2023 District of Columbia Code › Title 42 - Real Property › Chapter 34 - Rental Housing Conversion and Sale › Subchapter II - Conversion Procedures › § 42–3402.04. Conversion fee

§ 42–3402.04. Conversion fee.
(a) Definitions. — For the purposes of this section, the term “low-income” means annual household income, as determined by the Mayor, no greater than 80% of the area median income, as defined in § 42-2801(1)).
(a-1)(1) Amount. — An owner who converts a housing accommodation, including vacant buildings, into a condominium or a cooperative shall pay the Mayor a conversion fee of 5% of the sales price for each condominium unit, or proportionate value of the cooperative residence, within the housing accommodation.
(2) An owner who converts a housing accommodation containing more than 3 and fewer than 11 units, each with a separate certificate of occupancy, including vacant buildings but excluding a building that the Mayor has determined to be a blighted vacant building, as that term is defined in § 42-3131.05(1), and thereby reduces the number of units in the housing accommodation, shall pay the Mayor an additional conversion fee of 5% of the appraised value of the most valuable unit in the building multiplied by the net decrease in units. When calculating the net decrease in units pursuant to this paragraph, the Mayor shall subtract one unit for each unit that qualifies for the fee exemption under subsection (b) of this section; except, that the result shall not be less than zero.
(b) Fee exemption. — The Mayor shall not require conversion fees under subsection (a-1) of this section, or the proportionate share value of a cooperative residence, that:
(1) Is sold or rented to a low-income household;
(2)(A) Is sold or rented to a member of a household who, as determined by the Mayor:
(i) Has maintained a rental unit in the building complex as the principal place of residence for at least one year prior to the owner’s application to the Mayor for conversion of the housing accommodation to a condominium or cooperative;
(ii) Is a domiciliary of the District of Columbia; and
(iii) Is entitled to the possession, occupancy, or benefits of the rental unit.
(B) If an owner seeks an exemption under this paragraph, the member of the household may elect to purchase any unit in the housing accommodation in lieu of her current unit;
(3)(A) Is sold or rented to a person who is an elderly tenant or a tenant with a disability.
(B) Does not have a total annual household income, as determined by the Mayor, greater than 100% of the area median income, as defined in § 42-2801(1);
(4)(A) Is sold as part of a conversion of a property that has been registered as vacant for at least 12 months prior to conversion; and
(B) Is part of a building complex not exceeding 10 units; or
(5) Gains at least one additional bedroom in the process of the reduction of units.
(b-1) Payment. —
(1) The conversion fees required by subsection (a-1) of this section shall be paid in full into an escrow account at the time of settlement on the sale of the condominium unit or cooperative share.
(2)(A) The escrow agent shall submit the conversion fees to the Mayor within 30 business days of settlement, together with a copy of the recordation and transfer tax form reflecting the sale price of each condominium unit or cooperative share.
(B) The name, address, and telephone number of the escrow agent shall be stated on the deed or on a form attached to the deed.
(3) The Mayor may impose civil fines, penalties, and fees for failure to submit the conversion fees to the Mayor, any infraction of the provisions of this section, or any rules issued under the authority of this section pursuant to Chapter 18 of Title 2 [§ 2-1801 et seq.]. Adjudication of any infraction of this chapter shall be pursuant to Chapter 18 of Title 2 [§ 2-1801 et seq.].
(4) No portion of the conversion fees required under this section shall be included in the purchase price of units exempted from the conversion fees in subsection (b) of this section.
(b-2) To qualify for the exemption under subsection (b) of this section, if the unit is rented, the owner shall:
(1) Set the rent at no higher than:
(A) If seeking an exemption pursuant to subsection (b)(1), (2), or (3) of this section, the rent level before the conversion or 30% of the tenant's income, whichever is lower; or
(B) If seeking an exemption pursuant to subsection (b)(5) of this section an amount, as determined by the Mayor through rulemaking, that is affordable to a household whose income does not exceed 100% of the area median income, as that term is defined in § 42-2801(1);
(2) Increase the rent by no more, and no more often, than the increases allowed under § 42-3502.08, for the duration of the tenant's tenancy or 5 years, whichever is longer; and
(3) Otherwise maintain the same lease terms as before the reduction in the number of units.
(c) Repealed.
(d) The Mayor shall deposit in the Housing Production Trust Fund, created pursuant to § 42-2802, all fees paid pursuant to this section above $692,000 annually, as of April 16, 2020.
(e) The Mayor, subchapter I of Chapter 5 of Title 2, may issue rules to implement the provisions of this section.
