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Right of First Refusal
In Baltimore City, before the owner of a single-family residential rental property voluntarily sells or transfers the property to another, the current tenant has the right of first refusal, which is the opportunity to purchase the property on commercially reasonable terms.
Read the Law: Baltimore City Code, Article 13, Subtitle 6
"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.
- 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.
- Any tenant who was evicted for non-payment of rent is not entitled to a right of first refusal for that property.
"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.
Read the Law: Baltimore City Code, Article 13 § 6-2
The following transfers are permitted without first offering the property to tenant:
- transfer to landlord's spouse, child, parent, sibling or in-law;
- 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, and the tenant is notified in writing along with a copy of all information included in the public offering for sale, sent to tenant's 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.
Read the Law: Baltimore City Code, Article 13 § 6-7
Written Offer of Sale to Tenant and Tenant's Response
Before the landlord transfers title to a single-family residential unit, the landlord 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.
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 tenant's willingness to buy the property for at least as much as the third party has offered.
If the tenant decides to accept the offer, the tenant 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. If the tenant plans to use a federal, state, or city program to assist in financing or insuring the purchase, the tenant must indicate the program in tenant's notice to the landlord.
If the tenant notifies the landlord of the tenant's intent to exercise their right of first refusal, then the landlord must provide tenant with an executed contract for the sale of the property on the same terms and conditions indicated in the offer of sale or the third-party contract within 10 days. The tenant then has 10 days after the delivery of the contract to execute the contract and return the executed contract with the required deposit to the landlord.
Read the Law: Baltimore City Code, Article 13 § 6-4(a
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. This time, tenant must exercise their 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.
Read the Law: Baltimore City Code, Article 13 § 6-4(b)
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 their 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.
Read the Law: Baltimore City Code, Article 13 § 6-4(e)
Required Conditions of Offers and Contracts
- 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.
- The settlement date may not be required to be less than 60 days after tenant signs the contract. Where the 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.
- The landlord may not refuse to contract with tenant on the grounds that tenant proposes to use a government program to assist in financing.
- 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.
- The sales contract cannot require the tenant to obtain financing in less than 60 days from when the contracted is tendered by the landlord.
- The sales contract must release the tenant from the contract if the tenant cannot get adequate financing within that time.
- A contract provision requiring the 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.
Read the Law: Baltimore City Code, Article 13 § 6-5
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.
Read the Law: Baltimore City Code, Article 13 § 6-4(c)
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.
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.
The tenant may not waive their right to receive an offer of sale or any notice required by this law. The tenant may waive their right to the time period for entering into a sales contract with landlord, and the tenant may give landlord the right to contract with or transfer title to a third person without waiting the required time period. Any such waiver by the tenant must be in writing and signed by the tenant and state at top of the waiver that the tenant is under no obligation to sign the waiver and cannot be evicted for refusing to sign the waiver. The tenant may not be evicted for refusing to sign a waiver of their rights.
Read the Law: Baltimore City Code, Article 13 § 6-6
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.
Read the Law: Baltimore City Code, Article 13 § 6-9
There are additional requirements on the landlord and tenant with respect to the procedure under this law. Read the law carefully. If you have questions, consider consulting with an attorney.
Read the Law: Baltimore City Code, Article 13, Subtitle 6
In addition to penalties related to making a false affidavit, if landlord violates any provision of this law, the landlord is guilty of a misdemeanor and may be fined up to $500 for each offense. In addition, a tenant may ask the court to stop a violation of this law through an injunction.
Read the Law: Baltimore City Code, Article 13 § 6-8