Seattle Ratchets up Notice of Intent to Sell Requirements
The Seattle City Council recently amended a 2015 law requiring notice to the Seattle Office of Housing and Seattle Housing Authority of the owner's intent to sell multifamily property.
The law takes effect September 1, 2019, and applies to properties located within the City of Seattle only.
Background. In 2015, the City Council passed a law requiring owners of 5+ unit properties with rents at or below 80 percent AMI to notify the City's Office of Housing and Seattle Housing Authority of their intent to sell. The intent is to allow the City or Housing Authority to purchase the property to maintain the affordability of the property.
Since then only nine owners have provided notice to the Office of Housing. None of these nine properties have been acquired by the City, any non-profit provider or the Seattle Housing Authority, and the City has not taken any steps to enforce the law.
Council member Mosqueda, on her own behalf, moved to ratchet up the law. We first met with her staff in March to discuss the proposal and provide feedback to her.
Summary of the law. The amended ordinance requires owners of 2+ multifamily units with rents at or below 80 percent AMI to do the following:
- The owner must notify the Seattle Office of Housing and Seattle Housing Authority of the owner's intent to sell the building no later than 90 days before the property is listed or advertised.
- The owner must submit a declaration to the Office of Housing signed under penalty of perjury, affirming compliance with the ordinance.
- The owner shall prominently post a notice in the building, in a location clearly visible to residents stating the owner's intent to sell. The notice must include information prepared by the Office of Housing of funding that might be available to help tenants purchase the building.
If the owner receives an unsolicited offer to purchase the property the owner must comply with the requirements above, within two days.
For buildings with 5+ units, tenants, non-profit housing providers or the Housing Authority must provide notice of interest to purchase the building to the owner within 30 days of receiving notice of intent to sell. If the notice of interest is provided, the owner must provide the number of units and rent of each unit within 3 business days and the potential purchaser must provide documentation of financial ability to purchase within 15 days of receipt of this information. 90 days after the notice of interest is provided to the seller, the buyer must provide an offer to the seller.
Penalties. The law increases the penalty from $500 to $2,000, but the City acknowledges they do not have a mechanism to enforce the ordinance and instead tasked specific City departments with determining an appropriate strategy.
From a practical perspective, we attempted to work with the Council to educate them on the legal aspects of this law since March. The Council was unconcerned with our critique of the proposal and passed the ordinance as is.
SCCInsight published a great summary of the Notice of Intent to Sell proposal detailing the "substantial amount of federal and state case law supporting the notion that a right of first refusal to buy a property is a fundamental right of property ownership that is protected by the Constitution (both US and Washington). Courts have been clear that property owners have the right to possess, use and dispose of their property, and disposal includes selling it to whomever they choose. Property owners can give away or sell a right of first refusal on their property, but the government can’t take it away without compensating the owner and following due process."
it's important to also note, the City does not have available cash at this time to assist with the purchase of large buildings, and the average condo is selling for more than $450,000 right now in Seattle, disqualifying the use of low-income home ownership programs offered by the City.
Additional articles on the Notice of Intent to Sell ordinance:
- Council passes update to "Notice of Intent to Sell" Ordinance
- Councilmember Mosqueda Proposes New Tenant Protections for Buildings Up for Sale
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