Matthew Thall
A broad coalition of mayors, community development officials, housing advocates, housing policy organizations – local, regional statewide and national – is hoping that a five-year journey through the Massachusetts legislature will conclude this summer with the enactment of the Tenant Opportunity to Purchase Act, or TOPA.
The TOPA Coalition takes issue with the disingenuous misinformation presented by the Small Property Owners Association in a recent column in Banker & Tradesman. Here are the facts about TOPA.
This bill will authorize municipalities to adopt a local ordinance that would give tenants of multifamily properties the right to match a third-party, market-price offer to purchase the property when it is put on the market ensuring that sellers receive a market price for their property.
TOPA is not a statewide mandate. It would be adopted at the option of local municipalities when the municipality deems that it is a useful strategy. SPOA holds out Washington, D.C.’s TOPA law as a cautionary tale. But in that city, where TOPA has been in place for 41 years, thousands of households have been able to become homeowners in TOPA-created housing cooperatives.
How Bill Really Works
Tenants would have a very short time period to form a tenant association which must represent at least 51 percent of the tenant households; the rights established by the legislation are conferred to the tenant association. Individual tenants would have no ability to cut side deals with owners, attorneys or potential buyers, as SPOA suggested they would under Massachusetts’ bill.
The tenant association could act on its own to purchase the property as a housing cooperative or a tenant-controlled nonprofit organization. Alternatively, the tenants could assign their rights to the local housing authority or an experienced non-profit affordable housing developer. The tenant association could also form a joint venture with a qualified for-profit or nonprofit developer.
There are no Catch-22s or tripwires in the bill that would permit a prolonged closing process.
Joe Kriesberg
But these new powers won’t substantially delay a multifamily sale. A tenant association (or its designee) would have only 30 days after receiving notice of a third-party contract, to execute a purchase and sale agreement and put down a sizeable deposit. The tenants would then have a 90-day due diligence period; the deposit becomes non-refundable at the end of the due diligence period. The sale to the tenants must close 160 days after the purchase contract is signed.
Extensions not agreed to by the seller are simply not permitted as long as the seller provides the standard property information that is typically required by any buyer. There are no Catch-22s or tripwires in the bill that would permit a prolonged closing process.
Bill Refined with Industry Input
TOPA is now in its third iteration. With every reintroduction to the legislature, changes have been made that have been responsive to issues raised by landlords and other real estate industry players.
Foremost of these is a prohibition of tenants selling their rights under TOPA – the source of many of SPOA’s concerns about Washington, D.C.’s TOPA law. In addition, Realtors are guaranteed commissions earned from a transaction with a third party that transitions to a tenant association purchase.
Small landlords – individuals who own fewer than seven units in any one community – are exempt. Sales to immediate family members of owners are exempt.
Lyida Lowe
The TOPA Coalition recently recommended a further amendment exempting new construction projects put up for sale within three years of completion, in response to an issue raised in Gov. Charlie Baker’s veto of the bill in 2021.
TOPA Part of Larger Solution
The libertarian opponents of TOPA would have us believe that any regulation of the absolute rights of property owners will destroy the residential market. This is simply not true. Washington, D.C., where a version of TOPA has protected thousands of renters from displacement, remains one of the strongest – and most expensive – residential markets in the country.
A superheated, out-of-control real estate market in Massachusetts is upending low-income, working-class and even middle-income renters, especially minority families and neighborhoods. TOPA is one of the mildest measures of tenant protection and market regulation imaginable. It barely begins to level the playing field between tenants and nonprofit developers and investors who are devouring rental property throughout the commonwealth
TOPA challenges the conventional official response to the housing crisis, which is “production, production and more production.” Of course, we do need to produce more housing, but acquisition and repair strategies are often a faster and cheaper way to add permanently affordable housing to the inventory. Enactment of TOPA will stimulate a serious discussion about bringing about a sensible balance of resources for production and for preservation of affordable housing.
Mat Thall is the president of the Massachusetts Association of Housing Cooperatives, Joe Kriesberg is the CEO of the Massachusetts Association of Community Development Corporations and Lydia Lowe is a member of the Greater Boston Community Land Trust Network. All are members of the TOPA Coalition’s steering committee.
