The Small Property Owners Association disputes the TOPA Coalition’s duplicitous defense of TOPA as a “good housing policy” in its June 19 column in Banker & Tradesman.
TOPA irrefutably failed in Washington, D.C., where less than 5 percent of tenants purchase their rental properties. Numerous revisions to the law ensued, per the TOPA Coalition’s admission. However, a 2022 Bisnow report showed that TOPA still failed in D.C., despite those revisions, as it tanked the production and sale of multifamily properties. Moreover, the numerous changes to the D.C. law – as well as the Massachusetts proposal – demonstrate that TOPA is unworkable at its core.
Proponents in Massachusetts claim that the delays imposed on property sales are not too burdensome on owners. But their own timetable would add up to 227 days (seven to eight months), and possibly more, to the detriment of buyers and sellers, given the reality of these transactions. This is clearly unreasonable and it demonstrates an alarming neglect of how real estate transactions actually work. The structure and function of the tenant associations are also problematic in that the tenant organizations could transfer their first refusal option to a for-profit entity.
Limiting small property owners to possession of 6 units or less is also unrealistic. Small owners are not defined by the number of units they own nor whether their buildings are owner-occupied, but rather the degree to which they oversee management activities directly. Most small owners also own their properties through LLCs and trusts, which are automatically subject to TOPA, thereby negating the idea that most small owners would be exempt from this policy. Instead, this will benefit out-of-state investment companies that have the resources to wait at least seven to eight months after placing an offer to learn if the transaction will actually work.
While new production is most vital to alleviating the housing crisis, per the state legislature’s efforts, tenants would be better helped by increasing needs-based voucher programs, including RAFT, that would not infringe upon contract law or the rights of property owners.
— Amir Shahsavari is the vice president of the Small Property Owners Association.
