Maryland’s Tenant Right of First Refusal: What Baltimore Investors Must Know Before Selling
Maryland’s Tenant Right of First Refusal:
What Baltimore Investors Must Know Before Selling
Since October 1, 2024, Maryland law requires landlords to formally notify tenants before listing or selling 1–3 unit properties. Most Baltimore investors don’t know the full procedure — or the $1,000-per-violation penalty for getting it wrong.
If you own a 1–3 unit rental property in Baltimore City or Baltimore County and you’re thinking about selling — now, in a year, or at any point down the road — there is a procedural step in Maryland law you must follow before you list, before you accept an offer, and sometimes before you even reach a buyer.
It’s called the Maryland tenant right of first refusal, and it became statewide law on October 1, 2024 under the Renters’ Rights and Stabilization Act of 2024 (HB 693). Skipping this step or executing it incorrectly exposes you to penalties of up to $1,000 per violation — and could complicate or delay your closing.
The good news: the process is straightforward if you understand it. The risk is that most Baltimore investors handling their own exits — or working with a property manager who hasn’t updated their playbook — don’t realize this requirement exists until they’re already mid-transaction.
Key fact: Maryland is the first state in the nation to establish a statewide tenant opportunity-to-purchase law. The law applies to residential properties with three or fewer units — the most common investment property size in Baltimore City and County. If that’s your portfolio, this applies to you.
Who Does This Law Cover?
The tenant right of first refusal applies to any owner of a residential property with 1 to 3 dwelling units who intends to sell. Before you list the property publicly or enter into a contract of sale with any third-party buyer, you are required to notify eligible tenants.
An eligible tenant is one who meets both of these criteria: they are named in a written lease for the property, and they have occupied the property for at least six months. Short-term tenants or oral arrangements do not trigger the obligation — but the vast majority of Baltimore long-term rental tenants will qualify.
The law preempts Baltimore City’s prior Tenant Opportunity to Purchase Act for 1–3 unit properties, replacing it with the statewide framework. So if you were operating under the older Baltimore City rules, the state law now governs your process.
This is the kind of compliance change that slips through the cracks for self-managing landlords and portfolio owners who aren’t actively tracking Maryland legislative updates. At Sungate, we track regulatory changes for all 400+ properties we manage — including updates that affect owner exit strategies, not just day-to-day operations. If you’re planning a sale and want to make sure you’re following the correct procedure, this is the type of conversation worth having with a property manager who actually knows Maryland law.
The Step-by-Step Process Baltimore Landlords Must Follow
The law establishes a specific sequence of events. Skipping any step — or executing them out of order — is where legal exposure occurs. Here’s how the process works from start to finish:
Before listing or accepting any third-party offer, you must provide written notice to the eligible tenant of their right to purchase the property. The notice should include the proposed sale price or sale terms.
After receiving your notice, the tenant has 30 days to submit a written offer to purchase. During this period, you may only negotiate with the tenant — NOT with outside buyers.
If the tenant submits a counteroffer, you have 5 days to respond. Negotiations must conclude within the framework of the law. This ping-pong period operates within the 30-day window.
After your response to a counteroffer, the tenant has 5 more days to accept or decline. If they decline — or the 30-day window closes — you may proceed freely to the open market.
If negotiations don’t result in a purchase agreement with the tenant, you are then free to list and sell to a third-party buyer at the terms discussed. However, there is one important exception:
If a third-party offer comes in at a price that is at least 10% lower than the price you previously offered or negotiated with the tenant, you are required to re-notify the tenant of the lower price and give them another opportunity to match it. This ensures tenants aren’t cut out by a late price reduction on the open market.
Penalty for non-compliance: An owner who violates a tenant’s right of exclusive negotiation or first refusal can be fined up to $1,000 per violation. In a disputed sale, this is the least of your problems — a violation could also give a tenant grounds to challenge the transaction itself, creating delays, legal costs, and potential deal fallout.
