Maryland Tenant Right of First Refusal: What Landlords Must Know Before Selling

If you own a rental property in Maryland and you're planning to sell, your tenant may have a legal right to buy it before you can sell to anyone else. Maryland's tenant right of first refusal (ROFR) laws are among the more tenant-protective in the region, and getting this wrong doesn't just create a delay — it can trigger penalties and title problems.

Here's how it works and what you need to do.

What Right of First Refusal Means

A right of first refusal gives an existing tenant an opportunity to make a good-faith offer before you can proceed with a third-party buyer. It doesn't mean you must sell to your tenant — it means you must follow the notice and response process before accepting or proceeding with a third-party offer.

Maryland's statewide RRSA 2024 protections now establish a baseline for covered 1–3-unit properties; separate local or condominium-conversion requirements can still apply.

Where Maryland Tenant ROFR Applies

State-level (RRSA 2024): Maryland's statewide ROFR applies to residential rental properties containing 1, 2, or 3 dwelling units. Properties with 4 or more units are exempt. Transfers within specified family relationships, transfers to an entity wholly owned by the landlord, and court-ordered foreclosure sales are also exempt.

Local and condominium-conversion rules: Separate local or condominium-conversion requirements may apply in addition to the statewide RRSA process. Confirm the rules for the property before listing it.

How the Process Works

When ROFR applies, the general process is:

1. Deliver written notice before listing or accepting bids, following the applicable RRSA process
2. Give the tenant 30 days to submit a good-faith offer
3. Do not accept a third-party offer during that initial 30-day window
4. If the landlord counters, give the tenant 5 days to respond
5. If a later third-party offer is 10% lower, give the tenant the opportunity to match it under the applicable process

Notice delivery matters: Notice must be in writing, state the relevant terms, and be delivered in a way that creates a reliable record. Keep proof of delivery and the tenant's response or non-response.

The Condo Conversion Context

The statewide right of first refusal is not limited to condo conversions. If you own a Baltimore City apartment building and plan to convert it to condos, separate conversion requirements may apply:

• Each tenant receives written notice of the conversion plan and the right to purchase their unit
• Relocation assistance may be required for tenants who don't purchase
• Lead paint disclosure and compliance must accompany any sale to tenants

The condo conversion path is also where the exterior lead paint trap appears. If the building's exterior or common areas have lead paint that doesn't meet the required standard, individual unit rental licenses are blocked — and by extension, the condo conversion process becomes more complicated because you can't show compliance for the common areas.

Practical Implications for Investment Property Exits

If you're planning to sell to another investor: A tenant with ROFR rights can disrupt a planned 1031 exchange timeline if they exercise the right late in the process. The 1031 exchange has strict 45-day identification and 180-day closing deadlines. The 30-day initial response window, followed by possible counteroffer and matching steps, creates timing pressure.

If you're selling to an owner-occupant: The tenant's ROFR is even more significant — you may have a purchase contract signed with a buyer who wants owner-occupancy, and your tenant exercises ROFR at the same price. The original buyer loses the deal. This is why experienced Maryland investors building sale timelines account for ROFR notice periods explicitly.

If you're doing a value-add flip: If the property is vacant when you sell, ROFR generally doesn't apply (there's no sitting tenant to exercise the right). This is one reason experienced Baltimore flippers complete rehab, market the property, and close with the unit vacant rather than having a tenant in place.

What Doesn't Trigger ROFR

• Vacant properties: No occupying tenant, no right to exercise
• Sales to specified family members: Exempt under the RRSA exception
• Court-ordered foreclosure sales: Exempt under the RRSA exception
• Transfers to an entity wholly owned by the landlord: Exempt under the RRSA exception
• Properties with four or more dwelling units: Outside the statewide RRSA ROFR

Documentation to Maintain

If you're a Maryland rental property owner with a ROFR obligation in your jurisdiction:

• Keep a clear record of the notice date and delivery method
• Document tenant responses or non-responses
• If the tenant declines in writing, keep that declination in your files — it protects you if the tenant later claims they didn't receive proper notice
• If the tenant's exercise period lapses without a response, document the timeline before proceeding with your third-party buyer

When in doubt: Maryland is an attorney state — a licensed Maryland attorney must supervise settlement in any case. If you're uncertain whether ROFR applies to your specific property type and county, a 30-minute consultation with a Maryland real estate attorney before you list is money well spent. The cost of getting it wrong — a voided sale contract, a tenant lawsuit, or a delayed closing during a 1031 exchange window — is far higher.

Maryland's tenant protections are one dimension of a landlord legal environment that rewards advance planning. The Maryland Investment Property Guide covers ROFR alongside eviction procedures, security deposit law, rental licensing, and the full stack of Maryland compliance requirements for rental property owners.

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