Massachusetts Landlords Battle Bill That Would Give Renters First Right Of Refusal On Apartment Sales
Buying and selling multifamily properties in Massachusetts may get more complicated if a bill pending in the state legislature, The Tenant Opportunity to Purchase Act, becomes law.
If passed, TOPA would give tenants the first crack at buying the apartment where they live before it goes on the market by putting a six-month hold on the sale. Groups of tenants can designate a nonprofit to buy the property on their behalf.
The bill, which passed the Massachusetts State House earlier this summer as part of a larger unrelated economic development bill, is in a conference committee.
According to the bill's supporters, TOPA will "preserve affordability" and "prevent massive displacement" from the economic turmoil left in the wake of the coronavirus pandemic.
"The COVID epidemic will roil the housing markets in Massachusetts," TOPA's backers wrote in July in an article on nonprofit news site Commonwealth Magazine.
The authors — Boston City Councilor Lydia Edwards, Massachusetts Association of Community Development Corporations CEO Joseph Kriesberg and officials with local nonprofits in Fenway and Dudley Square — added that speculators and Wall Street investors will flock to the market looking for bargains, driving up rents in the process.
MassLandlords, a trade group representing multifamily operators in the state, opposes the bill and argues it would place an onerous economic burden on its members, which are largely mom-and-pop property owners, according to MassLandlords Executive Director Doug Quattrochi.
He argues that the bill requires the time and expense of arranging a sale before pausing, something most buyers won't tolerate.
"Renters already have the right to make an offer to purchase [the properties where they live] — the same as anybody else," Quattrochi said in an interview. "The point of this bill is to delay sales as long as possible so a nonprofit can come in and buy it."
The bill's supporters say MassLandords is overblowing the bill's potential problems.
"We think the bill has been crafted in a way that balances the interest of sellers and the interests of the community and the residents," Kriesberg told Bisnow. "Nothing in this bill would prevent an owner from selling his property at the full market value to whomever he wants."
It remains unclear if the bill has enough support to pass the Senate or if Republican Gov. Charlie Baker would sign it into law.
"We are trying to keep track of what's going on in the legislature, but we have no insight into the action of the conference committee," Massachusetts Association of Housing Cooperatives President Jonathan Seward said in an interview. "I would hope that the governor would sign the bill, but he has a line-item veto. Considering some of the things that the governor has vetoed in prior years, we might be one of the things that get vetoed this year."
A Baker spokesperson didn't return an email seeking comment.
The Massachusetts bill is modeled after a law that passed in Washington, D.C., in 1980 that supporters of renter rights, such as the D.C. Fiscal Policy Institute, credited with preserving more than 1,400 units of affordable housing in the District between 2003 and 2013 at a fraction of the cost of building new units.
Earlier this year, Berkeley, California, Mayor Jesse Arreguin proposed a TOPA ordinance for the city. TOPA also is being debated in Oakland and on the state level in Sacramento. A TOPA bill is pending in the New York State Legislature and in the U.S. Congress. Rep. Ilhan Omar, a Democrat who represents Minnesota, included it in legislation she sponsored in April to cancel rent and mortgage payments for people affected by the pandemic.
Developers in other states have raised the same concerns about TOPA as their counterparts in Massachusetts. In D.C., a new lobbying group called the Small Multifamily Owners Association was founded this year, and repealing TOPA is one of its key goals, founder Dean Hunter told Bisnow in June.
"TOPA, as it's administered in the District, is a nightmare," Hunter said. "The reality of the matter is it adds $25K or $30K per unit to a multifamily transaction. That cost is often absorbed by the landlord."