A seller calls in April with a two-unit rowhouse in Petworth. Long-term tenant downstairs, owner upstairs, ready to list. Their prior agent told them, correctly in 2023, to budget somewhere between forty and eighty thousand dollars for a tenant assignment payout, plus ninety days of TOPA notice periods. In 2026, the number is smaller and the timeline is shorter. The paperwork is also more unforgiving, and the exemption they think protects them only protects them if they filed a written notice with their tenant by March 31, 2026.
That is the shape of the new law. Not gentler, not harsher. Different.
The claim, in one paragraph
The Rebalancing Expectations for Neighbors, Tenants, and Landlords Act, signed by Mayor Bowser in November 2025 and effective December 31, 2025, is being described in most seller guides as the end of TOPA for small properties. That framing is misleading. The RENTAL Act moved the friction rather than removing it. Sellers of newer buildings, most 2-4 unit properties, and single-family rentals face materially less risk of a large tenant buyout demand, and materially more risk of a closing date that slips because an exemption notice was missed, a Notice of Transfer was skipped, or a 45-day tenant contest window was not accounted for on the sale contract. The old TOPA problem was money. The new TOPA problem is calendar and paperwork.
What the RENTAL Act actually did
The RENTAL Act passed its second reading on September 17, 2025, was signed by Mayor Bowser on November 13, and became effective December 31, 2025 after Congress took no action during its review period. Four provisions matter to a seller.
| Provision | Effect on a DC sale |
|---|---|
| 15-year new construction exemption | Buildings with a Certificate of Occupancy issued in the last 15 years are exempt from the Offer of Sale requirement, applied retroactively. A 10-year-old building has 5 years of exemption left. |
| Small-building exemption | Most 2-4 unit properties are exempt, provided the building is not majority-owned by a business corporation. |
| Assignment compensation cap | Tenant compensation for assigning purchase rights is capped at the lesser of one year's rent or $12,000, adjusted annually. |
| Majority-ownership rule | A transfer of more than 51% of the ownership interests in an entity that holds a rental property as its principal asset now counts as a "sale" for TOPA purposes. |
Under the new law, all multifamily buildings are exempt from TOPA for 15 years from the issuance of their Certificate of Occupancy. If a building received its CO 10 years ago, it is exempt for five more years. A brand-new building is exempt for the full 15. That single change is why most of the sellers walking into 2026 listings will not owe an Offer of Sale.
The compensation cap is the other headline. Tenants may only negotiate for relocation assistance capped at the lesser of one year's rent or $12,000, adjusted annually, building affordability such as caps on rental rates, organizing expenses including reasonable attorneys' fees, and specified improvements or efficiency upgrades. The six-figure assignment payments that shaped DC seller economics for a decade are no longer legal.
Where the new friction lives
Here is where the current online guidance is wrong, or at least dangerously incomplete: exemption does not mean silence.
To qualify for the 15-year exemption, landlords must notify prospective tenants in their leases that the property is exempt. Landlords of exempt properties must also provide written notice to all existing tenants regarding the applicability of the exemption by March 31, 2026. Although exempt properties are not subject to the Offer of Sale requirement, a Notice of Transfer must be sent to all tenants.
Miss the March 31, 2026 notice and the seller has a defensible tenant argument that the exemption was not perfected. Miss the Notice of Transfer at time of sale and the transaction has an unsettled cloud over it.
Then there is the contest window. A Notice of Transfer does not confer purchase rights to tenants, but rather notifies tenants that the property is exempt. Once the Notice of Transfer is provided, tenants have 45 days to register a tenant association for purposes of contesting the Notice of Transfer. Legitimate Notices of Transfer are rarely contested and transactions can generally proceed if the tenants do not register and contest.
Read that carefully. A 45-day window sits inside every "exempt" DC sale with a tenant in place. Most contracts do not survive a 45-day unexplained pause. The practical answer is to serve the Notice of Transfer as early in the listing process as the seller and their attorney are willing, so the 45 days runs down while the property is being marketed rather than while a buyer is waiting on a closing date.
What still triggers a full TOPA process
Not every DC sale is exempt. The seller universe still subject to the full Offer of Sale, tenant association registration, and negotiation timeline includes:
- Buildings with 5 or more units that are more than 15 years old
- 2-4 unit properties majority-owned by a business corporation
- Single-family dwellings occupied by qualifying elderly or disabled tenants
- Sales structured as a transfer of more than 51% of the ownership interests in an entity that holds the property as its principal asset
That last category closes a workaround that had grown quietly popular. Under the Act, transfer of majority ownership in an entity that owns a rental accommodation as its principal asset constitutes a "sale" for TOPA purposes. This provides a new bright-line rule. A recapitalization that replaces more than 51% of the capital of a property-owning entity will be deemed a sale for TOPA purposes.
