Key Takeaways
- DC is a race-notice jurisdiction for recording—first to record without notice of prior claims wins
- DC uses deed of trust (not mortgage) as the primary security instrument for real estate loans
- Foreclosure in DC is typically non-judicial through power of sale in the deed of trust
- DC has specific landlord-tenant laws including rent control for certain properties
- Transfer and recordation taxes apply to real estate conveyances in DC
DC Property Law Fundamentals
The District of Columbia has specific property laws that differ from many states. Understanding these unique features is essential for the DC exam.
Recording System
DC follows the race-notice recording system:
How Race-Notice Works
| Requirement | Description |
|---|---|
| Record first | Must record deed before subsequent purchaser |
| Without notice | Subsequent purchaser must have no actual or constructive notice |
| Who wins | First to record without notice prevails |
Key Point: Under race-notice, simply recording first isn't enough—the subsequent purchaser must also be without notice of the prior claim.
Importance of Recording
| Benefit | Description |
|---|---|
| Constructive notice | Recording provides notice to the world |
| Priority | Earlier recording = priority over later |
| Protection | Protects against claims of subsequent purchasers |
Security Instruments
Deed of Trust
DC uses the deed of trust (not mortgage) as the primary security instrument:
| Party | Role |
|---|---|
| Trustor | Borrower (property owner) |
| Beneficiary | Lender |
| Trustee | Neutral third party holding title |
How It Works
- Borrower (trustor) conveys legal title to trustee
- Trustee holds title for benefit of lender (beneficiary)
- Upon full repayment, trustee reconveys title to borrower
- Upon default, trustee can sell property (power of sale)
Foreclosure in DC
Non-Judicial Foreclosure
DC primarily uses non-judicial foreclosure through power of sale:
| Step | Description |
|---|---|
| Default | Borrower fails to make payments |
| Notice | Required notices to borrower |
| Advertising | Property advertised for sale |
| Auction | Public sale conducted by trustee |
| Deed | Trustee's deed to highest bidder |
Advantage: Non-judicial foreclosure is faster and less expensive than judicial foreclosure.
Judicial Foreclosure
Judicial foreclosure is available but less common:
| Feature | Description |
|---|---|
| Court supervised | Must file lawsuit |
| Deficiency judgment | Available if sale doesn't cover debt |
| Longer timeline | More time-consuming process |
Transfer and Recordation Taxes
DC imposes taxes on real estate transfers:
Transfer Tax
| Rate | Applies To |
|---|---|
| 1.1% | Residential (up to 4 units) under $400,000 |
| 1.45% | Residential $400,000 and above |
| 1.45% | Commercial/non-residential |
Note: First-time DC homebuyer exemptions may apply for certain qualifying purchases.
Recordation Tax
| Rate | Details |
|---|---|
| 1.1% | On value of property (residential under $400,000) |
| 1.45% | On value (residential $400,000+, commercial) |
Who Pays
| Tax | Typically Paid By |
|---|---|
| Transfer tax | Seller |
| Recordation tax | Buyer |
Exam Tip: Both taxes are based on consideration (purchase price) or fair market value, whichever is higher.
DC Landlord-Tenant Law
Rent Control
DC has rent control for certain residential properties:
| Applies To | Requirements |
|---|---|
| Covered units | Built before 1976 |
| Exemptions | Small landlords (4 or fewer units), new construction |
| Rent increases | Limited and regulated |
Tenant Rights
| Right | Description |
|---|---|
| Habitability | Landlord must maintain habitable conditions |
| Security deposit | Limited amount, interest required |
| Eviction process | Court process required |
| Retaliation protection | Cannot retaliate against tenant complaints |
Landlord Obligations
| Obligation | Details |
|---|---|
| Maintain property | Safe, sanitary, habitable |
| Make repairs | Timely response to repair requests |
| Provide notice | Before entry, before lease changes |
| Return deposits | Within 45 days of move-out |
Property Taxes
DC property tax information:
| Feature | Details |
|---|---|
| Assessment | 100% of estimated market value |
| Tax rate | Set annually by DC Council |
| Homestead deduction | Available for owner-occupied homes |
| Senior exemption | Available for qualifying seniors |
What type of recording system does DC use?
What is the primary security instrument used for real estate loans in DC?
What type of foreclosure is most common in DC?