On September 3, the Community Opportunity to Purchase Act — or COPA — became effective in San Francisco. This new law provides qualifying San Francisco nonprofits with the right of first offer and the right of first refusal when apartment buildings of three or more rental units are put on the market. The law also applies to vacant lots that are zoned for a minimum of three rental units, according to The Bay City Beacon. The reason for this act is the city’s goal to ensure more affordable housing is available within San Francisco.
What COPA Entails for Property Owners
So what exactly does this mean for owners of multifamily properties?
At its most basic, COPA means the following: An owner looking to sell a multifamily property with three or more rental units must notify qualified nonprofits within five calendar days of this intent. The nonprofits then have 25 days to make an offer, which the seller can accept or reject. If no offer is made, the owner is allowed to offer the property for sale on the public market.
However, before accepting an offer from a third-party buyer, the owner must offer the property to any qualified nonprofit that previously made an offer. This offer must match the offer the owner wants to accept. The nonprofit then has five days to pursue the deal on these terms. Only if no nonprofit wishes to do so can the seller complete the transaction with the third-party buyer.
What Makes for a Qualified Nonprofit Organization?
There are currently only a handful of nonprofits that qualify. They must have demonstrated their commitment to providing affordable housing in the city for low and moderate-income residents. They must also have the financial and legal capacity to acquire and manage multifamily residential properties.
Other Cities With Similar Acts
It’s interesting to note that Washington D.C. already passed a comparable act, the Tenant Opportunity to Purchase Act. Berkeley is working on similar legislation, and it’s conceivable that other cities with affordable housing challenges will soon follow suit.
Advice for Owners
Considering the complexities of these types of acts, owners of multifamily residential properties are best advised to work with experienced real estate agents in the event they want to sell. This will help them avoid any unnecessary issues so they can remain in compliance with their cities’ regulations.
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