Selling a Tenant-Occupied Rental in Maryland: A Landlord's Complete Guide to a Tenant’s First Right of Refusal
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If you're a Maryland landlord planning to sell a rental property with a tenant still living in it, the Renters' Rights and Stabilization Act (HB 693) requires you to offer your tenant the first chance to buy before you list publicly or accept an outside offer. Tenants generally get 30 days to respond, and skipping this step can mean a $1,000 fine and personal liability. Here's exactly how the process works for landlords in Prince George's County and across Maryland.
If you own a rowhome in Hyattsville, a duplex in Mount Rainier, or a single-family rental in Riverdale Park or College Park, and your tenant is still in the lease when you decide to sell, Maryland law now dictates exactly how you have to handle that sale. The Renters' Rights and Stabilization Act of 2024 (HB 693), effective October 1, 2024, created a statewide tenant right of first offer and right of first refusal for most small rental properties. This guide walks through every scenario a landlord needs to plan for before listing a tenant-occupied property.
What Is HB 693 and Why It Matters for Rental Sales
HB 693 gives residential tenants in properties with three or fewer dwelling units a right to be offered the property before it's sold to anyone else. The law preempts local right-of-first-refusal ordinances for these smaller properties, so it applies the same way whether your rental is in Prince George's County, Montgomery County, or Washington DC-adjacent Maryland. For landlords along the Route 1 corridor — where a large share of inventory is small multi-unit and single-family rentals — this is now a standard part of the sale timeline, not an exception.
The tenant's right applies when they've occupied the property for at least six months and are named on the written lease. If you're planning to sell within the next year, that timeline matters: notify too late and you could delay your listing by 30 days or more once you're ready to go to market.
Does HB 693 Apply to Your Property?
Several categories of transfers are exempt from the tenant right of first offer/refusal:
Properties with 4 or more housing units
Transfers to a family member (current or former spouse, child, sibling, parent, grandparent, grandchild, or in-law, including step-relations)
Transfers to a wholly owned business entity
Court-ordered transfers or settlements, including foreclosures and tax sales
Transfers by a fiduciary during estate, guardianship, or conservatorship administration, or through inheritance or trust
Transfers to a state or local government, public housing authority, or nonprofit
If none of these exemptions apply and your tenant meets the six-month occupancy and lease requirement, you're required to go through the notice process before listing or selling.
The Three Scenarios Every Landlord Needs to Understand
Scenario 1: The Exclusive Negotiation Period (Before You List)
This is the scenario every landlord will hit first. Before you list publicly, you must send your tenant a notice of solicitation with the material terms you'd consider. From there:
You send a copy of the notice to the Office of Landlord and Tenant Affairs
Your tenant has 30 days to respond with an offer
If their offer matches or beats your stated terms, you must accept it
If it falls short, you deliver a counteroffer, and your tenant then has 5 days to accept or reject it
No response within the deadlines extinguishes the tenant's rights, and you're free to list
Scenario 2: A Lower Third-Party Offer After Negotiations Fall Through
If you and your tenant went through Scenario 1 but didn't reach a deal, your tenant's rights aren't necessarily done. If you later receive a third-party offer at 10% or more below the lowest price you offered your tenant during that negotiation, you must notify the tenant and the Office of Landlord and Tenant Affairs of their right of first refusal. Your tenant then has 30 days to match the lower third-party price, and if they do, you must accept their offer.
Scenario 3: An Unsolicited Third-Party Offer
If a third-party offer shows up before you've ever gone through the notice process — say, an investor approaches you directly — the same right of first refusal kicks in. Notify your tenant and the Office of Landlord and Tenant Affairs, and give your tenant 30 days to match the offer. If they match it, you're required to accept.
Notice Requirements: What Must Be Included
Every notice under HB 693 has to meet specific standards:
Delivered by first-class mail with a certificate of mailing, or a delivery service with tracking
Use the state-developed notice form
Cannot include restrictions on financing methods or the right to a home inspection
Clearly state that it's a solicitation of an offer, not a binding contract
Specify the deadline and duration of the tenant's negotiation period
The tenant's right cannot be waived in advance, though a tenant is never required to actually purchase. And even after their formal rights expire, a tenant can still submit a non-binding offer once the home hits the open market — worth remembering if a good relationship with your tenant is part of your plan.
