Tenant / Community Opportunity to Purchase
Tenant Opportunity to Purchase (TOPA) policies provide tenants living in multifamily buildings with advance notice that the landlord is planning to sell their building and an opportunity for them to collectively purchase the building. TOPA is an emerging anti-displacement tool that can be used to preserve affordable rental housing stock, keep housing with community hands, and stabilize Black and Brown communities that have long faced displacement, disinvestment, and exclusion. These policies generally require landlords to provide an "Intent to sell" notice to their tenants, along with a timeframe for the tenants to form a tenant association and express interest in purchasing the units, and an additional timeframe for the tenants to secure financing. By providing renters with the right to negotiate and collectively bargain to purchase their buildings, TOPA policies level the playing field in highly speculative markets. Keys to successful TOPA programs include: 1) extending right of first purchase or right of first refusal to tenants so they have an opportunity to match an offer; and 2) requiring purchasers to preserve units as permanently affordable.
As an anti-displacement tool, TOPA policies and programs can stabilize households facing displacement pressures and provide an opportunity for long-time residents to stay in their neighborhood and purchase their homes. In Washington, DC — home to the nation's oldest and most comprehensive TOPA program — tenants organized to preserve close to 1,400 units between 2015 and 2018 alone. This has significantly contributed to Washington, DC’s impressive total of 4,400 units of limited equity cooperative housing units across 99 cooperative buildings. TOPA can also be a cost-effective method for cities to preserve their affordable housing stock since preserving existing housing costs less than building new affordable homes.
Cities and states can also consider developing Community Opportunity to Purchase Act (COPA) policies as an alternative or to complement a TOPA policy. COPA allows a qualified nonprofit to make a first offer to purchase a building with low-income tenants if the property owner decides to sell. COPA should be carefully crafted with tenants and nonprofit partners such as community land trusts, limited equity housing cooperatives, and other affordable housing providers. While only a few cities and states have developed policies that allow for the purchase of unsubsidized housing, a number of cities and states have provisions that allow for the purchase of subsidized affordable housing in order to preserve affordability.
In addition to PolicyLink tools and resources listed to the right, see the Council of Community Housing Organizations, the DC Fiscal Policy Institute, and Local Initiatives Support Corporation (LISC) for more resources related to tenant/community opportunity to purchase policies.
- Elected and appointed city and state officials can champion, pass legislation, and allocate funding for the creation of robust and intentional TOPA/COPA programs.
- Tenants are at the frontlines, organizing for expanded tenant rights, leading TOPA campaigns, and developing TOPA policies.
- Community-based organizations and CDCs can serve as potential purchasers or partners providing outreach, education, and organizing support to tenants.
The most effective TOPA/COPA policies are developed in partnership with tenants and housing advocates and include dedicated funding and infrastructure to proactively inform tenants about their TOPA/COPA rights, support tenant organizing, and help tenants finance the purchase of buildings.
Cities and states seeking to implement TOPA/COPA policies must consider a range of related legal and logistical questions.
- Tenant empowerment: TOPA policies can be a tool of empowerment and self-determination for tenants, giving them the ability to participate in the sale of their homes. Opportunity to purchase harnesses tenants' collective power as they form tenants' associations to make decisions about purchasing, what organizations to partner with, and how to secure funding and legal counsel. Upon a tenant purchase, residents have democratic control of their building and can address repairs, maintenance, and renovations as they best see fit. Further, TOPA provides ownership opportunities for lower-income households who would otherwise struggle to purchase homes and levels the playing field for residents to compete in speculative markets.
- Preserving affordability: Typical TOPA/COPA programs are reserved for tenants earning at or below 80 percent of the area median income (AMI). TOPA/COPA helps preserve affordable housing options for low-income residents. This is particularly important for communities facing displacement pressures and at risk of being priced out of their homes and neighborhoods. Cities and states should ensure purchasers through TOPA /COPA can agree to maintaining property as long-term affordable through deed restrictions or requiring the property to enter a community land trust.
- Unit and tenant eligibility: Cities and states should consider whether TOPA should apply to subsidized properties to preserve dedicated affordable housing or if it should also apply to unsubsidized properties to preserve rental housing in general. Strong TOPA policies such as that in DC cover both types of properties and help better preserve availability of rental units and mitigate displacement. Policymakers must also determine eligibility of potential purchasers, such as tenants at or below 80 percent AMI. Policymakers should offer all tenants the opportunity to purchase by making all rental units eligible for TOPA and to best mitigate displacement.
- Timing and notice provisions: TOPA should provide an adequate timeframe for tenants to organize and form an association, make an informed decision, secure funding, and put an offer together. Timing and notification periods should include ample notice of intent to sell to tenants and should outline timeframes for notification, statements of interests, negotiations, and time for residents to secure financing and financial assistance if needed. All notices should be provided in writing and typical notice periods range between several months to several years.
- Second right of refusal: If tenants choose to forgo their TOPA rights, they should have the opportunity to assign their TOPA rights to a qualified affordable housing provider, community land trust, or other nonprofit. To preserve affordability, policymakers should ensure the third-party purchaser will maintain the property as affordable. Policymakers and tenants can also consider a second right of refusal for municipal governments such as Washington DC's District Opportunity to Purchase.
