TOPA Timeline FAQs

Why does TOPA extend timelines to purchase certain properties? 

TOPA levels the playing field for tenants and affordable housing developers who want to purchase property and keep it in the community. This is necessary because:

  • Alameda County is the 17th most unaffordable housing market in the country, according to a 2019 study.

  • The rapid rate of Berkeley home sales, coupled with high offers, results in exceedingly fast bidding wars that privilege all-cash investors over buyers using conventional financing.

  • These challenges make it nearly impossible for moderate-income tenants, first-time buyers, and affordable housing developers to purchase property and maintain it as affordable. 

How were these timelines developed? 

The timelines in Berkeley’s proposed TOPA are based on extensive research and are designed to give tenants reasonable time to organize, submit an offer, secure financing, and close a deal, while also taking into account sellers’ needs. Timelines are categorized by property type and are also broken down into different stages.

Step 2: Time to submit statement of interest* 

Why do tenants need at least 20 days to provide a statement of interest?

Tenants need this time to organize meetings around multiple schedules, understand their rights, and decide how to move forward. But this early stage is critical for sellers too. Giving tenants time to understand their rights early means sellers will get early notice of how they can proceed. 

Sellers can also use this time to concurrently begin getting the property ready for the market if they wish. For example, a seller may choose to get an agent, property inspection, and begin repairs as they await a response from tenants and qualified organizations.

*Step 1 is seller giving tenants and qualified organizations notice of intent to sell.

Step 3: Time to submit an offer

Why do tenants get at least 60 days to make an offer?

They need time to gather financial information; consult with a Supportive Partner to select an ownership structure and assess financing options; form a Tenant Organization which likely means incorporating a legal entity and adopting governance documents; and get pre-approved for a loan. 

Step 4: Time to close

If the landlord accepts the tenants’ offer, TOPA then gives 1-unit properties 30 days, or 60 days where a commercial loan is needed; gives 2 unit properties 90 days; and gives 3+ unit properties 120 days. 

Why the difference?

Single tenant households qualify for faster-processing consumer loans. By contrast, buyers purchasing multi-unit properties and buyers that are entities typically need commercial/business loans which take longer to process. If it’s an affordable project, buyers will also need to work with specific lenders willing to finance projects with affordability restrictions. These lenders tell us this will take 90-120 days.

Bottom line: At this stage, sellers are already in contract with the tenant-buyers or with a Qualified Nonprofit and these time periods can be seen as a financing contingency and time to close, which is necessary for a lender or public agency to process and fund the loan.  

At the “Right of First Refusal” stage, how much time do the tenants/Qualified Organization (who made an initial offer) have to meet the price and terms of the third-party contract?

*As of May 2021, the Land Use Committee voted on changes that reduced the below timelines. See amendments here: https://www.cityofberkeley.info/uploadedFiles/Clerk/Level_3_-_City_Council/TOPA%20AMENDMENTS%205-20-21%20.pdf].  

  • 1-2 units: 10 days.

  • 3+ units: 30 days.

The time to close in a Right of First Refusal process is the same as the timelines from Step 4 above (time to close in a Right of First Offer process).

How does TOPA mitigate risk of tenants “holding-up” a sale?

  • The letter of interest stage.

    • This stage allows tenants who have no interest in moving forward to waive rights early, so a landlord can proceed. 

  • Joint notification to tenants and Qualified Organizations. 

    • Under TOPA, property owners notify Tenants and Qualified Organizations before putting their property on the market. This way these organizations can step in quickly to express interest or make an offer if tenants decide not to purchase.

  • Tenants interested in purchasing must work with a “Supportive Partner” such as a nonprofit advisor that will help tenants assess the feasibility of purchasing and make faster, more informed decisions. 

  • Unlike Washington D.C.’s TOPA, Berkeley’s TOPA does not allow tenants to sell their rights. Meaning there is no financial motive for tenants to move forward if they don’t actually intend to purchase or assign rights to an affordable housing developer.