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Massachusetts’ small-landlord trade groups have launched a push calling on Gov. Charlie Baker to reject portions of the omnibus economic development bill passed in the early hours of Wednesday morning over provisions that would grant apartment tenants the right of first refusal if a landlord sought to sell the building.
The bill, called H.5250, mostly consists of a wide range of grants and appropriations for local business development priorities and would inject $626.5 million into the state economy. A number of policy items were also attached to the bill, which was regarded as “must-pass” legislation: a zoning reform known as “Housing Choice” long-sought by Baker and a provision that would require communities that host MBTA stations to designate at least one zoning district “of reasonable size” near at least one station for the by-right development of multifamily housing.
The bill also includes elements of a bill called the “Tenant Opportunity to Purchase Act,” or TOPA, that would give municipalities the option of requiring landlords to notify their apartment tenants if they intend to sell the building and give them 15 days to submit an offer to purchase the property. If a city or town adopted the measure, landlords would also be required to let tenants make a counter-offer up to 15 days after being notified in writing of an offer from a third-party buyer for the building they live in. The tenants will have up to 160 days after signing a purchase and sale agreement with their landlord to assemble the funds necessary and complete the purchase.
Tenant associations may also delegate their rights to purchase or form a joint venture partnership with “another entity with requisite experience in developing, owning or operating residential real estate or an entity that has the financial capacity to guaranty the financing of the purchase transaction,” the bill states.
MassLandlords and the smaller Small Property Owners Association sent out emails to supporters condemning the inclusion of the right-to-purchase legislation in the economic development bill, saying it would significantly hurt their members and urging Baker to veto that portion of the bill.
“We must stop this bill and embarrass our elected officials at the slapdash way in which this dramatic policy change was enacted without public participation, in the middle of the night, with drafting errors and inconsistencies and corrupt intent to bankrupt owners,” MassLandlords said.
Both groups say the delays in executing a sale, which could add up to 240 days, would amount to “legalized extorsion.”
“That delay will hurt landlords badly, because when they decide to sell, they usually want to sell quickly. And tenants know that. Most tenants have no desire nor financial ability to purchase a property, especially the property they live in when the owner wants to sell. Thus, very few will ever use this provision in its (supposedly) intended purpose,” SPOA said. “But what they WILL do is demand $$$$ in a payoff to sign away their right to purchase so that the landlord can proceed with the sale promptly. EVERY tenant will ask for this payoff.”
Both groups say they fear the bill could also hurt bankrupt landlords’ ability to sell short should they default on their mortgages.
Tenant groups have pushed the measure saying it is necessary to prevent displacement and slow the pace of gentrification in poor and working-class neighborhoods, many of which are minority-dominated.
