Bulletin: DC2019001

Dear Associates:

The purpose of this Bulletin is to advise District of Columbia (“DC”) agents that when handling transactions involving DC properties with 5 or more residential rental units that they must ensure that the owner has complied with the District Opportunity to Purchase Act (“DOPA”).

DOPA Background:

In 2008, the Rental Housing Conversion and Sales Act of 1980 was amended to give the District an opportunity to purchase property with 5 or more residential rental units. This right is subordinate to the tenants’ rights to purchase the property. The District can only exercise its right to purchase when at least 25% of the rental units qualify as affordable housing.

DC Mayor Muriel Bowser has stated that she intends to begin using DOPA to increase DC’s affordable housing stock. To ready itself, in November 2018, DC finalized regulations for DOPA. Additionally, DC has made it clear that it intends to exercise its right to purchase by assigning its right to a qualified developer(s). In support of that effort, the District issued a request for qualifications (“RFQ”) to create a pool of qualified developers. That RFQ closed in January 2019. 

Agent Requirements:

1. Notice to the Mayor. The District must be given proper notice of ALL sales of properties with 5 or more residential rental units regardless of the number of affordable housing units. The DOPA Notification Form (found here) must be used to provide the District with notice. When reviewing the DOPA Notification Form be sure all required attachments (ratified third-party contract (if applicable), list of tenants with rental unit number and monthly rent, list of vacant units with rental unit number and monthly rent, and a list of affordable rental units with rental unit numbers including the owner’s calculations of determining the monthly rent of the affordable rental units) are included with the notice.

2. Title Commitments. All Title Commitments issued in connection with the sale of ALL real estate in the District of Columbia must contain a requirement substantively similar to the following:

Company must be furnished proof that no portion of the Property is leased for residential purposes. If any portion of the Property is leased for residential purposes, Company must be furnished proof that the requirements of the Rental Housing Conversion and Sale Act of 1980, as amended, have been complied with and proof that Company's applicable requirements for the removal of an exception for the rights of tenants and the rights of the District of Columbia under the Rental Housing Conversion and Sale Act of 1980, as amended, have been complied with.

3. Title Policies. If it is determined that a property has 5 or more residential rental units, the Title Policy (both owner’s and lender’s policies) must contain an exception substantively similar to the following:

Rights of District of Columbia under the Rental Housing Conversion and Sale Act of 1980, and all amendment thereto and regulations thereunder.

Removal of this exception requires specific Underwriter approval. 

Implementation of DOPA:

• Written Statement of Interest. The Mayor has 30 days from receipt of the DOPA notice to provide the owner with a written statement of interest. A copy of the written statement of interest must also be provided to the tenants. 
   
• Negotiation Timeframe. The Mayor has 150 days from the date of the owner’s receipt of the Mayor’s written statement of interest to negotiate a contract for sale.
     
  • If a tenant organization is formed and delivers an application for registration to the Mayor, then the Mayor has 15 additional days to negotiate a contract of sale.
     
  • The negotiation period is extended by one day for each day the owner delays providing the required information.
     
• Time to Complete Settlement. The Mayor has 60 days after the date a contract of sale is executed to complete settlement.                 
• Extension of time. If the owner provides any extension of time to a tenant, the Mayor shall automatically receive the same extension of time.                 
• Lapse. If 360 days pass since the tenants or Mayor received the offer of sale, whichever is later, then, the owner will have to comply anew with DOPA. 

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.