Frequently Asked Questions About TOPA
What properties have to go through the TOPA process?
All properties - from single family homes to multi-unit buildings - that are tenant-occupied.
Can I market my property for sale with an agent before going through the TOPA process?
No. TOPA gives tenants and Nonprofits the exclusive opportunity to make an offer before an owner can list the property on the open market and receive third party offers.
How will the price for the property be set?
The owner may decide on the asking price of their property. However, since the owner is prevented from going out to the free market, they may never know what the "fair market price" of the property really is.
How long will it take to sell the property?
It depends. There are required timelines for each part of the TOPA process lasting anywhere from 140 to 315 days to complete the sale. Tenants and Nonprofits will have up from 60 to 150 days just to secure financing.
Does the owner have to accept the offer from the tenant or Qualified Nonprofit?
No, you do not. However, if you reject an offer a First Right of Refusal kicks in. You may reject the offer and then go to market as you normally would. Once a third party offer is secured, you must go back to the tenant or Nonprofit and give them up to 30 days to meet or beat the offer.
Is this the only way tenants can buy properties?
No. Tenants can currently buy properties as anyone else who is interested in buying may.
Will this lower the value of properties?
TOPA could reduce the number of potential buyers. Any buyer who is purchasing a property through a 1031 Exchange, will not be able to purchase tenant-occupied properties in Berkeley. Since pricing is about supply and demand, the lower the demand, the lower the sales price. Thus TOPA will likely reduce the final sales of properties.
Can an owner gift the property to their "chosen family" such as a friend or godchild?
Yes and no. If an owner's will states that their chosen family member is to inherit the property upon their death, TOPA will not apply when the transfer of ownership occurs. But if the owner wants to sell or gift your property to a chosen family member while they are still alive, they will have to offer the property for sale to the tenants and the Qualified Nonprofits first.
What if this is the owner's primary investment and they need to sell quickly and for the best price?
If the owner has a medical need to sell, they may request an exemption from the city. However the granting of the exemption may take time and during that time the owner will not be able to list or market their property. If an owner needs to sell quickly for any other reason, they will have to go through the TOPA process and they may not be able to sell as quickly as they would like.
Who will benefit from TOPA?
The primary beneficiaries of TOPA are the Qualified Nonprofits who find it difficult to compete in the open market. By being given a first right of offer, the tenants and Nonprofits have the exclusive opportunity to make an offer before an owner markets the property to other buyers.
Does this prevent displacement of our most vulnerable community members?
The short answer is no. Berkeley has very strong tenant protections and sale of a property (or new ownership) is not a good cause for eviction. Most times when someone acquires an investment property, they do not have a right to terminate the tenancy of its occupants. In the long run, the policy may preserve a small handful of low or affordable rents.