Family transfers were carved out in the other direction. Estate planning transfers to family members, including surviving spouses, domestic partners, or lineal descendants, and including trusts or entities controlled by family members, do not constitute a sale for TOPA purposes. That matters for estate-driven sales that pass through a family trust before hitting the market.
The single-family carve-out is older and narrower than most sellers think
A 2018 law exempted single family dwellings from TOPA, unless occupied by elderly or disabled tenants. Also exempted are single family dwellings with an Accessory Dwelling Unit and a single rental unit in a condo, co-op or homeowners' association. The elderly-and-disabled exception is real. Elderly and disabled tenants who signed a lease to occupy an exempted unit by March 31, 2018 and took occupancy by April 15, 2018 have a limited opportunity to purchase or assign their rights. A seller of a rowhouse with a decade-long qualifying tenant does not get to invoke the single-family exemption without walking through that history first.
The regulations are not written yet
This is the piece most 2026 sellers should treat as a live risk rather than a footnote. Several provisions of the RENTAL Act are unclear and subject to interpretation. DHCD is required to promulgate regulations within 180 days to assist in interpreting TOPA, but the process of promulgating and adopting regulations may take at least two years. In the interim, DHCD will endeavor to provide ongoing guidance.
Translation for the closing table: the exemption paperwork requirements, the Notice of Transfer form, and the treatment of edge cases like a corporate-owned duplex or a mid-sale ownership transfer are all being interpreted case by case. A seller who wants a clean closing should assume that title counsel will want to see documentation of every step, not rely on a general reading of the statute.
There are two supporting tools worth knowing about. Where a TOPA sale notice is given to tenants, the Sale Notice must disclose the availability of no-cost technical assistance and training and list all certified Tenant Support Providers. The District will make experts available to provide free counseling and advice. The Act requires the mayor to establish a public, searchable database tracking TOPA filings and data, including offers of sale, association registration, selected purchaser, deal duration, negotiated outcomes, and final sale filings. Once that database is live, both the price of past assignments and the pace of past deals become discoverable to the tenant across the hall.
The rent-freeze wildcard sitting behind 2026 timing
For owner-landlords weighing whether to sell now, keep renting, or wait for a stronger 2027 spring, there is a second policy variable to price in. On December 1, 2025, the DC Housing Modernization and Accessibility Act of 2026 was refiled with the Board of Elections. The ballot initiative includes an initial two-year rent freeze, followed by a 12-month rent freeze anytime the consumer price index for the DC metro area exceeds 6% for the year. Whether the initiative reaches the ballot and passes is not knowable in July 2026. The direction of the risk is knowable. Holding a small rental in DC through 2027 carries a policy tail that holding a small rental in 2019 did not.
A working sequence for a 2026 seller
For an owner of a tenant-occupied DC property considering a sale this year, the order of operations has changed enough to state plainly.
- Confirm exemption status with DC counsel before signing a listing agreement. The 15-year CO clock and the 2-4 unit corporate-ownership test are the two most commonly miscounted.
- Confirm the March 31, 2026 written notice to existing tenants was served. If it was not, this is the first conversation to have with counsel and title.
- Serve the Notice of Transfer as early in the process as counsel allows, so the 45-day tenant-association contest window runs down during marketing rather than during contract.
- Price the deal assuming the assignment compensation cap. Buyers and their agents are already using the $12,000 or one year's rent figure as an anchor.
- Document everything. With DHCD regulations still being written, defensible paper is the difference between a clean settlement and a delayed one.
FAQ
Does the RENTAL Act apply to a condo I rent out? Most rental condos in buildings younger than 15 years, and single rental units in condominium, cooperative, or homeowners' association buildings, sit inside one of the exemptions. The Notice of Transfer and the March 31, 2026 written notice to the existing tenant still applied.
I closed a sale in November 2025. Does anything reach back? The Act took effect December 31, 2025. Sales that closed before that date were governed by the prior TOPA framework. The retroactive language in the RENTAL Act affects the exemption calendar for buildings already standing, not sales that had already been completed.
Can I still offer a tenant a cash payment to move out? Relocation assistance is one of the categories tenants can still negotiate for. The ceiling is the lesser of one year's rent or $12,000, adjusted annually. Higher figures documented as something other than TOPA compensation are a question for counsel, not a marketing decision.
Selling a tenant-occupied home in DC in 2026 is a paperwork exercise wrapped around a real estate transaction. It rewards sellers who start the process with an attorney and an agent in the room together and punishes sellers who assume the old playbook, or the new headlines, tell the whole story. If you are weighing a sale this year, Gayhardt Partners is glad to walk the calendar with you before the listing goes live. Let's connect.