(Sept. 10, 1980, D.C. Law 3-86, § 204, 27 DCR 2975; Nov. 5, 1983, D.C. Law 5-38, § 2(c), 30 DCR 4866; Sept. 6, 1995, D.C. Law 11-31, § 3(e), 42 DCR 3239; June 5, 2003, D.C. Law 14-307, § 1606, 49 DCR 11664; Mar. 2, 2007, D.C. Law 16-192, § 2162(a), 53 DCR 6899; Mar. 25, 2009, D.C. Law 17-354, § 2(a), 56 DCR 1155; Apr. 7, 2017, D.C. Law 21-239, § 2(e), 64 DCR 1588; Apr. 16, 2020, D.C. Law 23-72, § 3, 67 DCR 2476.)
Prior Codifications
1981 Ed., § 45-1613.
Section References
This section is referenced in § 42-3402.10.
Effect of Amendments
D.C. Law 14-307, in subsec. (a), substituted “5%” for “4%”.
D.C. Law 16-192 rewrote the section.
D.C. Law 17-354 rewrote subsecs. (a), (b), and (b-1).
Applicability
Section 7074 of D.C. Law 23-149 repealed section 5 of D.C. Law 23-72 removing the applicability provision impacting this section. Therefore, the amendment of this section by Law 23-72 has been implemented.
Applicability of D.C. Law 23-72: § 5 of D.C. Law 23-72 provided that the change made to this section by § 3 of D.C. Law 23-72 is subject to the inclusion of the law’s fiscal effect in an approved budget and financial plan. Therefore that amendment has not been implemented.
Emergency Legislation
For temporary amendment of section, see § 3(e) of the Rental Housing Conversion and Sale Act of 1980 Reenactment and Amendment Emergency Act of 1994 (D.C. Act 10-285, July 8, 1994, 41 DCR 4904).
For temporary amendment of section, see § 3(e) of the Rental Housing Conversion and Sale Act of 1980 Reenactment and Amendment Emergency Act of 1995 (D.C. Act 11-47, May 4, 1995, 42 DCR 2410) and § 3(e) of the Rental Housing Conversion and Sale Act of 1980 Reenactment and Amendment Congressional Recess Emergency Act of 1995 (D.C. Act 11-96, July 19, 1995, 42 DCR 3837).
For temporary (90 day) amendment of section, see § 1606 of Fiscal Year 2003 Budget Support Amendment Emergency Act of 2002 (D.C. Act 14-544, December 4, 2002, 49 DCR 11700).
For temporary (90 day) amendment of section, see § 1606 of the Fiscal Year 2003 Budget Support Amendment Congressional Review Emergency Act of 2003 (D.C. Act 15-27, February 24, 2003, 50 DCR 2151).
For temporary (90 day) amendment of section, see § 1606 of Fiscal Year 2003 Budget Support Amendment Second Congressional Review Emergency Act of 2003 (D.C. Act 15-103, June 20, 2003, 50 DCR 5499).
For temporary (90 day) amendment of section, see § 2162(a) of Fiscal Year 2007 Budget Support Emergency Act of 2006 (D.C. Act 16-477, August 8, 2006, 53 DCR 7068).
For temporary (90 day) amendment of sections, see § 2162(a) of Fiscal Year 2007 Budget Support Congressional Review Emergency Act of 2006 (D.C. Act 16-499, October 23, 2006, 53 DCR 8845).
For temporary (90 day) amendment of section, see §§ 2 and 3 of Vacancy Conversion Fee Exemption Reinstatement Emergency Act of 2006 (D.C. Act 16-533, December 4, 2006, 53 DCR 9844).
For temporary (90 day) amendment of section, see § 2162(a) of Fiscal Year 2007 Budget Support Congressional Review Emergency Act of 2007 (D.C. Act 17-1, January 16, 2007, 54 DCR 1165).
For temporary (90 day) repeal of Subtitle M of Title II of the Fiscal Year 2007 Budget Support Act of 2006, effective March 2, 2007 (D.C. Law 16-192; 53 DCR 6899), see § 2 of Conversion Fee Clarification Emergency Amendment Act of 2008 (D.C. Act 17-305, February 22, 2008, 55 DCR 2516).
For temporary (90 day) amendment of section, see § 2 of Vacancy Exemption Repeal Emergency Amendment Act of 2008 (D.C. Act 17-354, April 17, 2008, 55 DCR 5372).
For temporary (90 day) amendment, see § 2(a) of Vacancy Exemption Repeal Clarification Emergency Amendment Act of 2008 (D.C. Act 17-461, July 28, 2008, 55 DCR 8732).
