# COMAR Title 05 — Department of Housing and Community Development ## Subtitle 22 — Tenant’S Exclusive Negotiation Period and Right of First Refusal ### Chapter 01 — Procedure **Authority:** Housing and Community Development Article, §5-104; Real Property Article, §8-119, Annotated Code of Maryland **Administrative History:** Effective date: October 14, 2024 (51:20 Md. R. 898) #### Regulation .01 Purpose. *COMAR 05.22.01.01* The purpose of this chapter is to prescribe the policies and procedures relating to the tenant’s exclusive negotiation period and right of first refusal as outlined in Real Property Article, §8-119, Annotated Code of Maryland. #### Regulation .02 Definitions. *COMAR 05.22.01.02* A. In this chapter, the following terms have the meanings indicated. B. Terms Defined. (1) “Commercially reasonable” means terms and pricing that are reasonably consistent with what an experienced real estate professional would expect to see in similar transactions. (2) “Department” means the Department of Housing and Community Development, a principal department of the State. (3) “Material terms” includes the sales price, settlement date, inspection terms, financing terms, escrow deposit, seller credit to buyer (if any), and seller repairs. (4) “Offer to purchase” means a good faith offer for the purchase of a residential rental property for a price that a willing buyer would pay to a willing seller in an arm’s length transaction, with neither party under any compulsion to buy or sell. (5) “Office” means the Office of Tenant and Landlord Affairs within the Department of Housing and Community Development. (6) “Secretary” means the Secretary of Housing and Community Development. (7) “Tenant” means an individual who has occupied a residential rental property for at least 6 months and who is a named lessee in the written lease. (8) “Tenant’s exclusive negotiation period” means the period of time prescribed in Real Property Article, §8-119(c), Annotated Code of Maryland, after a tenant is notified about the tenant’s right to purchase a residential rental property during which the tenant may negotiate exclusively with the owner to enter into a contract of sale. #### Regulation .03 Notice Requirements in Tenant’s Exclusive Negotiation Period. *COMAR 05.22.01.03* A. Before a residential rental property may be offered for sale to the public or a third party, including through a listing for sale, the owner of the property shall send each tenant of the property a written notice of the tenant’s right to deliver an offer to purchase the property. B. A notice sent to a tenant under this chapter shall be delivered by: (1) First-class U.S. Mail, with a certificate of mailing; or (2) A delivery service providing delivery tracking and confirmation. C. The owner shall send a copy of a notice sent to a tenant under this chapter to the Office by a submission form on the Office’s website. D. The owner shall notify the Office by submission form on the Office’s website if: (1) A tenant delivers a timely written offer to purchase the property that contains the same or more favorable material terms as those contained in the notice sent under this chapter; (2) A tenant fails to make an offer to purchase in response to the notice sent under this chapter within the time prescribed by law; (3) A tenant affirmatively declines to make an offer to purchase the property; (4) A tenant fails to make a timely response to, or rejects, a counteroffer made by the owner under Real Property Article, §8-119(c)(5)(ii), Annotated Code of Maryland; or (5) A tenant accepts a counteroffer made by the owner under Real Property Article, §8-119(c)(5)(ii), Annotated Code of Maryland. #### Regulation .04 Form of Notice and Counteroffer. *COMAR 05.22.01.04* A. The notice delivered to tenants at the commencement of the tenant’s exclusive negotiation period shall contain, at minimum, the following information: (1) The material terms that the owner would agree to incorporate into a contract of sale with the tenant; (2) A conspicuous statement that the notice is a solicitation of an offer to purchase and is not intended as and may not be construed as a binding contract of sale; and (3) Any information regarding deadlines for the tenant to submit an offer to purchase, including the duration of the tenant’s exclusive negotiation period. B. The material terms stated in the notice delivered to tenants under this chapter: (1) Shall be commercially reasonable and made in good faith; (2) Shall adhere to generally accepted residential real estate practices; and (3) May not include restrictions on financing methods or the right of inspection. C. The notice delivered to tenants under this chapter shall be in the form provided in Appendix A of this subtitle. D. A counteroffer delivered