The D.C. Tenant Opportunity to Purchase Act, known as TOPA, gives renters in a building with two or more units the legal right to buy the property before their landlord can sell it to anyone else. The law sets a specific sequence: the owner has to make a written offer to the tenants first, wait out defined response and negotiation periods, and only then move forward with an outside buyer. Skipping any step can unwind the sale, even years after closing.
Which Buildings TOPA Covers
TOPA applies to “housing accommodations,” meaning residential rental buildings with two or more units. The law splits those buildings into two tracks with different procedures: two-to-four-unit buildings and buildings with five or more units.
Single-family rentals used to be covered. D.C. Law 22-120, enacted in 2018, took them out of the standard process almost entirely. The narrow exception is for tenants who are elderly or have a disability, signed a lease by March 31, 2018, and moved in by April 15, 2018. Those tenants keep a limited version of TOPA with shorter deadlines: 20 days to express interest, 25 days to negotiate, and 45 days to close after signing a contract.1D.C. Law Library. D.C. Law 22-120 – TOPA Single-Family Home Exemption Amendment Act of 2018
Properties with an accessory dwelling unit sit in a gray zone. Whether a basement apartment or carriage house turns a house into a two-unit building for TOPA purposes depends on how the District classifies the property and whether the unit is registered as a separate rental. Confirm the classification before assuming the single-family carve-out applies.
What Tenants Can Actually Do With the Right
TOPA bundles three protections together.
The core right is the opportunity to purchase. Before selling to anyone else, the owner must offer the property to the tenants at a price and on terms that constitute a genuine offer of sale.2D.C. Law Library. District of Columbia Code 42-3404.02 – Tenant Opportunity to Purchase This is not a courtesy notice. It starts a legally binding process.
If tenants don’t buy the building themselves and the owner later negotiates a deal with a third party, tenants hold a right of first refusal. They can match the outside buyer’s contract and take that deal instead.
Tenants can also assign or sell their TOPA rights to a nonprofit, a private developer, a government entity, or any other third party. The law puts the tenant in sole control of how to structure that assignment and what to accept in return.3D.C. Law Library. District of Columbia Code 42-3404.06 – Exercise or Assignment of Rights A lot of TOPA transactions end this way: tenants assign their rights to a developer in exchange for a cash payment, building improvements, or long-term affordability commitments. The assignment can happen at any point in the process after the statutory cooling-off period has run.
These rights attach to the tenancy itself. A lease clause purporting to waive TOPA does not hold up; the statute overrides it.
The Offer of Sale
Everything starts when the owner delivers a written offer of sale to every tenant in the building. The same day, the owner must send a copy to the Mayor, which in practice means the Department of Housing and Community Development’s Rental Conversion and Sale Division. Delivery has to be by certified mail, a tracking-confirmed delivery service, or by hand.4D.C. Law Library. District of Columbia Code 42-3404.03 – Offer of Sale
The offer must include the asking price and the material terms, and it must state whether a contract with a third-party buyer already exists. If a contract exists, the owner has to make a copy available within seven days when a tenant asks.4D.C. Law Library. District of Columbia Code 42-3404.03 – Offer of Sale Tenants can also request information needed to evaluate the deal, which the owner must provide within seven days: building floor plans, itemized operating expenses and capital expenditures for the prior two years, and utility consumption data.5District of Columbia Office of the Tenant Advocate. TOPA Single Unit
DHCD publishes official offer-of-sale forms through its Rental Conversion and Sale Division. Using them is the simplest way to avoid having a notice rejected for a technical defect.6Department of Housing and Community Development. Rental Conversion and Sale Forms
Timelines for Two-to-Four-Unit Buildings
In smaller buildings, tenants respond as a group first and individually second. Acting jointly, tenants have 15 days from the later of receiving the offer or the Mayor receiving a copy to deliver a written statement of interest to the owner and the Mayor. If no joint statement is filed, any individual tenant has an additional seven days to submit one alone.7D.C. Law Library. District of Columbia Code 42-3404.10 – Accommodations With 2 Through 4 Units
Once a statement of interest is on file, the owner must give tenants at least 90 days to negotiate a contract of sale. For every day the owner delays producing requested information, the negotiation period extends by one day. If the tenants acting jointly do not reach a contract by the end of the 90-day window, the owner has to provide an additional 30 days in which any individual tenant can negotiate separately.7D.C. Law Library. District of Columbia Code 42-3404.10 – Accommodations With 2 Through 4 Units
After a contract is signed, tenants get at least 90 days to secure financing and close. If a lender provides written notice that it needs up to 120 days to make a decision, the owner must extend the settlement period to match.