Temporary Legislation
For temporary (225 day) amendment of section, see § 3(e) of Rental Housing Conversion and Sale Act of 1980 Temporary Extension Amendment Act of 1994 (D.C. Law 10-176, September 22, 1994, law notification 41 DCR 6706).
For temporary (225 day) amendment of section, see § 2 of Vacancy Conversion Fee Exemption Reinstatement Temporary Act of 2006 (D.C. Law 16-250, March 8, 2007, law notification 54 DCR 250).
Section 3 of D.C. Law 16-250 repealed Subtitle M of Title II of the Fiscal year 2007 Budget Support Congressional Review Emergency Act of 2006, effective October 3, 2006 (D.C. Act 16-499; 53 DCR 8818), as of October 3, 2006.
Section 2 of D.C. Law 17-17 repealed Subtitle M of Title II of the Fiscal Year 2007 Budget Support Act of 2006, effective March 2, 2007 (D.C. Act 16-476; 53 DCR 6899), as of March 2, 2007.
Section 3 of D.C. Law 17-17 repealed Subtitle M of Title II of the Fiscal Year 2007 Budget Support Congressional Review Emergency Act of 2007, effective January 16, 2007 (D.C. Act 17-1; 54 DCR 1165), as of January 16, 2007.
Section 2 of D.C. Law 17-162 repealed Subtitle M of Title II of the Fiscal Year 2007 Budget Support Act of 2006, effective March 2, 2007 (D.C. Act 16-476; 53 DCR 6899), as of March 2, 2007.
For temporary (225 day) amendment of section, see § 2 of Vacancy Exemption Repeal Temporary Amendment Act of 2008 (D.C. Law 17-191, July 18, 2008, law notification 55 DCR 9769).
For temporary (225 day) amendment of section, see § 2(a) of Vacancy Exemption Repeal Clarification Temporary Amendment Act of 2008 (D.C. Law 17-274, November 25, 2008, law notification 55 DCR 12594).
Short Title
Short title: Section 2161 of D.C. Law 16-192 provided that subtitle M of title II of the act may be cited as the “Vacancy Conversion Fee Clarification Amendment Act of 2006”.
Editor's Notes
Reenactment of Law 3-86: See Historical and Statutory Notes following § 42-3401.01.
Amendment of section by Law 10-144: Section 2(e) of D.C. Law 10-144 purported to amend (b), (b-1) and (c) of this section to read as follows:
“(b) Reduction. The Mayor may reduce the conversion fee to as low as $50 per condominium unit or proportionate value of the cooperative residence if the owner declares the intent to sell or provide a lease or option to lease for at least 5 years to tenants who, at the time of request for an election, are low income and whose continued right to remain a tenant is not required by statute (”qualifying tenants“). To qualify for this reduction, a sale or lease cannot require monthly payments greater than existing rents, as may be increased by the annual adjustment of general applicability provided in § 45-2516(b) or a similar annual adjustment in any successor rent control act, or 25% of gross household income, whichever is greater. The number of qualifying tenants is the number of tenants identified by the Mayor as residing in the accommodation as of the date of the owner’s request for an election. The amount of the reduction shall be determined by the Mayor based on factors such as the Mayor may determine, which shall include the percentage of tenants in the accommodation who are qualifying tenants and the percentage of qualifying tenants who purchase or continue renting in accordance with the first sentence of this subsection. The Mayor shall also reduce the amount of the conversion fee of each unit or proportionate value for a cooperative residence that is sold or leased to a low-income purchaser or to a new low-income tenant who leases a unit in accordance with the requirements of this subsection, regardless of where that low-income purchaser or tenant previously lived. In doing so, the Mayor shall consider the lost conversion fee revenue in comparison to the cost of making available the number of low-income units purchased or leased. If the owner does not sell or lease to the percentage of qualifying tenants or outside purchasers or tenants as declared, the unpaid balance of the conversion fee as adjusted by the Mayor in accordance with the actual sales and leases shall be paid by the owner. The Mayor may assert a lien against any unsold units or proportionate value of the cooperative residence by filing a lien against the land. The Mayor shall not attempt to collect any conversion fee which would not have been due if the provisions of this section had been in effect at the time of the conversion.
“(b-1) Payment. The conversion fee required by subsection (a) of this section shall be paid no later than at the time of settlement on the individual units or shares.
“(c) Waiver of lien. The Mayor shall waive a conversion fee lien on a condominium unit or proportionate value of the cooperative residence purchased by a low-income tenant.”