What Happens If You Skip the Process
Non-compliance carries a $1,000 fine per violation. The requirement doesn't attach to the property itself and a tenant can't file a lien against it, but a tenant can sue you personally for failing to honor their rights. For a landlord trying to close a sale on a normal timeline, an overlooked notice requirement is one of the easiest ways to end up in a dispute mid-contract — this is exactly the kind of detail worth reviewing with your agent before you accept any offer.
Other HB 693 Changes That Affect Landlords Selling a Rental
A few additional pieces of the law are worth knowing if you're actively managing a tenant while preparing to sell:
Security deposits are capped at one month's rent (up to two months if the tenant receives qualifying utility assistance and pays utilities directly to you)
Court filing fees for evictions and possession cases have increased significantly, and in most cases can only be recovered from the tenant's security deposit if you win in court and your lease allows it
Tenants now have 7 days (up from 4) to comply with a judgment of repossession, and there's a mandatory stay of eviction during extreme weather events
You're required to attach the state's Tenant's Bill of Rights to any lease, current or new
None of this should change your decision to sell, but it does affect your holding costs and timeline if you're weighing a sale against continuing to rent the property out.
Before You List: Landlord Action Checklist
Confirm whether your tenant has been in place 6+ months and is named on the lease — this determines whether HB 693 applies at all
Check whether your sale qualifies for an exemption
Build the 30-plus-5-day notice window into your selling timeline before you set a target listing date
Use the state notice form
Keep documentation of mailing/delivery
Talk to your agent about pricing strategy before your notice goes out
If Your Tenant Wants to Buy: What Happens Next
Not every tenant scenario ends in a sale to a third party. If your tenant is seriously interested, this can be one of the smoothest transactions available to you — no showings, no vacancy gap, and a buyer who already knows the property's condition. If your tenant declines or the negotiation period expires without a deal, you're free to move forward with a traditional listing, and depending on your goals, a Compass Coming Soon or Private Exclusive listing can be a useful way to quietly test pricing with select buyers before going fully public, especially if you want to keep the sale low-key while your tenant is still in place.
Frequently Asked Questions
Does HB 693 apply to a single-family rental home in Hyattsville or Riverdale Park?
Yes, as long as the property has three or fewer dwelling units and doesn't fall under one of the exemptions. Most single-family rentals and small duplexes/triplexes along the Route 1 corridor are covered.
How long does my tenant have to make an offer before I can list?
Your tenant has 30 days to respond to your notice with an offer. If they submit one that doesn't meet your terms, you have 5 days to counter, and they then have 5 days to respond to that counteroffer.
What if my tenant doesn't respond to the notice at all?
If your tenant doesn't respond within the 30-day window, or doesn't respond to a counteroffer within 5 days, their rights under HB 693 are extinguished and you're free to list the property.
Can I accept a higher offer from someone else while I'm waiting on my tenant?
Not during the exclusive negotiation period. Your tenant gets first crack at purchasing before you can move forward with a third-party buyer. Once that window closes without a deal, you can list and negotiate with other buyers — though the right of first refusal can still apply if a later offer comes in significantly lower than what you offered your tenant.
Does HB 693 apply if I'm selling to a family member or an LLC I own?
No. Transfers to family members and to a business entity wholly owned by the landlord are both specifically exempt from the tenant right of first offer and refusal.
What happens if I sell without giving my tenant proper notice?
You're subject to a fine of up to $1,000, and your tenant can sue you personally for the violation. The sale itself isn't voided and no lien attaches to the property, but it's a legal and financial risk that's entirely avoidable with the right paperwork upfront.
Thinking About Selling a Tenant-Occupied Rental?
HB 693 adds real timing and paperwork requirements to any rental sale in Maryland, and getting a step wrong can mean fines or a lawsuit from your tenant. I help landlords across Hyattsville, Riverdale Park, Mount Rainier, College Park, Cheverly, Edmonston, Bladensburg, and the wider DC metro area navigate tenant-occupied sales the right way, from the first notice to closing.
Ryan Hehman | Compass Real Estate, Home Keys Team
Ryan.Hehman@Compass.com | ryanhehmanrealestate.com
Call or text Ryan at443-990-1230 for a free, no-obligation consultation on selling your rental — tenant in place or not.