The Providence City Council is weighing a proposal called the “Providence Tenant Right of First Refusal Act,” which would place significant new restrictions on property owners seeking to sell multi-family rental housing. This ordinance would create burdensome requirements on private property owners, cap sales prices, and stall private transactions. Below is a breakdown of the ordinance’s provisions and the ways it could affect landlords and property rights.

• Providence City Council is considering an ordinance, An Ordinance Amending Chapter 13, “Housing”, “The Providence Tenant Right of First Refusal Act” - City of Providence, that would require sellers of two or more rental units to give their tenants the right to purchase the property before the seller can sell the property on the open market.
• The landlords must send written notice with the price and key terms of a sale to all tenants by certified mail and post the notice in the multi-family. The notice must be written in English, Spanish, Portuguese, and any language spoken by 10% or more of the tenants.  
• If the tenants request more information, the seller has 7 days to provide monthly operating expenses, utilities, consumption rates for the past two years, along with a floor plan, rent roll, and a list of tenants and vacant units.
• The tenants have 10 days after receiving the notice to notify the seller that they want to buy the property, and provide preliminary proof that they have the ability to buy the property. 
• The sales price would be capped at 15% of fair market value as determined by an appraiser or real estate licensee jointly selected by the tenants and the landlord.
• The sales price would be capped at 15% of fair market value as determined by an appraiser or real estate licensee jointly selected by the tenants and the landlord.
• The seller could charge the tenants a maximum deposit of 5% of the purchase price, which is fully refundable as long as the tenants have acted in good faith.
• The tenants have 60 days to close or 90 days if they need time to form a tenants’ association.
• If the tenants wish to convert the property to a nonprofit housing cooperative, the tenants can have 120 days to purchase.
• If the tenants decide not to exercise their right, the seller must give a qualified nonprofit a right to purchase and comply with similar procedures.
• If a qualified nonprofit decides not to buy, the landlord must give the City of Providence a right of refusal.
• If the sale isn’t completed within 90 days, the landlord must start the entire process over.
• Within 15 days after a sale, the seller must sign a declaration confirming compliance with these procedures and file it with the City of Providence.
• Penalties would include fines of $100 - $500 per day per rental unit.
• To contact the Providence City Council:  Home - Providence City Council

REALTORS®, for more information, contact the RIAR Legal Department at [email protected].