Maryland’s Tenant First-Refusal Law: What You Should Know

In 2024, Maryland enacted a major overhaul of tenants’ rights under the Renters’ Rights & Stabilization Act (RRSA), which went into effect on October 1, 2024. One of the most significant provisions is the creation of a statewide right of first refusal, giving tenants a formal opportunity to buy the property they’re renting before the landlord sells to someone else.

Here’s how it works, who it applies to, and what both tenants and landlords need to understand.

What Is the Right of First Refusal?

• The law gives tenants in certain residential rental properties the chance to match a third-party offer on the property — in other words, to “step in” as a buyer before the landlord sells to an outside buyer.
• This right also comes with an exclusive negotiation period, during which tenants can negotiate with the owner before the property is marketed publicly.
• Crucially, the landlord cannot accept a third-party offer under specific conditions (see below) until they give tenants a formal opportunity to exercise this right. 

Which Properties and Tenants Are Covered

• The right applies to residential rental properties with three or fewer individual dwelling units.
• Exemptions: Certain types of transfers are not subject to this requirement. For instance, transfers to close family members, transfers arising through estate proceedings (like probate), foreclosures, or sales to a business entity owned by the landlord do not trigger the first refusal rights.
• Also, the law preempts any local ordinance that would impose a different or additional first-refusal right for properties of this size. 

The Process: How It Plays Out

1. Notice of Intent to Sell & Negotiation Window
   • When a landlord plans to sell, they must notify their tenant(s) of the exclusive negotiation period, giving the tenant a 30-day window to submit an offer.
   • The notice must be in a specific form (regulated by the state) and delivered via first-class mail or a mail service that provides tracking.
   • The terms in this initial offer or counteroffer from the landlord must be commercially reasonable, made in good faith, and follow standard real estate practices. Critically, landlords can’t impose unreasonable restrictions like limiting financing methods or refusing inspection rights. )
   • If there’s a counteroffer, tenants have 5 days to respond. If they don’t, the counteroffer is considered rejected.
   • If multiple tenants (or a group of tenants) make offers, the owner can choose whichever is most favorable — they are not forced to take a particular tenant’s bid.
2. Right of First Refusal (Matching Offers)
   • After the negotiation period, if the landlord receives a third-party offer (i.e., someone outside the tenant) that meets one of two conditions, the landlord must give the tenant the right to match it:
     1. The third-party offer is at least 10% lower than the lowest price previously offered to the tenant during negotiation.
     2. The offer was made without first publicly listing the property (i.e., unsolicited).
   • When that happens, the landlord must send a formal written notice to the tenant, including:
     1. The third-party’s price (must match what was offered).
     2. A clear statement that this is a solicitation for the tenant to make a purchase offer, not a binding contract.
     3. A deadline for the tenant to respond.
   • The tenant then has 30 days from when they receive that notice to deliver a written offer to purchase.
   • If the tenant’s offer matches the third-party price, the landlord must accept the tenant’s offer and notify the Office of Tenant and Landlord Affairs (OTLA).
   • If more than one tenant (or tenant group) makes a matching offer, the owner can pick whichever is most favorable without being liable to the others.
3. What If the Tenant Declines or Fails to Act
   • If the tenant does nothing within that 30-day window (i.e., doesn’t submit an offer), their right of first refusal is waived.
   • At that point, the owner is free to go ahead and accept the third-party offer.
   • There’s also a provision: if the landlord and tenant do agree on a contract, but it later falls apart before closing, the tenant’s right is waived. The landlord then must notify OTLA.

Penalties & Enforcement

• If a landlord violates these rules — for example, sells without giving the tenant the required notice or opportunity — they can be fined up to $1,000 per violation.
• Tenants aren’t left without recourse: they can go to court to restrain or enjoin a sale (essentially ask a judge to stop the sale) if their rights under this law are ignored.
• Importantly, a tenant’s rights under this law cannot be waived or sold (assigned) — any attempt to do so is void.
• After a sale closes, if the seller didn’t comply, liability remains with the former owner, not the property itself. 

Why This Law Matters — For Tenants & Landlords

For Tenants:

• This is a real chance to become a homeowner: if you're renting a small residential property (1–3 units), you now have a legal path to buy it when your landlord decides to sell.
• It provides transparency: you must be notified formally, and the terms (including price) have to be clearly laid out.
• It gives time to plan: the 30-day window to negotiate and then match an offer gives tenants breathing room to explore financing or work with a real estate agent.

For Landlords:

• You must comply with new procedural steps: failure to do so isn’t just a misstep — it could expose you to fines or legal action.
• Sales may become more complex: the process of negotiating with tenants, providing required notices, and waiting through the matching window may slow down third-party transactions.
• But: landlords retain some flexibility. For example, they can accept the best tenant offer (if there are multiple) without legal risk to other tenants. 

Things to Be Careful About / Watch For

1. Notice Formalities: Landlords need to use the correct form (as regulated) and deliver it properly (by first-class mail with tracking or equivalent).
2. Good-Faith Negotiation: The law requires realistic, good-faith terms — landlords can’t try to hide behind “unreasonable financing restrictions” or inspection hurdles.
3. Recordkeeping & Reporting: Because landlords must notify OTLA (the Office of Tenant and Landlord Affairs) in certain circumstances (e.g., when a matching offer is made, or when a contract fails), keeping good records is more important than ever.
4. Legal Risks: Even after closing, prior noncompliance may create liability for the former owner, not the new owner — but litigation or injunctions could arise if tenants feel their rights were bypassed.
5. Limitations: The law does not apply to every property or every sale — landlords should carefully check whether a given property is covered, and whether a particular sale is exempt (e.g., transfer to a relative).

Bottom Line

Maryland’s right-of-first-refusal law is a landmark tenant protection, especially for residents of smaller rental properties (1–3 units). It empowers tenants with a legal window to make an offer and match a third-party buyer, rather than being sidelined in a landlord’s sale process. But it also imposes new obligations on landlords — from strict notice requirements to potential fines if they don’t comply.

For tenants, this can be a real opportunity to own their home. For landlords, it means more procedural rigor and potentially more complexity when selling. Anyone in Maryland — whether a renter or a property owner — should familiarize themselves with these provisions, because they fundamentally change how certain rental property sales work.

If you are a broker, Maryland’s Exclusive Buyer-Tenant Residential Brokerage Agreement has been updated to enhance transparency and clarify broker compensation: under the 2024 law (Senate Bill 542), buyer/tenant brokerages must now state in writing how they will be paid—either as a percentage of the purchase price, a percentage plus a fee, or a flat fee.