What This Means for Your Baltimore Exit Strategy
For most Baltimore investors, the practical implication of this law is simple: add 30 to 45 days to your exit timeline and initiate the tenant notification process before you engage a listing agent or show the property to prospective buyers.
The bigger planning consideration is how you structure tenant communications. Many landlords have ongoing, informal relationships with long-term tenants — and a formal written notice of intent to sell can be a sensitive conversation. How that conversation is handled can affect whether the tenant remains cooperative during the listing process, whether they maintain the property well during showings, and whether they choose to exercise their right to purchase (which could actually simplify your closing).
Baltimore’s 2026 market context also matters here. With home values up roughly 4% year-over-year and a sale-to-list ratio near 100%, some long-term tenants — particularly those with solid household finances — may genuinely consider purchasing the property they’ve occupied for years. That isn’t a complication; it’s a potential clean exit that avoids listing entirely.
For Sungate-managed properties, we already maintain the documentation required to execute this process correctly: written leases with named tenants, move-in dates on file, and compliance-ready communication templates. When an owner decides to exit, we can initiate the required tenant notification process immediately — in the right format, with the right timing — so the legal clock starts running without delay and the owner’s exit timeline stays on track.
Common Questions Baltimore Investors Are Getting Wrong
Does the law apply if I sell to a family member?
Yes. The right of first refusal applies to any sale to a third party — including family members who are not co-owners of the property. The only transactions that may fall outside the requirement are transfers between co-owners or certain estate-related transfers. Consult a Maryland real estate attorney if your situation involves a non-traditional sale structure.
What if I have multiple units in a building?
Each eligible tenant in a multi-unit 1–3 unit property must receive notice. If you own a duplex with two occupied units, both tenants receive notification. The law applies at the property level, not the unit level — so you cannot notify one tenant and skip another.
Do I have to sell to the tenant if they make an offer?
No. The law gives tenants the right to negotiate — not the right to force a sale. If you receive an offer from your tenant that doesn’t meet your terms, you are not required to accept it. After the 30-day period concludes without a deal, you proceed to the open market on your own terms.
What if my tenant hasn’t been there 6 months?
Tenants who have occupied the property for fewer than six months do not trigger the requirement — nor do tenants who are not named on a written lease. If your property is vacant, between tenancies, or occupied by a short-term tenant, you can proceed with your sale without initiating the first-refusal process. That said, verify your specific situation with legal counsel before assuming an exemption applies.
Bottom line for Baltimore investors: This law does not prevent you from selling. It does not give your tenant the right to block or delay a sale indefinitely. It adds a 30-day structured notification window to your exit process — one that most well-prepared landlords can navigate without complications if they plan ahead and follow the correct sequence.
How to Protect Yourself Before Your Next Sale
The landlords most exposed to this law are those who don’t know it exists until they’re already in contract with a buyer. At that point, a tenant who learns they were entitled to a right of first refusal — and didn’t receive it — has standing to raise a legal challenge. That challenge doesn’t have to succeed to cost you time and money.
The simplest protection is preparation. If you’re managing 1-3 unit properties in Baltimore City or Baltimore County and you have any plans to sell within the next year or two, talk to your property manager now about whether your tenant documentation is sale-ready: written lease on file, named tenants documented, occupancy dates confirmed. These aren’t new requirements — they’re the same records every well-run PM operation should already maintain.
If you’re self-managing, now is the time to review your lease files and understand where each tenant stands. A six-month occupancy threshold passes faster than most landlords realize, and the law doesn’t make exceptions for landlords who simply weren’t aware of it.
Planning an Exit? Let’s Make Sure You’re Set Up Correctly.
Sungate has managed 400+ properties across Baltimore City and Baltimore County since 2018 — through every regulatory change Maryland has thrown at landlords. When you call, you speak directly with Aldo or Ravi, the owners.
📞 Call (443) 219-8410Or email connect@sungateproperty.com · sungateproperty.com · Your Property, Our Expertise.