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The DC Code: § 42-3402.04 Conversion fee.

Index42 Real Property. (Refs & Annos)
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
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.
b
Fee exemption. -- The Mayor shall not require a conversion fee for a condominium unit, or the proportionate share value of a cooperative residence, that:
1
Is sold to a low-income household;
2
(A) Is sold 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 to a person who:
i
Is 62 years of age or older; or
ii
Has a disability as defined in § 42-3402.08(c)(1)(B)(ii); and
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); or
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.
b-1
(1) Payment. -- The conversion fee 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 fee 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 fee 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. Adjudication of any infraction of this chapter shall be pursuant to Chapter 18 of Title 2.
4
No portion of the conversion fee required under this section shall be included in the purchase price of units exempted from the conversion fee in subsection (b) of this section.
c
Repealed.

Historical and Statutory

Prior Codifications 1981 Ed., § 45-1613. Effect of Amendments D.C. Law 14-307, in subsec. (a), substituted "5%" for "4%". D.C. Law 16-192 rewrote the section which had read as follows: "(a) Amount.-- An owner who seeks to convert shall pay the Mayor a conversion fee of 5% of the declared sales price for each condominium unit or proportionate value of the cooperative residence within the housing accommodation. If a condominium unit or proportionate value of the cooperative residence is sold for less than the declared price, that proportionate share of the conversion fee shall be refunded to the owner. If a condominium unit or proportionate value of the cooperative residence is sold for more than the declared sales price, the conversion fee on that increment of value becomes a lien on the property which the Mayor may collect in the manner provided for collection of property taxes. "(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 § 42-3502.06(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." D.C. Law 17-354 rewrote subsecs. (a), (b), and (b-1) which read as follows: "(a) Definitions. -- For purposes of this section, the term: "(1) 'Low-income individual' means an individual with an annual household income, as determined by the Mayor, of less than 60% of the area median income for the Washington-Arlington-Alexandria Metropolitan area. "(2) 'Qualifying tenant-purchasers' means the number of tenants or purchasers who qualify as low-income individuals at the time they enter a 5-year lease, acquire an option to lease, or purchase a unit in the housing accommodation, and whose continued right to remain a tenant is not required by law. "(3) 'Declared conversion fee' means the conversion fee required by this section, based on a bona fide estimate of the sales price and number of qualifying tenant-purchasers, as declared by the property owner at the time of application for registration of the housing accommodation as a condominium or cooperative. "(4) 'Final conversion fee' means the conversion fee required by this section, based on the number of qualifying tenant-purchasers and the sales price of all sold units and any unsold units that have been assessed a conversion fee by the Mayor, as required by subsection (b-1) of this section. "(b) Reduction. -- The Mayor shall reduce the conversion fee of each unit of a condominium, or proportionate value of the cooperative residence, when the owner sells a unit in the housing accommodation, provides a lease, or provides an option to lease for at least 5 years, to current or new qualifying tenant-purchasers. To qualify for this reduction, a lease cannot require monthly payments greater than existing rents, as may be increased by the annual adjustment of general applicability provided in § 42-3502.06(b), or a similar annual adjustment in any successor rent control act, or 30% of gross household income, whichever is greater. The 5% conversion fee shall be reduced by dividing the total number of qualifying tenant-purchasers by the number of units in the building at settlement, and multiplying the quotient by 5%. The resulting percentage shall be subtracted from the 5% conversion fee coefficient and shall be used as the basis of the final conversion fee. "(b-1) Payment. -- Upon registration of the housing accommodation as a condominium or a cooperative, the Mayor shall record a lien on the property in the amount of the declared conversion fee.  The declared conversion fee shall be apportioned among the individual units or shares according to the percentage that each unit represents of the total estimated sales price and shall be paid at the time of settlement on the individual units or shares.   The Recorder of Deeds shall not record a deed for an individual unit or share until the declared conversion fee for that individual unit or share is paid in full. The Mayor shall require payment of the declared conversion fee for any unsold units or shares 2 years after the housing accommodation is registered as a condominium or a cooperative. After payment of the declared conversion fees for all of the units, if the declared conversion fee and the final conversion fees are not the same, any underpayment or overpayment of the conversion fee shall be collected from the owner or refunded to the owner by the Mayor, accordingly. If the final conversion fee is greater that the declared conversion fee, for each 1% that the final conversion fee is greater than the declared conversion fee, a .5% (one-half of one percent) surcharge shall be added to the conversion fee paid by the owner. The Mayor shall enforce a lien against any unsold unit of a condominium or proportionate value of a cooperative to collect any underpayment of the final conversion fee." Temporary Amendments of Section 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). Emergency Act Amendments 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). Legislative History of Laws For legislative history of D.C. Law 3-86, see Historical and Statutory Notes following § 42-3401.01. For legislative history of D.C. Law 5-38, see Historical and Statutory Notes following § 42-3405.03a. For legislative history of D.C. Law 10-144, see Historical and Statutory Notes following § 42-3405.03a. For legislative history of D.C. Law 11-31, see Historical and Statutory Notes following § 42-3405.03b. For Law 14-307, see notes following § 42-1103. For Law 16-192, see notes following § 42-903. Law 17-354, the "Conversion Fee Clarification and Technical Amendment Act of 2008", was introduced in Council and assigned Bill No. 17-179 which was referred to the Committee on Public Services and Consumer Affairs.  The Bill was adopted on first and second readings on November 18, 2008, and December 16, 2008, respectively.   Signed by the Mayor on January 16, 2009, it was assigned Act No. 17-688 and transmitted to both Houses of Congress for its review.  D.C. Law 17-354 became effective on March 25, 2009. Miscellaneous 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." 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". DC CODE § 42-3402.04 Current through December 11, 2012

Credits

(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.)