to tenants under Real Property Article, §8-119(c)(5)(ii), Annotated Code of Maryland, shall be in the form provided in Appendix B of this subtitle. E. The Office shall make the forms provided in Appendix A and Appendix B of this subtitle available on its public website in a format allowing residential rental property owners to populate the blank sections of the forms, download the forms, and print the forms for delivery to tenants. F. The Office may, from time to time, with the approval of the Secretary, edit or amend the forms provided in Appendix A and Appendix B of this subtitle to facilitate compliance with Real Property Article, §§8-119(c) and 8-120, Annotated Code of Maryland, or other applicable law, as appropriate. #### Regulation .05 Notice Requirements for Tenant’s Right of First Refusal. *COMAR 05.22.01.05* A. Before accepting an offer to purchase a residential rental property from a third party, the owner of the property shall provide written notice to any tenants of the property of the tenants’ right of first refusal, and give the tenant an opportunity to exercise the right of first refusal within 30 days after receipt of the notice, if: (1) The proposed transfer to the third party is not a transfer listed in Real Property Article, §8-119(b), Annotated Code of Maryland; (2) The owner intends to accept an offer from a third party to purchase the property for an amount at least 10 percent lower than the lowest price offered to the tenant in any previous notice, offer, or counteroffer made during the tenant’s exclusive negotiation period; or (3) The owner, without having offered the property for sale to the public or any third party, receives an offer to purchase the property from a third party. B. A notice sent to a tenant under this chapter shall be delivered by: (1) First-class U.S. Mail, with a certificate of mailing; or (2) A delivery service providing delivery tracking and confirmation. C. The owner shall send a copy of a notice sent to a tenant under this chapter to the Office by a submission form on the Office’s website. D. The owner shall notify the Office by submission form on the Office’s website if: (1) A tenant delivers a timely written offer to purchase at the same sales price as the third-party offer; (2) A tenant does not deliver a timely offer to purchase the property at the same sales price as the third-party offer; or (3) The owner accepts an offer to purchase from a tenant and enters into a contract of sale, but the contract of sale is terminated before settlement. #### Regulation .06 Form of Notice of Right of First Refusal. *COMAR 05.22.01.06* A. The notice delivered to tenants under this chapter shall contain, at minimum, the following information: (1) The sales price proposed in the third-party offer to purchase; (2) A conspicuous statement that the notice is a solicitation of an offer to purchase and is not intended as and may not be construed as a binding contract of sale; and (3) Any information regarding deadlines for the tenant to submit an offer to purchase. B. The notice delivered to tenants under this chapter shall be in the form provided in Appendix C of this subtitle. C. The Office shall make the form provided in Appendix C of this subtitle available on its public website in a format allowing residential rental property owners to populate the blank sections of the form, download the form, and print the form for delivery to tenants. D. The Office may, from time to time, with the approval of the Secretary, edit or amend the form provided in Appendix C of this subtitle to facilitate compliance with Real Property Article, §§8-119(d) and 8-120, Annotated Code of Maryland, or other applicable law, as appropriate. #### Regulation .07 Information Provided to Department. *COMAR 05.22.01.07* Upon entry into a contract of sale with a tenant to purchase a residential rental property, the termination of a tenant’s exclusive negotiation period, or the termination of a tenant’s right of first refusal as provided in Real Property Article, §8-119, Annotated Code of Maryland, the owner shall provide the following information to the Office by submission form on the Office’s website: A. The physical address of the property, including the county (or Baltimore City) in which the property is located; B. The legal description of the property; C. The material terms proposed in any notice, offer, or counteroffer made to or by the tenant under Real Property Article, §8-119(c), Annotated Code of Maryland, whether accepted or rejected; D. If applicable, the material terms of the contract of sale; E. The length of time the tenant resided in the property before the owner sent the notice required by this chapter; and F. The periodic rent amount under the most recent lease entered by the tenant.