Baltimore City Tenant's Right of First Refusal
Baltimore City has a law granting tenants right of first refusal. The law is found Subtitle 6 of Article 13 of the Baltimore City Code.
This law provides that before the owner of a single-family residential rental property sells or transfers the property to another, the current tenant has the opportunity to purchase the property on commercially reasonable terms. (Sections 6-1 and 6-3).
The following transfers are permitted without first offering the property to tenant (Section 6-7):
- Transfer to a spouse, child, parent, sibling or in-law of the landlord;
- Transfer by will or under inheritance laws;
- A gift to a religious, charitable or benevolent tax-exempt recipient;
- Transfer of title in a mortgage or deed of trust;
- Transfer to a government agency;
- Certain transfers related to creating a ground rent interest;
- Transfer of title in place of foreclosure of a mortgage or deed of trust;
- Sale of the property at public auction where the landlord had properly offered the property to the tenant and tenant did not accept the offer;
- Property is sold in the course of the administration of the landlord’s estate if the landlord has died;
- A bona fide gift to relatives or ancestors as defined in Section 267(c)(4) of the Internal Revenue Code of 1986 and all lineal descendants, including adopted, illegitimate, and step children; or
- A transfer of title in which the property is listed for sale with a bona fide third-party licensed real estate broker. The tenant must be notified in writing along with a copy of all information included in the public offering for sale, sent to his last known address by certified mail, return receipt requested, within 48 hours after the listing of the property with a real estate broker, that:
- The right of first refusal under this subtitle does not apply because of one of the above exemptions;
- The tenant may negotiate for the purchase of the property on the same basis as other members of the general public; and
- The tenant may contact the Homeownership Institute in the Department of Housing and Community Development for information about the process of purchasing and financing a home.
"Tenant" means a tenant, subtenant or any person entitled to occupy a rental unit owned by another person who has lived in the unit for at least 6 months (Section 6-2(b)(1)). Where the rental unit had been occupied by a tenant at any time during the preceding 6 months, the last tenant to occupy it is considered the "tenant" under this law (Section 6-2(b)(2)). However, any tenant who was evicted for non-payment of rent is not entitled to a right of first refusal for that property (Section 6-2(b)(3)).
"Landlord" means an owner, lessor, sublessor, assignee, their agent, or anyone receiving or entitled to receive rent or other benefit for a residential rental unit in Baltimore City (Section 6-2(a)).
Before the landlord transfers title to a single-family residential unit, he must mail to tenant by first class mail, postage prepaid, a written offer of sale stating the sale price and the terms and conditions of the sale; the sender must also obtain a receipt from the post office for the mailing (Section 6-4(a)(1)). If the tenant decides to accept the offer, he must respond within 30 days of the date the offer was mailed by first class mail, postage prepaid, and obtain a receipt from the post office (Sections 6-4(a)(1) and (3)). If the tenant plans to use a federal, state, or city program to assist in financing or insuring the purchase, he must indicate the program in his notice to the landlord (Section 6-4(a)(3)). Landlord may not refuse to contract with tenant on the grounds that tenant proposes to use a government program to assist in financing (Section 6-5(d)).
If the landlord signs a sales contract with a third person before mailing an offer to tenant or during the 30 day notice period, the landlord must mail a notice of the contract to tenant, in the same manner as provided above. The tenant has 30 days from the date of that mailing to indicate his willingness to buy the property for at least as much as the third party has offered (Section 6-4(a)(2)).
After the 30-day period has expired, if the landlord enters into a contract with a third person for an amount less than that offered to the tenant or with terms materially more favorable to the buyer than in the contract offered to tenant, the tenant must be notified as described above (Section 6-4(b)(1)). This time, tenant must exercise his right of first refusal within 15 days from the date of the mailing of the notice, unless more than 6 months have passed since tenant received the first offer or if the net proceeds of the contract with the third person are less than 80% of the first offer to the tenant; in that case, the tenant has 30 days from the date of mailing to respond (Section 6-4(b)(2)).
Where the tenant's dwelling is included in a bulk sale contract (defined as the sale of two or more properties) and the tenant decides to exercise his right to buy the dwelling, the landlord may increase the price to tenant by up to 1.75% of the price offered to the third party (Section 6-4(e)).
After the tenant has notified the landlord of his intent to purchase, the landlord must offer to tenant, within 10 days, a contract of sale signed by landlord (with the same terms as in offer of sale or in the third party contract) and tenant has 10 days after receipt of the contract to sign the contract and return it to landlord with the required deposit (Sections 6-4(a)(4) and (5)). The settlement date may not be required to be less than 60 days after tenant signs the contract; where tenant proposes to use a federal, state, or local program to help finance the purchase, settlement may not be required to be less than 90 days after tenant signs the contract (Section 6-5(b)). The sales contract must release the tenant from the contract if he cannot get adequate financing within that time (Section 6-5(e)(1)). A provision in the sales contract requiring tenant to apply for financing within less than 7 banking days from the date the tenant signs the contract is unreasonable and violates this law (Section 6-5(e)(2)).
Where the tenant proposes to use a government program to assist in the purchase, the landlord may not require a deposit which is greater than the program requires; where no government program is involved, the deposit may not be more than 7% of the sale price (Section 6-5(c)).
Validity of Sale
The validity of the sales contract between landlord and a third person depends on compliance with this law, and the contract must state this (Section 6-4(c)).
Every offer of sale to tenant must include a statement of tenant's rights under this law and a copy of the offer must be sent to the Department of Housing and Community Development (Section 6-5(a)).
If landlord transfers a particular property to a person who qualifies as a tenant under this law, landlord will be considered to be in compliance even if another person would qualify as a tenant or if that person is not the only tenant or is not the person with whom landlord had a lease (Section 6-6(a)).
If there is a change of tenants after landlord has sent notice of the offer of sale, the new tenant is entitled to notification and the right to enter into a contract as a third party (Section 6-6(b)).
Tenant may not waive his right to receive an offer of sale or any notice required by this law (Section 6-6(c)). Tenant may waive his right to the time period for entering into a sales contract with landlord, and tenant may give to landlord the right to contract with or transfer title to a third person without waiting the required time period (Section 6-6(d)(1)). Any such waiver by tenant must be in writing and signed by tenant and state at top of the waiver that tenant is under no obligation to sign the waiver and cannot be evicted for refusing to sign the waiver (Section 6-6(d)(2)). Tenant may not be evicted for refusing to sign a waiver of his rights (Section 6-6(d)(3)).
Where a single family residential rental dwelling is transferred to a person not the tenant, the landlord must file with the Land Records Office of Baltimore City a detailed affidavit (sworn statement) as outlined in Section 6-9(c) (Section 6-9(a)). Proper filing of this affidavit will protect the transferee from any claims of a tenant arising under this law (Section 6-9(b)).
In addition to penalties related to making a false affidavit, if landlord violates any provision of this law, he is guilty of a misdemeanor and may be fined up to $500 for each offense (Section 6-8(a)). A tenant may ask the court to stop a violation of this law through an injunction (Section 6-8(b)).