Opinion ID: 1957556
Heading Depth: 1
Heading Rank: 3

Heading: The Statutory Framework and its Background

Text: In 1980, the Council of the District of Columbia enacted the Rental Housing Conversion and Sale Act of 1980 (the Act), D.C. Law 3-86, September 10, 1980, 27 DCR 2975 (1980), Title IV of the Act is known as the Tenant Opportunity to Purchase Act of 1980 (TOPA). Section 401 of the Act, 27 DCR 2991 (1980). The Act generally is designed to address the continuing housing crisis in the District of Columbia and the severe shortage of rental housing available to the citizens of the District of Columbia. Section 101(a) and (b) of the Act, 27 DCR 2975 (1980). TOPA requires the owner of a housing accommodation to give the tenant an opportunity to purchase the accommodation ... prior to its sale. Section 402 of the Act. [4] In 1989, TOPA was amended by adding a new subsection (b) (the Tenant Opportunity to Purchase Clarification Amendment Act of 1989) which sought to define the words sale and sell. Subsection (b) specified: For the purposes of this subchapter, the terms sell or sale includes the execution of any agreement that assigns, leases, or encumbers property, pursuant to which the owner: (1) Relinquishes possession of the property; (2) Extends an option to purchase the property for a sum certain at the end of the assignment, lease, or encumbrance and provides that a portion of the payments received pursuant to the agreement is to be applied to the purchase price; (3) Assigns all rights and interests in all contracts that relate to the property; (4) Requires that the costs of all taxes and other government charges assessed and levied against the property during the term of the agreement are to be paid by the lessee either directly or through a surcharge paid to the owner; (5) Extends an option to purchase an ownership interest in the property, which may be exercised at any time after execution of the agreement but shall be exercised before the expiration of the agreement; and (6) Requires the assignee or lessee to maintain personal injury and property damage liability insurance on the property that names the owner as the additional insured. 36 DCR 5790-91 (1989); now codified at D.C.Code § 42-3404.02(b). TOPA was amended again in 1994/1995. At the time of the amendment, West End Tenants Ass'n, supra, was pending in this court. This case concerned a lease agreement (known as the Master Lease), id. 640 A.2d at 721, between the owners of the West End Apartments (located at 2124 I Street, N.W.) and GWU. The term of the lease was ten years, and GWU was to be paid $25,000 per month or $300,000 per year under the lease. Id. at 723. GWU was given the exclusive right to purchase the West End Apartments for $6 million, minus a $100,000 credit per rental year, for a net amount of $5 million. Id. Although GWU's exclusive right to purchase was subject to the tenants' right to purchase, id., the West End Tenants' Association sought a declaratory judgment that the owners and GWU had violated the Act because the Master Lease constituted a sale within the meaning of § 42-3404.02(b) of TOPA, as amended in 1989. Id. at 722, 723. During the appeal, the Council of the District of Columbia considered, and after the appeal had been decided, enacted the permanent version of the Rental Housing Conversion and Sale Act of 1980 Reenactment and Amendment Act of 1995. 42 DCR 3239 (1995), [5] which added subsection (c) to Section 402 of TOPA. Subsection (c) provided in pertinent part: For purposes of this title, the term sell or sale includes the transfer of 100% of all partnership interests in a partnership which owns the accommodation as its sole asset to 1 transferee or of 100% of all stock of a corporation which owns the accommodation as its sole asset to 1 transferee in 1 or more transactions occurring during a period of 1 year from the date of the first such transfer, and a master lease which meets some, but not all of the factors described in subsection (b) of this section or which is similar in effect .... Section 402(c), currently codified at D.C.Code § 42-3404.02(c) (2001) (emphasis added). The Council's section by section analysis of the subsection (c) amendment states in relevant part: This subsection amends section 402 ... to include, within the term sale or sell, the transfer of one hundred percent of all partnership interests [or] fundamental control of ownership of the rental accommodation. Included specifically would be master leases and sale of a one hundred percent interest in a corporation or partnership. There was extensive discussion at the hearing on the Tenant Opportunity to Purchase Clarification Amendment Act of 1989 (D.C. Law 8-49) concerning transactions which are encompassed within the term sale. It was generally agreed that all changes in fundamental control of ownership were intended to be covered, but the legislative history was not clear on this point. There was a particular lack of clarity caused by the introduction of a provision in ... The Rental Housing Conversion and Sale Act of 1980 Amendments and Extension Act of 1983. That provision would have explicitly covered sale of majority interest in corporations and partnerships, but was removed in response to the Mayor's position that such sales were not occurring and that they could not be monitored because they did not have to be recorded. Today, it is clear that such sales do occur and now they do have to be recorded.... COUNCIL OF THE DISTRICT OF COLUMBIA, COMMITTEE ON CONSUMER AND REGULATORY AFFAIRS, COMMITTEE REPORT ON BILL 11-53, THE RENTAL HOUSING CONVERSION AND SALE ACT OF 1980 REENACTMENT AND AMENDMENT ACT OF 1995, March 14, 1995 (the Committee Report), p. 10.