What you need to know when you list a house after a rental!

by Don Den­ton, Branch Vice Pres­i­dent Capi­tol Hill

In the Dis­trict, if you own a res­i­den­tial rental prop­erty, IT MUST BE REGISTERED AS EXEMPT (OR NOT) FROM RENT CONTROL.

Where we run into prob­lems is with harry home­owner who gets trans­ferred to Chicago and decides not to sell but to rent his home or condo until he returns. At some point he decides he isn’t com­ing back and he calls you to list. When you are inter­view­ing a prospec­tive client(a seller) and the prop­erty is ten­anted, the first words out of your mouth should be, have you prop­erly reg­is­tered the prop­erty as a rental. This means that at some point he went to DCRA and reg­is­tered as exempt or not exempt from rent control.

That prob­a­bly also trig­gered a Basic Busi­ness License. If he didn’t and every­thing goes swim­mingly, than life is good. How­ever, if it is a sin­gle fam­ily prop­erty the like­li­hood is nearly 100% that the new buyer will want to occupy and you will have to give the exist­ing ten­ants a notice to vacate. The notice to vacate has a blank for the “exemp­tion num­ber.” With­out that num­ber, you can not give a legit­i­mate notice to vacate. You can write in “applied for” or leave it blank. It could then get bounced back from DC or, more likely if the tenant/landlord rela­tion­ship has gone south, a smart ten­ant advo­cacy type will imme­di­ately notice the lack of an exemp­tion num­ber and thus a defec­tive notice. Besides screw­ing up your set­tle­ment, the ten­ant has just been handed a loaded pis­tol and the land­lord could be sub­ject to repay­ment of up to three years of rent he has col­lected. A lot of money.

If the prop­erty has not been prop­erly reg­is­tered, your seller can do one of sev­eral things. A. Wing it and hope it all works out. B. Con­sult with an attor­ney (Irene Lind­ner 202–429-8888 x 102) and fol­low her advise. C. Call an expe­diter (Scott Ham­mer 202–302-0342) and get the build­ing reg­is­tra­tion straight before you list it. Could take 3 to 4 weeks(requires a prop­erty inspec­tion). D. Nego­ti­ate an agree­ment with the tenants(and hope they abide by it). Basi­cally cash for keys and have them agree to be out by a date cer­tain. Make sure in this agree­ment they agree to exe­cute any nec­es­sary ten­ant pur­chase forms and any TOPA affi­davits required by the title com­pany. Fail­ing to deal with this can place you in a very ugly situation.