News
Court Ruling in "95/5" Case Affirms the Need for New Law
FOR IMMEDIATE RELEASE
Contact: Alan Heymann
(202) 724-8031
March 16, 2006
Washington, DC - The District of Columbia Court of Appeals ruled today that individual tenants in buildings sold in so-called "95/5" transactions cannot sue to challenge those transactions. The Court also ruled that 95/5 sales did not trigger the tenants right of first refusal.
The Tenant Opportunity to Purchase Act (TOPA) allows tenants the opportunity to buy their buildings before they are sold to a third party. In these so-called "95/5" transactions, the landlord would transfer most of the ownership interest (usually 95% or more) to a new owner and hold back the rest (usually 5% or less) for a year. This was done to avoid triggering the tenants' TOPA rights. Time after time, the District government determined that these transactions were not sales under the law. Today's court ruling reinforces these determinations.
“The first chance we got, we changed the law,” said Councilmember Jim Graham (D-Ward One), chair of the Committee on Consumer and Regulatory Affairs. “Under the old law, tenants are very sadly out of luck. But we stopped new 95/5 transactions cold. The court has acknowledged this in its ruling today.”
Councilmember Graham introduced a bill on January 18, 2005 to clarify the definition of “sale” and block future 95/5 transactions. This bill became law July 23, 2005.
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