It’s been a busy year for sales and acquisitions of multifamily properties in Maryland. We frequently represent purchasers and sellers in multifamily transfers throughout the state. This means we frequently navigate the statutory right of first refusal (ROFR) process and local law requirements in Montgomery and Prince George’s counties, where local laws give the County or a designated organization the right to purchase multifamily rental housing before it is sold to another party.

The ROFR process can be time-consuming, often requires coordination with multiple parties, and may ultimately dictate the transaction timeline. ROFR submissions are required within five days of purchase/sale contract execution, so parties are advised to engage counsel early enough to ensure that the contract adequately addresses the ROFR process, and to provide enough time for due diligence and preparation of related materials. Furthermore, since any transfer of ownership interests may trigger ROFR requirements, it is important to address ROFR implications while determining the transaction structure.

A number of recent actions in Montgomery County highlight the County Council’s heightened focus on tenant rights and issues that affect the increasing number of rental housing residents—actions that affect multifamily asset transfer. The County’s ROFR law provides a purchase right to a timely certified tenant organization. Although certification is rare for tenant groups in the County, that could change: The County Department of Housing and Community Affairs budget for this year includes a $218,000 increase in funding for tenant advocacy services. ROFR compliance requires communication with existing tenants in the form of notice letters, postings, and response to individual inquiries.