Chicago establishes Tenant Opportunity to Purchase program on northwest side

The Chicago City Council recently established a Tenant Opportunity to Purchase program for rental buildings on the city’s northwest side. Billed by the city as an anti-gentrification measure, the program gives tenants a right of first refusal to purchase their building when the landlord plans to sell it.

Details of the program

The program applies to buildings located in the area approximately bounded by Addison Street on the north, the North Branch of the Chicago River and Western Avenue on the east, Division Street and Hirsch Street on the south, and Kostner Avenue and Pulaski Road on the west. The program imposes several notification requirements and time periods that will impact an owner’s ability to list its property for sale and negotiate with potential purchasers, giving tenants as long as six months to conduct due diligence and secure financing to close on a purchase.

Program amendments

Further amendments to the program were introduced at yesterday’s City Council meeting. The amendments are scheduled to be considered by the Zoning Committee at its meeting on December 9, 2024. If approved by the Zoning Committee, the amendments could be approved by the full City Council as soon as December 13, 2024. The amendments would clarify that:

• Tenants exercising the right of first refusal must also provide proof that they will be able to obtain financing, such as a letter of intent
  
  
• Tenants are given another opportunity to exercise the right if the price drops by ten percent or more, and
  
  
• Once the property is listed for sale, an owner may ask tenants to waive the right of first refusal.

The amendments would also provide for the program to automatically expire on December 31, 2029. If approved, the amendments would also establish an effective date for the program of March 1, 2025. The original ordinance did not establish a transition period, and the Department of Housing has suspended enforcement of the right of first refusal provisions until March 1, 2025.

Contact

For more information about these changes, please contact any members of DLA Piper’s Chicago Land Use team:

Richard F. Klawiter
Paul W. Shadle
Mariah F. DiGrino
Katie Jahnke Dale