Update on the District of Columbia’s RENTAL Act of 2025

The amendment now awaits Mayoral signature and a 30-day congressional review before becoming law. The goal of this change is to ease transaction burdens on small landlords and long-time homeowners who may lack the resources to navigate complex TOPA transactions and who seek more predictability when selling.

Why It Matters

If finalized, qualifying small property sales would occur outside the traditional TOPA framework, which currently requires landlords who wish to sell their property to offer their tenants (or someone that the tenant assigns these rights to) the first opportunity to purchase. This TOPA exemption could shorten deal timelines, lessen assignment-related risks, and streamline negotiations for covered properties for landlords. However, the scope and application of the exemption may evolve through implementing guidance or future amendments. Stakeholders should plan for potential adjustments to diligence and notice practices in the near future.

Practical Implications for Real Estate Stakeholders

Owners and Sellers of Two-to-Four-Unit Properties

Individual landlords may see faster and simpler sales to purchasers of their choice if their properties qualify for this new exemption. Deal planning should account for forthcoming definitions and any guidance clarifying eligibility and process.

Purchasers and Lenders

Expect diligence to focus on whether a seller qualifies as an “individual landlord,” how multi-asset or multi-entity ownership will be treated, and the exemption’s inapplicability to corporate or institutional beneficiaries.

Tenants and Tenant Organizers

The scope of buildings in which TOPA rights apply would narrow, particularly in neighborhoods with a high concentration of two-to-four-unit properties.

Developers

Pipelines focused on developing smaller properties will be impacted if this exemption becomes effective, while larger properties and those outside the exemption will remain subject to the modernized TOPA regime under the RENTAL Act.

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. You can find our most recent alert regarding the RENTAL Act here. 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.