The hot Massachusetts real estate market is prompting more and more rental property owners to consider converting their rental properties to condos. If the property contains more than 4 units and is currently leased by tenants, some extra steps must be taken. Landlord-tenant laws in Massachusetts are quite strict and it’s critical that landlords comply with the law to avoid issues. Here are some things that you need to know about converting tenant-occupied multi-family properties to condos in Massachusetts.
Tenant Occupancy Timeframes
Converting a building to a condominium requires an extension of timeframe for tenants with existing leases. Tenants must be given one-year to vacate, even if their lease ends sooner. This timeframe is longer, at two years, for protected classes such as those with low income or who are disabled or elderly. Additionally, it’s worth noting that some cities have increased notice timeframes that supersede what is mandated by Massachusetts state law.
Landlords are also required to reimburse tenants for their relocation expenses up to $750. A higher limit of $1,000 applies to tenants in protected classes.For protected classes, landlords must also assist with finding new housing that is comparable to their current apartment. Reimbursement is for actual expenses, so tenants must provide receipts. Landlords have 10 days from the move date to pay reimbursements.
Right of First Refusal
When converting tenant-occupied multi-family properties to condos in Massachusetts, landlords must give existing tenants a 90-day right of first refusal. What does this mean? Tenants are basically allowed the opportunity to purchase the unit they are living in before that unit is offered for sale to the public. The terms and conditions must be the same. For instance, if the public will be able to purchase the unit for $400,000 with 5% escrow deposit, then the tenant must have those same options. A landlord cannot offer to sell it to the tenant for $430,000 and 10% escrow deposit then turn around and give public buyers better terms and conditions.
Additional Restrictions for Converting Tenant-Occupied Multi-family Properties to Condos in Massachusetts
The above are the 3 most important requirements by Massachusetts law for condo conversions. Individual cities and towns are given the option to expand the law and impose even more stringent requirements. For instance, some require longer notice periods, higher reimbursement limits, or expanded rights of first refusal. The protected classes can vary as well. Some even view condo conversions as presumed eviction, applying eviction rules to the process. For large buildings, some cities may limit the number of units that can be converted each year.
Given the state and local laws that impact converting tenant-occupied multi-family properties to condos in Massachusetts, it is extremely important to work with an experienced Massachusetts real estate attorney. Your attorney will not only file necessary paperwork for your conversion, but will also guide you through the other legal requirements. Contact Martino Law Group for assistance with your next condo conversion.