- COPA versus TOPA: While these policies are related, they differ in important ways. With TOPA, tenants are empowered to negotiate directly in the sale of their building or can choose to assign that right to another entity, while with COPA, that ability is given to a list of qualified nonprofits. Which policy is better will depend on policy goals, market conditions, capacity of local housing nonprofits, availability of funding and financing, and capacity for tenant organizing and education.
- Adequate funding: Cities and states should dedicate funding to adequately support all aspects of a TOPA/COPA program to ensure its success. This should include funding for tenant outreach, education, technical assistance, enforcement, and a fund to assist tenant or community purchases such as a housing trust fund.
- Outreach and education: In addition to ample notification periods, tenants need substantial information, outreach, and resources to make decisions about TOPA/COPA and actualize their rights.
- Technical assistance: Cities and states should provide robust funding to offer adequate technical assistance, including legal counsel and representation. Washington, DC's TOPA program funds support staff at community organizations to support tenants in exercising their TOPA rights. Residents often need support post-purchase and cities must continue providing strong technical assistance to help them succeed as first-time homeowners.
- Enforcement: Cities and states should outline enforcement mechanisms and ensure adequate staffing to enforce a TOPA/COPA policy effectively. The policy should also give tenants a legal recourse outside of the municipality, such as third-party enforcement, to strengthen enforcement and provide residents with greater recourse options.
- Complementary Policies: TOPA/COPA policies are most effective when paired with robust tenant protections, financing and ownership tools that slow down the real estate transaction process and assist tenants in locating funds. Advance notice of sale policies that require property owners to submit a notice of intent to sell to the city give tenants more time to organize and prepare for a sale. Right of first refusal policies give tenants or non-profit developers the right to match any purchase offer that the property owner accepts on the private market when selling their property. Making acquisition and preservation an eligible use of local housing trust funds is a critical way to ensure tenants or non-profit developers have funds available to buy property in a fast-paced real estate market. Lastly, using the community land trust model as the underlying ownership structure of the acquired land and property is one way to reduce the long-term cost of ownership.
Tenant or community opportunity-to-purchase policies are an emerging solution to preserve affordable housing. Local and state governments across the country are exploring how to tailor these policies, in conjunction with other strategies to build community wealth and prevent displacement.
- TOPA was first enacted in Washington, DC in 1980 and is the nation's oldest and most comprehensive policy. Under the District's Tenant Opportunity to Purchase Act, tenants have the right of first refusal which gives them the opportunity to match any other offer the landlord is considering. While there are several cities with similar programs that only apply to subsidized housing, Washington DC's TOPA applies to private rental housing as well. From 2002 to 2013, DC's TOPA helped preserve close to 1,400 affordable housing units and keep thousands of long-time, low-income residents in their home. Tenants can purchase units individually, turning units into condos, or collectively if they form a tenant association and in partnership with a developer. Additionally, the District can acquire housing through the District Opportunity to Purchase Act (DOPA) to preserve affordable housing and address at-risk housing in need of serious repairs. The District Department of Housing and Community Development has limited funding available for loans to help tenants purchase their buildings. Since TOPA's implementation, hundreds of tenants have organized to purchase their units or buildings. Many of these units are located in gentrifying or gentrified neighborhoods, representing a form of housing stability and ownership that has allowed low- and moderate-income residents to stay in their homes as increased investments in retail, services, schools and job opportunities come to their neighborhoods. In July 2018, Washington, DC amended its policy to exempt single family dwellings from TOPA unless the home is occupied by elderly or disabled tenants, meaning the majority of tenants renting single-family homes no longer have the opportunity to purchase their homes.
- In San Francisco, the Community Opportunity to Purchase Act (COPA) gives nonprofits a first right of purchase, allowing landlords to sell at market rate to nonprofits. Due to San Francisco's inflated property costs, tenants would have little feasibility to secure enough funding to purchase a property on their own through a TOPA policy. Nonprofits could purchase housing but struggle to compete with private purchasers ready to pay in cash or more readily available capital. COPA addresses this challenge by requiring landlords to notify affordable housing nonprofits from a qualified list when their building goes on sale. The landlord may reject the nonprofit's offer only after the nonprofit has had a chance to match the private buyer's offer. The policy also includes a financial incentive to property owners to sell to nonprofits by exempting sites valued at five million or more from paying a portion of the local property transfer tax. Nonprofits that purchase a building through COPA will be required to maintain rents at affordable levels. COPA builds upon the city's Small Sites Program which gives loans to nonprofits to purchase and preserve affordable housing for existing tenants. Since its implementation in 2019, eight non-profit developers have successfully joined the list of qualified developers. One of them, Mission Economic Development Agency (MEDA), has been able to purchase three buildings and get into contract for three more.
- In 2020, Chicago passed the Woodlawn Housing Preservation ordinance as a strategy to preserve affordable housing and protect residents of the Woodlawn neighborhood from being displaced by gentrification that has been accelerating in the area. One of the components of the policy is that it creates a right of first refusal pilot program, requiring the owner of a building with 10 or more units to give tenants an exclusive opportunity to make an offer on the property before it is sold. Tenants would have a 90-day period to form a tenant’s association and enter into an agreement with a non-profit affordable housing developer to purchase the building and maintain it as affordable. The Right of First Refusal has not yet been exercised through the program. PolicyLink will continue to monitor progress on this program and provide updates.