SENATE DOCKET, NO. 1963        FILED ON: 1/18/2019

SENATE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 801

The Commonwealth of Massachusetts

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PRESENTED BY:

Patricia D. Jehlen

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To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act relative to tenants’ opportunity to purchase.

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PETITION OF:

SENATE DOCKET, NO. 1963        FILED ON: 1/18/2019

SENATE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 801

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-First General Court
(2019-2020)

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An Act relative to tenants’ opportunity to purchase.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

SECTION 1. Chapter 184 of the General Laws as appearing in the 2016 Official Edition is hereby amended by the adding after section 21, the following new section:--

Section 21A: Municipal Local Option for a Tenants’ Opportunity to Purchase

(a) For the purposes of this section the following words shall have the following meanings—

''Affiliate'', an entity owned or controlled by an Owner or under common control with the Owner of Residential Property.

“Department”, Department of Housing and Community Development, or its successor agency.

“Designee” a nonprofit organization, established pursuant to chapter 180 of the General Laws which is duly selected by members of a Tenant Association, as defined in this section; a public land trust; or a Tenant Cooperative as defined herein.

“Member”, a natural person who is a certified member of a Tenant Association.

“Minimum Tenant Participation Percentage” the minimum percentage of tenants, as defined herein, which must agree to participate as members of the Tenant Association, and which shall be not less than 35 percent. The percentage shall be calculated based on the number of housing units in a property rather than the number of individuals listed on leases as Tenants. Tenants agreeing to participate in a Tenants Association shall signify their intent by signing a form provided by the municipality.

“Owner”, a person, firm, partnership, corporation, trust, organization, Limited Liability Company or other entity, or its successors or assigns that holds title to Residential Property as defined herein.

“Purchaser”, a party who has entered into a purchase contract with an Owner and who will, upon performance of the purchase contract, become the new Owner of the Residential property as defined herein.

''Purchase contract'', a written agreement whereby an Owner agrees to sell property including, without limitation, a purchase and sale agreement, contract of sale, purchase option or other similar instrument.

“Residential Property”, a buildings structure, or one or more units therein which are designed and equipped for human habitation.

''Sale'', an act by which an Owner conveys, transfers or disposes of property by deed or otherwise, whether through a single transaction or a series of transactions; provided, that a disposition of housing by an Owner to an affiliate of such Owner shall not constitute a sale.

“Successor” , the  entity through which the Tenant Association will take title to the property, which may be a corporation, with the sole stockholder being the Tenant Association; a housing cooperative organized under chapter 157 B of the General Laws, a  limited liability company in which the Tenant Association is the Member; a limited partnership in which the Tenant Association is a general partner or when permitted by the municipality’s ordinance,  a joint venture between any of such entities, and  another party (i) with the requisite experience in  acquiring, developing and owning Residential Property (ii) with the financial capacity to guaranty financing of the purchase transaction.

“Tenant”, a natural person who has entered into an express written lease or rental agreement with the owner for exclusive possession of the premises for at least six months, or a natural person who has paid rent to the Owner, which rent has been accepted by the Owner for at least six months, and who is residing in a residential unit at the time of a notification under subsection (c)(1) herein. If more than one tenant is listed on a lease any such tenants may exercise the rights granted under this section.

“Tenant Association”, an unincorporated organization with a Minimum Tenant Participation Percentage, as defined herein, with membership limited to present participating Tenants of a property and registered with a municipality which has adopted an ordinance consistent with this Section 21A; such Tenants shall have signified their intent to participate in the Tenant Association by signing a form provided by the municipality.

“Tenant Cooperative”, a duly formed cooperative corporation or limited equity cooperative housing corporation as defined in section 4 of chapter 157B of the General Laws. All members of the cooperative shall be tenants as defined in this section.

“Third-Party Purchaser”, is a purchaser that is not a Tenant Association, a Designee, or an affiliate.

(b) A city or town may accept this section in the manner provided in section 4 of chapter 4 of the General Laws. The acceptance of this local option by a municipality shall take effect no later than 180 days after adoption.  A municipality which accepts this section shall adopt an ordinance or bylaw which effectuates the provisions of this section no later than 180 days after acceptance. The municipality may by such ordinance or bylaw: 

(i) provide tenancy protections for tenants that do not participate in the Tenant Association;

(ii) exempt from the  application of the ordinance or bylaw properties with fewer than a designated number of units;

(iii) provide different exemptions for owner-occupied properties; and

(iv) exempt classes of properties in addition to those enumerated in section (f) herein.

No municipal ordinance or bylaw shall require the participation of more than 51 percent of tenants. The percentage shall be calculated based on the number of housing units in a property rather than the number of individuals listed on leases as Tenants. 

