The Tenant Opportunity to Purchase the (606) Block provides tenants the right of first refusal for sale of residential rental properties within the 606 Predominance of the Block District boundaries. This is a pilot program set to take effect on March 1, 2025.
Who Does This Affect?
This applies to ALL rental properties within the 606 Predominance of the Block District, including Avondale, Hermosa, Humboldt Park, Logan Square and West Town.
What Does This Mean for Property Sales?
- Before selling a rental property in this area, owners must notify tenants of their right to purchase the property first.
- If a tenant can show financial viability and is willing to pay fair market value, the seller must consider the tenant’s offer before any third-party offers.
- There are specific timelines and guidelines that sellers must follow to ensure tenants have a fair opportunity to exercise their rights.
Why Was This Passed?
The ordinance aims to address rising property prices, displacement, and gentrification by providing additional tenant protections. Aldermanic prerogative played a key role in its approval.
STEPS FOR TENANT RIGHT OF FIRST REFUSAL
Step 1: Notice of Intent to Sell
- Prior to listing a property for sale, notice must be provided to the Department of Housing (DOH) and tenants
- DOH Forms: Public Notice of Intent to Sell, Notice of Intent to Sell
- Timelines
- 5 units or more: 60 days’ notice
- 4 units or less: 30 days’ notice
Step 2: Right of First Refusal/Notice of Offer
- Prior to a rental property sale, tenants are granted the first right of refusal, meaning they have the right to make an offer before proceeding with a 3rd party contract or purchase.
- DOH Forms: Notice of Third-Party Purchase Offer, Tenant Association Notice
- Tenant offers must be fair market value of the property.
- During this time, property owners or their agent may ask about waiving the first right of refusal (tenants do not wish to purchase property).
- If 50% of renters waive their rights, tenant rights are waived.
- Tenants may request specific information about the property.
- Tenant associations must include 75% of renters in 5 unit or more buildings, and 50% of renters in 4 units or less buildings.
- Tenant rights to purchase expire once the notice of offer period ends.
- Tenants or tenant associations must provide some financial backing in their offer on the property.
- Timeline for tenant rights
- 5 units or more: 90 days
- 3-4 units: 30 days
- 1-2 units: 15 days
Step 3: Closing/Tenant OR Third-Party Purchase
Tenant Purchase
- Escrow is capped at 5% of purchase price
- Financial backing could come from financial institution or community partner
- If public funds are used to purchase the property or building, the property will remain as affordable housing for 30 years (60% AMI, new tenants to building 80% AMI)
- Failure to close within the timeline eliminates tenant rights and opens process to a third party. If there is a 10% decrease in the asking price, the tenant rights are reinstated.
- Timeline to close
- 5 units or more: 120 days
- 3-4 units: 60 days
- 1-2 units: 60 days
Third Party Purchase
- If the tenant/s do not offer to purchase property within the “right of first refusal” period, a 3rd party offer may be negotiated and closed upon under normal circumstances agreed upon by all parties in the transaction.
- If there is a failure to close, tenant rights are reinstated IF ONLY there is a 10% decrease in the asking price.
- After the third-party closing, tenants have the right to stay in units for a period of 180 days or when their lease expires (whichever is longer)
Sign Up for Training
We will be offering a virtual training with the Department of Housing.
- Date: February 21, 2025
- Time: 11:00 AM – 12:15 PM.
Additional Resources
Timeline
Tenant Purchase
| 5 or More Units | 4 or Fewer | 1-2 Units | |
| Notice of intent to sell | 60 | 30 | 30 |
| Right of first refusal | 90 | 30 | 15 |
| Closing | 120 | 60 | 60 |
| Total Days | 270 | 120 | 105 |