The DC TOPA Rule Most Rowhouse Sellers Have Backward
A Capitol Hill investor calls about listing a rowhouse he bought four years ago and converted into two units, an upstairs owner's unit and a rented English basement. He's heard the word TOPA enough times to be nervous about it. He assumes that because he holds the property in an LLC, the tenant downstairs has the same right-of-first-refusal leverage as a renter in a hundred-unit apartment building. He's planning for a year of delay and a payout he can't estimate.
He has it backward. And as of December 31, 2025, that mistake could cost him a buyer.
The Tenant Opportunity to Purchase Act has shaped how tenant-occupied property moves in the District for decades, and it exists nowhere else in the region. Maryland and Northern Virginia have nothing like it. But the version of TOPA that scared off small landlords for years just got rewritten by the Rebalancing Expectations for Neighbors, Tenants, and Landlords Act, and the rewrite didn't just soften the law. It changed which ownership structures actually trigger it, and the change runs opposite to what most owners assume.
Under the RENTAL Act, buildings with two to four units are now exempt from TOPA's offer-of-sale requirement, with one specific carve-out: the exemption disappears only if the building is majority-owned by a business corporation. An LLC does not count. A trust does not count. An individual owner does not count, even one who owns several properties. The distinction the law actually draws is corporate ownership versus everything else, and everything else is most of how small DC landlords hold title.
That means the investor with the Capitol Hill rowhouse in an LLC is very likely exempt from the process he's been dreading. If he'd incorporated instead, for tax reasons or investor structuring, he'd still be looking at the old timeline.
This matters at scale, not just for one seller. Two-to-four-unit buildings aren't a niche corner of DC's rental stock. The Urban Institute counted 6,886 of them citywide compared with 3,568 buildings of five units or more, and from 2015 through 2020 these smaller buildings generated more TOPA notices of sale every single year than the larger ones did. Ward 5 alone holds 1,407 of these properties, the largest share in the city, with Ward 6 and Ward 7 close behind. These are the same rowhouse corridors that draw most of the District's buy-and-hold and fix-and-flip activity. The category the RENTAL Act exempted is the category that was generating the most TOPA friction to begin with.
The corporation carve-out isn't the only thing that still triggers full TOPA rights. Buildings with five or more units remain fully covered, just with new procedural guardrails. And the exemption for smaller buildings doesn't erase the paperwork, it changes what the paperwork does.
Even an exempt sale still requires a Notice of Transfer to every tenant, confirmed by Ballard Spahr's January 2026 summary of the law's effective provisions. That notice doesn't grant purchase rights. It tells tenants the transaction is happening and that the building qualifies for exemption. Tenants then get 45 days to register a tenant association if they want to contest that exemption claim. Contests are rare in practice, but the window exists, and skipping the notice entirely is not the same as being exempt from the law.
For buildings that remain covered, the cooling-off period is new too: tenants can't assign their purchase rights to a third party for a set window after receiving a valid offer of sale, which gives tenant associations time to organize before an outside buyer can step into the deal. Get any of this sequencing wrong and the consequences aren't hypothetical.
"I've seen deals just get completely railroaded by the inability to comply with these rules. Nobody wins. Sometimes the tenants win, sometimes the buyers, sometimes the sellers. But I've also seen it get railroaded where nobody wins," says Kevin Bayly, a board member of the DC Land Title Association who handles these transactions regularly.
The rowhouse-to-rental conversion that drives a lot of DC's investor activity, turning a below-grade unit into a legal rental, has actually been mostly clear of TOPA since 2018, years before the RENTAL Act existed. The District's Department of Housing and Community Development confirms that single-family dwellings became exempt from TOPA that year, including single-family homes with an accessory dwelling unit, unless the tenant is elderly or disabled and signed their lease by March 31, 2018 with occupancy by April 15 of that year. Outside that narrow window, an owner-occupied rowhouse with a rented English basement was never the TOPA trap many assumed it was.
What changed under the RENTAL Act sits one level up, at the small multi-unit building rather than the single-family conversion. That's the distinction worth checking before you price a listing: is this a single-family home with an accessory unit, which has been exempt for years, or a legally separate two-to-four-unit building, which just became exempt under different rules with a different notice obligation.
Sellers who expect a tenant might negotiate to assign their rights, rather than simply vacate, now have a ceiling to plan around. The RENTAL Act caps that negotiated compensation at whichever is lower: one year's rent or $12,000, adjusted annually, according to Arnold & Porter's advisory on the law's passage. Before this cap existed, that number was open-ended and set entirely by negotiation, which made underwriting a sale timeline genuinely difficult. A capped number is a number you can put in a closing worksheet.
| Property situation | Status as of December 31, 2025 |
|---|---|
| Single-family rowhouse, no rental unit | Exempt (unchanged since 2018) |
| Single-family rowhouse with English basement rental to a non-elderly, non-disabled tenant | Exempt since 2018 |
| Single-family rowhouse, elderly or disabled tenant on a lease predating April 2018 | Still covered, limited purchase window |
| 2-4 unit building owned by an individual, LLC, partnership, or trust | Exempt from offer-of-sale; Notice of Transfer still required |
| 2-4 unit building majority-owned by a business corporation | Still fully covered by TOPA |
| 5+ unit building, any ownership structure | Still fully covered; new cooling-off period and compensation cap apply |
| Any building with a certificate of occupancy issued within the last 15 years | Exempt from offer-of-sale regardless of unit count; Notice of Transfer still required |
Does converting my rowhouse basement into a rental after I buy the house change my TOPA exposure? Not for most owners. The single-family exemption applies to the accessory unit the same way it applies to the main house, unless the tenant qualifies under the narrow elderly or disabled carve-out tied to a pre-2018 lease.
Does anything like TOPA apply if I'm selling a tenant-occupied property in Maryland or Northern Virginia? No. TOPA is specific to the District. Nothing comparable exists in the Maryland or Virginia portions of the region, which is exactly why an out-of-market seller who's used to Virginia's disclosure rules can be caught off guard by DC's requirements.
What if I genuinely don't know how my property is titled? Start with your deed. A title company or real estate attorney can confirm the vesting in an afternoon, and that single fact should come before you set a listing date, not after you're already under contract.
The rowhouse and small-building market in DC didn't get simpler this year. It got more specific. Owners who know exactly how their property is titled, when it was built or converted, and who's living in it can move through a sale faster than the old TOPA reputation suggests. Owners who guess are the ones who find out at closing.
If you're weighing a sale on a tenant-occupied rowhouse or a small multi-unit building anywhere in DC, Maryland, or Northern Virginia, The James Patrick Group can walk through your specific ownership structure and timeline before you list. Contact us today.
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