District of Columbia RENTAL Act of 2025

These changes directly affect affordable housing providers, developers, and lenders, and require careful attention to new compliance, transactional, and tenant engagement requirements. The RENTAL Act’s stated goal is to promote development, investment, and long-term housing affordability in Washington, DC.

Eviction and Court Procedures

The Act streamlines eviction processes, particularly for cases involving dangerous crimes or violence, allowing housing providers to serve a 10-day notice to vacate and requiring expedited court hearings. It also adds explicit protections for victims of domestic violence, barring retaliatory evictions and requiring reasonable accommodation under federal and District law. The pre-filing notice period for nonpayment of rent is reduced from 30 to 10 days, and new procedures for protective orders and court registry payments are codified. Courts are granted greater discretion to avoid dismissals for procedural deficiencies when equity requires.

TOPA Modernization

The most significant impact of the Act is the modernization of the Tenant Opportunity to Purchase Act (TOPA). The definition of “sale” is broadened to include certain master leases and controlling ownership transfers, closing prior loopholes. The definition of “tenant” is clarified to include those with month-to-month leases, and, crucially, a late amendment ensures that tenants without written leases are not excluded from TOPA rights, preserving long-standing District practice and protecting more tenants.

New TOPA exemptions include estate and family transfers, bona fide foreclosures, tax and bankruptcy sales, certain entity restructurings, and new multifamily construction with a permanent certificate of occupancy issued within the prior 15 years. The Act narrows the exemption for entry or exit of limited partners or investors, requiring new investors to hold only a minority interest and prohibiting additional acquisitions within 12 months. Low-Income Housing Tax Credit (LIHTC) property transfers are exempt if they maintain continuous control and extended affordability or are solely to qualify for a new LIHTC credit period.

The Qualified Purchaser (QP) program was also reestablished, allowing the Mayor to certify entities with a proven track record in affordable housing as QPs. The District may assign its purchase rights under TOPA to a QP, provided the QP commits to long-term affordability. QPs are also granted a deed and recordation tax exemption, subject to appropriations, to incentivize preservation transactions. The Act establishes a public list of QPs and sets standards for certification and compliance, aiming to attract experienced, mission-driven developers to the affordable housing market.

A critical shift in the Act is the removal of the “affordability covenant” exemption from TOPA. The prior version of the Act would have exempted sales to buyers who recorded a covenant to maintain at least 51% of units at or below 80% the Area Median Income for 20 years. The current version strikes this provision, citing concerns about enforceability, administrability, and the risk of undermining deeper affordability. As a result, more transactions will remain subject to the full TOPA process, preserving tenant purchase rights and the District’s ability to secure long-term affordability through direct tenant or District intervention.

A “cooling-off period” is restored as well for assignment of TOPA rights. Tenant organizations in buildings with five or more units may not assign their rights to a third party within the first 45 days after receiving an offer of sale, unless they have completed required training and registration. For smaller buildings, a 22-day period applies. This measure is designed to prevent abuse and ensure tenants are fully informed before making assignment decisions. The Act further restricts secondary assignments of TOPA rights, allowing them only to certain nonprofit or mission-driven entities and prohibiting consideration for such secondary assignments.

Assignment of TOPA rights is otherwise limited to specific forms of consideration, including relocation assistance (capped at the lesser of one year’s rent or $12,000, adjusted for inflation), organizing costs and reasonable attorney fees, and certain unit or building improvements. This is expected to reduce cash-for-rights practices and focus on preservation and tenant benefits.

Other Affordable Housing Provisions

The Act clarifies the definition of a “qualified project” for the District’s LIHTC program and requires owners transferring credits to certify that the value received was used to ensure project feasibility. For Inclusionary Zoning (IZ), District-designated entities may now purchase or facilitate the resale of IZ units to eligible households, supporting pipeline liquidity and income targeting.

The District of Columbia Housing Authority governance is overhauled, establishing a nine-member board with specific expertise and resident representation. The Act strengthens resident protections, updates the public housing Bill of Rights, and requires robust resident engagement and transparency in federal subsidy repositionings.

Market and Compliance Implications

Collectively, these changes provide greater certainty for affordable housing transactions, especially for LIHTC recapitalizations, new construction, and preservation strategies using tenant or District purchase rights. The new QP program and restored cooling-off period are expected to professionalize tenant engagement and reduce disputes, while the removal of the affordability covenant exemption will keep more transactions within the TOPA framework. However, compliance risks remain, particularly regarding Notices of Transfer and the owner’s burden to prove exemptions. Noncompliance can result in a transaction being deemed a sale subject to TOPA, with potential litigation and fee exposure.

Lenders and investors should ensure robust due diligence, including analysis of TOPA exposure, exemption eligibility, and verification of all required notices and filings. Closing conditions should require evidence of Department of Housing and Community Development (DHCD) filings and, where applicable, recorded affordability covenants. For LIHTC transactions, the new affidavit requirement for transferred credits must be addressed in syndication and credit sale agreements.

Developers and owners should update compliance checklists, transaction templates, and tenant communications. Early engagement with certified tenant support providers is recommended, and all parties should monitor DHCD rulemakings for further guidance. For transactions already underway, a gap analysis is advisable to determine if the new regime offers a more efficient path to closing or requires additional notices or filings.

The RENTAL Act, as amended, will take effect following Mayoral approval, congressional review, and publication in the District of Columbia Register. Some provisions, including those related to the QP program and TOPA transparency, depend on budget inclusion and further DHCD rulemaking. Additionally, the Act may be further amended, and the effective date is uncertain at this time. Stakeholders should monitor implementation and be prepared to operationalize new requirements as they become effective.

The Real Estate and Government Relations groups at ArentFox Schiff will continue to monitor the impact of the RENTAL Act and publish follow-up legal alerts as amendments and updates roll out. If you would like to engage in a more detailed conversation about the RENTAL Act, please contact your ArentFox Schiff attorney or any of the authors of this alert. 

Additional research and writing from Anisa Ostad, law clerk in ArentFox Schiff’s Washington, DC, office.