Lawton on Tenant Purchases & Affordable Housing

Julie Lawton (DePaul) has posted Tenant Purchase as a Means of Creating and Preserving Affordable Homeownership (Georgetown Journal on Poverty Law Policy).  Here's the abstract:

For a number of years, the federal government and various local jurisdictions have struggled with the most effective means of producing more units of affordable housing. This article proposes an affordable housing production model that enables tenants to purchase their single-family homes and multifamily apartment buildings based on a tenant purchasing program prevalent in Washington, D.C.

Throughout the years, Washington, D.C., like many jurisdictions, has tried various measures to create and preserve affordable housing and make homeownership affordable to more residents. One of the most productive programs created to produce and preserve units of affordable housing in Washington, D.C. is the program known as the Tenant Opportunity to Purchase Act (TOPA). Generally, TOPA requires that a landlord owning residential property in Washington, D.C. must first offer the tenants residing in that property the opportunity to purchase it before selling that property to a third-party. The tenants then have the right to: (i) maintain the property as a rental owned by either the tenants or a private developer chosen by the tenants, (ii) purchase the property and convert it to a market rate or affordable condominium or cooperative, (iii) sell their rights to purchase the property to any entity the tenants choose for any value negotiated by the tenants, or (iv) ignore their TOPA rights altogether. TOPA helps prevent the loss of affordable housing units to the private market, promotes resident engagement and control in the development of the resident’s neighborhood, promotes private investment in preserving affordable housing, enables residents — specifically low- and moderate-income residents — to participate in the wealth creation from the property sale, and creates homeownership opportunities for low- and moderate-income residents who might otherwise be priced out of an expensive real estate market.

I represented tenant groups in Washington, D.C. in the purchase, renovation, and conversion of their multi-family apartment buildings for many years and experienced TOPA’s ability to facilitate the preservation of affordable homeownership in gentrifying neighborhoods, to empower low- and moderate-income residents in influencing the redevelopment of their neighborhoods, and to provide wealth creation for the tenants who were able to successfully purchase their properties in a manner that preserved affordability. Other jurisdictions should consider a law providing some form of tenant purchase rights to residents of multi-family properties to help create and preserve affordable housing. This article seeks to provide those jurisdictions with an in-depth review of TOPA, its benefits, and some suggested areas of improvement. This article also seeks to provide Washington, D.C. with a rare scholarly review of TOPA by someone who worked closely on TOPA policy, business, and legal issues for a number of years.

Steve Clowney