the Affidavit should be signed after the 45 day period (30 days right to purchase plus 15 days right of first refusal). In most cases, the tenant will sign the Affidavit prior to the conclusion of the waiting period, but the 45 day period must pass. The reason an underwriter requires the 45 day period to pass is the affidavit is “retractable”; in other words, the tenant is allowed to change his or her mind making the affidavit no good.
In addition, when an affidavit is used; the title company will need to get a Review of File Letter issued from the District (DCHD) prior to settlement. The Review of File letter will confirm there was not Notice of Intent to Purchase filed with the District and solidifies tenant’s intent – to purchase or not purchase. This closes the underwriting loop and allows settlement to happen.
- Tags: Agents | Closing Costs | Homebuyers | Homebuying | News | Real Estate | renters | Tips or Advice | TOPA | Washington DC