(c) In any city or town which has accepted the provisions of this section:

(1) An Owner of a Residential Property shall, within two (2) business days of accepting a bona fide offer to purchase, notify the municipality and each Tenant, in writing by hand delivery and US mail, of the Owner’s intention to sell the property for the price offered; together with a copy of the municipality’s prepared summary of the ordinance or bylaw and any associated forms adopted hereunder;

(2) The Tenants of a Residential Property with six (6) or fewer units shall, within fifteen (15) business days of said notification, either form a Tenant Association, or notify the Owner that they do not wish to purchase the property or assign their right to do so. The Tenants of a Residential Property with seven (7) or greater units shall, within thirty (30) calendar days of said notification, either form a Tenant Association, or notify the Owner that they do not wish to purchase the property or assign their right to do so.

(3) A Tenant Association may by written agreement select a Designee to act on its behalf as purchaser of the property. Tenant Association shall give the Owner and the municipality written notice of its selection of a Designee within two (2) business days.

(4) The Owner shall, if notified of the formation of a Tenant Association, offer said Tenant Association, or its Designee, the opportunity to purchase the property by meeting the offered price. The Tenant Association or its Designee shall within five (5) business days accept or reject such offer. Failure to accept a timely within such five (5) business days shall constitute an irrevocable waiver of the tenants’ rights under this section.

(5) If the Tenant Association, or its Designee accept the Owner’s offer, then both parties shall in good faith negotiate a purchase contract within ten (10) business days, following acceptance of the offer.

(6) The proposed purchase contract shall provide at least the following terms: (i) the earnest money deposit shall not exceed the lesser of: (1) the deposit in the third party purchase contract, if any; (2) 5 percent of the sale price; or (3) $250,000; provided, however, that the Owner and the Tenant Association, or its Designee, may agree to modify the terms of the earnest money deposit; provided, further, that the earnest money deposit shall be held under commercially-reasonable terms by an escrow agent selected jointly by the Owner and the Tenant Association, or its Designee; (ii) the earnest money deposit shall be refundable for not less than ninety 90 days from the date of execution of the purchase contract or such greater period as provided for in the third party purchase contract; provided, however, that if the Owner unreasonably delays the buyer's ability to conduct due diligence during the ninety 90 day period, the earnest money deposit shall continue to be refundable for a period greater than ninety 90 days; and (iii) the time for performance shall be not more than sixty 60 days from the date of the execution of the purchase contract, or such greater period as provided for in the third party purchase contract.

(7) The time periods set forth in this section may be extended by agreement between the Owner and the Tenant Association or its Designee.

(d) Any notice required by this section shall be deemed to have been provided when delivered in person or mailed by certified or registered mail, return receipt requested, to the party to whom notice is required. Notice shall be deemed to have been provided when either: (1) the notice is delivered in hand to the Tenant or an adult member of the Tenant’s household; or (2) the notice is sent by first class mail and a copy is left in or under the door of the Tenant’s dwelling unit. A notice to the affected municipality shall be sent to the chief executive officer.

(e) In a municipality which accepts this section, no lease or other agreement for tenancy executed after the date of such acceptance may contain provisions, nor can any landlord require a Tenant, to release their rights under this section.

(f) This section shall not apply to the following:

i. property that is the subject of a government taking by eminent domain or a negotiated purchase in lieu of eminent domain;

ii. a proposed sale to a purchaser pursuant to terms and conditions that preserve affordability, as determined by the Department;

iii. any sale of publicly-assisted housing, as defined in section 1 of chapter 40T of the General Laws;

iv. rental units in any hospital, skilled nursing facility, or health facility

v. rental units in a nonprofit facility that has the primary purpose of providing short term treatment, assistance, or therapy for alcohol, drug, or other substance abuse provided that such housing is incident to the recovery program, and where the client has been informed in writing of the temporary or transitional nature of the housing.

vi. Rental units in a nonprofit facility which provides a structured living environment that has the primary purpose of helping homeless persons obtain the skills necessary for independent living in a permanent housing and where occupancy is restricted to a limited and specific period of time of not more than twenty-four months and where the client has been informed in writing of the temporary or transitional nature of the housing at its inception.

vii. Rental units in a residential property where the owner of record occupies a unit in the same property as his or her principal residence and regularly shares in the use of kitchen or bath facilities with the tenants of such rental units. For the purposes of this subsection, the term “owner” in subsection (a) shall not include any person who claims a real estate property tax exemption on any other residential real property in the Commonwealth of Massachusetts.

viii. Public housing units managed by the local housing authority.

ix. Federal public housing units that are subsidized and regulated under federal laws, to the extent such applicable federal laws expressly preempt the provisions of this section.

x. Any residential property where the owner is a natural person and owns six (6) or fewer residential rental units in the municipality and the owner resides in the Commonwealth of Massachusetts

xi. Any units which are held in trust on behalf of a developmentally disabled individual who permanently occupies the  unit, or a unit that is permanently occupied by a developmentally disabled parent, sibling, child, or grandparent of the owner of that unit.

xii. Any rental unit that is owned or managed by a college or university for the express purpose of housing students;

(j) In the event that this Section 21A of chapter 184 is repealed in its entirety or in part in the future, any municipal ordinance adopted pursuant to section (b) herein, above shall continue to have the full force of law.