The San Francisco Board of Supervisors recently passed the Community Opportunity to Purchase Act (COPA), and it went into effect on June 3rd. COPA gives non-profit housing organizations the first right to purchase residential buildings with three or more units. The city is hoping that COPA will help preserve affordable housing.
When an owner lists a multi-unit building, he or she must notify the Mayor’s Office of Housing. A pre-selected group of non-profit housing organizations then has 30 days to make an offer to purchase the property (and also has the opportunity to match an offer that comes in.) If one of the organizations completes a purchase through the COPA legislation, the deed restricts the property’s use to permanent affordable housing.
However, COPA is not exactly ready for prime time. The City of San Francisco has three months to develop guidelines and identify the list of housing non profits that will be involved. So sellers currently have no obligation relative to the new law. It’s also highly likely that lawsuits will pop up to challenge COPA, further delaying its effect on real estate transactions in the near term.
Once COPA is up and running, the main effect it will have on multi-unit building sales will be in the timing. Sellers will need to disclose that their buildings fall under the COPA law, informing prospective buyers that there will be a waiting time during the transaction that can result in a non-profit group matching an accepted offer. In the end the buyer who makes the initial offer may walk away with nothing but a returned deposit. This is most cumbersome when a buyer is doing a 1031 exchange, which has some serious time constraints of their own.
COPA will be evolving in the coming months. If you’re planning to buy or sell a multi-unit building, it’s best to check with a knowledgeable, local real estate attorney who can advise you with respect to the current COPA status. You should also engage an experienced Realtor who will be able to manage the sale from start to finish while navigating this new law. Watch for COPA updates on the Mayor’s Office of Housing and Development site here.