Timelines for Buildings With Five or More Units
Larger buildings add an organizing step. After a valid offer of sale, tenants have 45 days to form a tenant organization capable of holding real property: elect officers, adopt bylaws, file articles of incorporation, and deliver a registration application to the Mayor and the owner. If a qualifying tenant organization already exists, the registration deadline is 30 days.8D.C. Law Library. District of Columbia Code 42-3404.11 – Accommodations With 5 or More Units
The registration application has to include the names, addresses, and phone numbers of tenant officers and legal counsel, copies of the articles of incorporation and bylaws, and documentation that the organization represents at least a majority of the occupied rental units.8D.C. Law Library. District of Columbia Code 42-3404.11 – Accommodations With 5 or More Units Getting a majority of neighbors signed on and filing incorporation paperwork within 45 days is where many tenant efforts stall. The Office of the Tenant Advocate runs TOPA classes and publishes process guides to help with this phase.9Office of the Tenant Advocate. Tenant Opportunity to Purchase Act
After registration, negotiation and settlement periods follow a structure similar to the smaller-building track, scaled for larger transactions and subject to day-for-day extensions when the owner is late with required information. Confirm the current applicable deadlines with DHCD before relying on any particular date.
Transfers That Don’t Trigger TOPA
Not every change of ownership is a sale for TOPA purposes. D.C. Code ยง 42-3404.02(c) exempts a defined list of transfers, including:
- Transfers between spouses, domestic partners, parents and children, siblings, and grandparents and grandchildren, even if money changes hands.
- Transfers under a bona fide deed of trust or mortgage, including foreclosure sales and deeds in lieu of foreclosure.
- Sales or transfers resulting from tax foreclosure.
- Sales ordered or conducted through bankruptcy proceedings.
- Transfers pursuant to a court order or court-approved settlement.
- Transfers by eminent domain or under threat of it.
- Changes in entity form without consideration, such as converting an LLC to a corporation.
- Transfers of bare legal title into a revocable trust without consideration, where the transferor remains the beneficiary.
- Transfers from a decedent’s estate to family members where the proceeds go to charity.
These exemptions are read narrowly.10D.C. Law Library. DC Code 42-3404.02 – Tenant Opportunity to Purchase Owners claiming one still have to file a notice of exempt transfer with the District. Attempts to disguise an ordinary sale as an exempt transfer, like routing a deal through a related entity to look like a no-consideration restructuring, can be challenged and the deed voided.
What Happens If an Owner Skips TOPA
This is the part of the law that catches owners off guard. A tenant whose rights were violated can sue to rescind a completed sale, not just recover damages. Courts can order specific performance and place the tenant in the buyer’s position at the original price. Attorney’s fees are recoverable. There is no short window for bringing the claim, and sales that closed years earlier have been unwound successfully when tenants never received a proper offer of sale.
The remedy is deliberately aggressive. Most landlord-tenant statutes stop at money damages. TOPA puts the property itself on the table. That is why compliance is non-optional for owners, and why buyers should independently verify TOPA compliance before closing on any D.C. rental building. Title companies in the District routinely flag TOPA during review, and lenders will often refuse to close without evidence that the process was followed or that the property is exempt.
FHA Financing and TOPA
A buyer hoping to use an FHA-insured mortgage can hit a wall if TOPA rights are still live. HUD’s Single Family Housing Policy Handbook treats an active right of first refusal as a restriction on conveyance. A property is generally ineligible for FHA mortgage insurance when it’s subject to a purchase option or right of first refusal, unless the right is held by a community land trust, a governmental body, or a nonprofit working to maintain affordability for low- or moderate-income families, and the right terminates upon foreclosure or deed in lieu.11U.S. Department of Housing and Urban Development. HUD Single Family Housing Policy Handbook 4000.1
In practice, an FHA buyer has to wait until the tenants’ TOPA rights have been exercised, assigned, or allowed to expire before the loan can close. That delay puts FHA borrowers at a disadvantage against conventional and cash buyers competing for the same D.C. rental properties.
Taxes on TOPA Buyout Payments
When tenants assign their TOPA rights for money, both sides should understand the tax treatment. The IRS generally treats buyout payments to tenants as taxable income. If a payment reaches $600 or more, the owner or buyer typically reports it on a Form 1099-MISC, and the tenant should expect to declare the full amount on their federal return. Whether the payment is ordinary income or consideration for surrendering a property interest depends on the facts, so tenants receiving sizeable buyouts should talk to a tax professional before filing.
For owners, the capital gains picture depends on how long they held the building and how much depreciation they claimed. Long-term capital gains rates for 2026 are 0%, 15%, or 20%, depending on taxable income. Owners who took depreciation deductions face recapture taxed at up to 25%, which is often the piece that surprises sellers. Short-term gains on property held less than a year are taxed as ordinary income at rates up to 37%.