Ever felt like your landlord was selling the home out from under you, or wondered if tenants have a shot at buying their rental? In Maryland, that’s now a reality. Effective October 1, 2024, landlords of 1‑, 2‑, or 3‑unit rental properties are required by law to give tenants a right of first refusal (ROFR) to purchase their own home before listing it publicly. That’s not small potatoes: around 30% of rental units in MD fall under these categories, impacting tens of thousands of households across the state. Let’s dive into what this means for both landlords and tenants, spelling out deadlines, obligations, exemptions, penalties, and how OTLA (Maryland’s new Office of Tenant & Landlord Affairs) is built to govern it all.
How the ROFR Works:
Under the Renters’ Rights and Stabilization Act (HB 693), landlords must follow a very specific sales process:
- Notice Period: If a landlord plans to sell, they must send written notice to tenants who’ve lived in the property for at least six months and are on the lease before listing or negotiating with another buyer..
- 30-Day Exclusive Window: Once notified, tenants have 30 days to respond and make a bona fide offer. Landlords may not negotiate with third parties during this period,.
- Response Obligation: If a tenant makes an offer with comparable terms, the landlord must either accept or counter within five days|.
- Right to Match Lower Offers: If after the negotiation period a third-party offer comes in that’s at least 10% below the tenant’s previously offered price, the landlord must re-offer the sale to the tenant at the lower price, triggering the ROFR again.
- Termination: If tenants decline or fail to respond, the ROFR ends. Landlords may then proceed, but must monitor future offers for the 10% rule.
Who Qualifies and Who Doesn’t?
The rule applies only to:
- Properties with 1 to 3 residential units
- Tenants named on the lease who’ve lived there for at least six months.
Excluded transactions include those involving:
- Family transfers (spouse, child, trustee transfers)
- Court-ordered transfers (e.g., foreclosure, estate settlements)
- Transfers to government or nonprofit entities
- Sales of 4 or more unit properties
Why Landlords Should Pay Attention
This is more than a paper-pushing exercise; it changes the sales timeline and strategy. Here’s how:
- Slower Sales: The 30-day exclusive window and matching clause can delay closing by weeks or even months.
- Increased Disclosures: Beyond the tenant notice, landlords must notify the new Office of Tenant & Landlord Affairs (OTLA). Copies of offers, tenant responses, and sales documents must be filed with the.
- Eviction Restrictions: Landlords cannot evict tenants solely to sell faster; even ending a lease to clear the unit may be scrutinized.
- Penalties: Non-compliance carries fines up to $1,000 per violation, and title insurers may refuse coverage for noncompliant sales.
- Title Insurance Risk: Sellers may face title insurance refusal if they neglect tenant rights.
Tenant Takeaways: Don’t Sleep on It
For tenants, this law is a game-changer, but only if you know your rights.
- Free Purchase Option: If you’ve lived in a qualifying unit for six months, you have the legal right, but not the obligation, to buy.
- Transparent Dealings: Landlords must provide material terms upfront, and cannot force unreasonable conditions.
- Matching Lower Offers: If a better offer appears, you get a second bite at the apple, 30 days to match.
- Preparedness is Key: Speak with mortgage lenders early, especially if financing is needed. Maryland’s housing programs, like DHCD’s Mortgage Program, may offer aid.
- Legal Recourse: Failure to follow ROFR deadlines or form can be challenged via injunctions or lawsuits, and you may seek damages for noncompliance.
Key Differences at a Glance
| Aspect | Landlord Obligations | Tenant Rights |
| Notice | Written notice required before sale or listing | Receive timely notification |
| Negotiation Window | 30-day exclusive period | 30 days to propose a purchase |
| Matching Offers | Must re-offer if the new offer is≥10% lower | 30-day right to match |
| Eviction Protections | Cannot terminate lease solely to evade ROFR | Stay in the unit without retaliatory eviction |
| Penalties | Up to $1,000 per violation, title risks | File an injunction or sue for noncompliance |
ROFR Timeline Overview
| Step | Trigger/Event | Deadline | Obligations |
| Notice | The landlord decides to sell | Before listing or third-party offers | Tenant gets written notice, sends copy to OTLA |
| Response Window | Tenant receives notice | 30 days to respond | The tenant can submit an offer |
| Counteroffer | Tenant offer received | Landlord responds in 5 days | Accept or counteroffer |
| Listing Phase | Tenant declines or fails | After 30 days | The landlord may list publicly |
| Matching Phase | Third-party offer ≥10% lower | After receiving the offer | Re-notify the tenant; new 30-day window |
What Happens If the Law Is Violated?
Failure to adhere to ROFR can block or delay closings, result in up to $1,000 in fines per violation, and give tenants a clear path to sue or obtain injunctions. Title companies may refuse to insure the sale, and your reputation and real estate clearance could take a hit.
Pro Tips for Compliant Landlords
- Use Certified Mail: Proof of mailing safeguards against disputes.
- File with OTLA Promptly: Send copies of notices, responses, and sale documentation.
- Avoid Evictions Pre-Sale: Termination of tenancy must be justified; eviction motivated by sale intent is prohibited.
- Plan Sale Timeline Accordingly: Build in extra weeks for negotiation and matching rights.
- Consult Title Insurer Early: Run compliance checklist pre-escrow.
- Train Staff and Agents: Awareness prevents missteps and costly oversights.
Tenant Smart Moves
- Watch the mailbox: Early alert grants you valuable planning time.
- Get Mortgage Pre-Approval: Especially helpful if a purchase opportunity arises.
- Track Comparable Sales: Know the market to make fair offers.
- Team Up: If multiple tenants live in the property, you can submit a joint offer.
- Seek Legal Aid: OTLA offers guidance, and local aid organizations (e.g., Economic Action MD) can help with financing and fair offer processes.
Maryland Leads the Nation
This makes Maryland the first state to roll out a statewide tenant right of first refusal, building on local programs (Baltimore City’s TOPA, for example). Supporters highlight its impact:
“Provides families with a foundation for stable life… stay in the same school and maintain that education,” said Del. Hill during legislative sessions.
Though critics question affordability, the intent is to give renters a meaningful path to homeownership.
Final Word
Maryland’s mandatory Tenant Right of First Refusal changes the selling landscape for small rental unit landlords and offers tenants a genuine shot at ownership. For landlords, it introduces new steps: structured timing, transparency, record-keeping, and a potential prolonged sales timeline. For tenants, it’s a new power tool, if they’re ready to act, it can transform housing stability and wealth-building.
Both sides should learn the deadlines, use written, certified notices, and lean on OTLA resources to ensure compliance. With both diligence and awareness, landlords and tenants can navigate this law to mutual benefit and add a layer of fairness to Maryland’s rental housing ecosystem.