COPA will give “qualified nonprofits” a right of first offer and the right of first refusal when an owner decides to sell a multifamily property.
After a cantankerous and litigated battle to regulate tenant buyouts, the San Francisco Board of Supervisors has upped the ante in tinkering with buyers’ and sellers’ rights and obligations by ushering in the Community Opportunity to Purchase Act (COPA).
When a multifamily property is put up for sale, “qualified nonprofits” will be first in line to scoop them up. Landlords who are subject to the ordinance must let nonprofit organizations know they intend to sell and give these providers of affordable housing the first crack at a purchase offer, but it doesn’t end there.
If a nonprofit comes to the trough, they will be able to match the offer of a private buyer. The seller is not obligated to sell to a nonprofit, but they must give the organization preferential treatment.
How to alert nonprofits of an impending sale?
To give first dibs to nonprofits, multifamily property owners intending to sell will have to notify the Mayor’s Office of Housing and Community Development (MOHCD), a conduit between owners and a cherry-picked group of organizations dedicated to creating permanent affordable housing for low and moderate income residents.
These pre-selected nonprofits need more than the wherewithal to purchase the property; they must also demonstrate the ability to manage it. The legislation will apply to any residential building with at least three rental units or a vacant lot zoned for at least three units, though there are exceptions to every rule.
Get strapped in
COPA raises a number of weighty questions and our friends at the San Francisco Apartment Association have stated the legislation is illegal and unconstitutional. The law is patterned in some ways after Washington DC’s Tenant Opportunity to Purchase Act and the District Opportunity to Purchase Act. Both laws have been the subject of much controversy and numerous lawsuits. Rest assured, San Francisco’s new legislation will similarly be contested.
Sellers and buyers of multifamily properties are ordinarily urged to consider the legal aspects of a transaction, but it is even more imperative to seek the proper counsel of Bornstein Law as COPA begins to take shape.