Opinion ID: 1904669
Heading Depth: 2
Heading Rank: 3

Heading: The Transfer May Have Been a Sale Under Subsection (a)

Text: The Tenants' Association argues in the alternative that, when viewed in context, the transfer of the Eldon from IMC to IMDel was a sale under § 42-3404.02(a)  that there was a passing of general and absolute title in exchange for consideration. The Association points out that the Stock Sale Agreement implicitly required IMC to deliver the deed transferring the Grantor's entire interest in the real property to IMDel, and further obligated L Street Building, LLC (controlled by Thai) to pay $3,875,000 to IMC. It emphasizes that Alem and Thai signed the Stock Purchase Agreement before IMC delivered the deed to IMDel, and that IMC's right to receive the $3,875,000 payment from Thai's company [L Street Building, LLC] was contingent upon this transfer of fee simple title.  [5] Appellant also asserts that Alem had appointed Thai the sole officer and sole director of IMDel before title to the Eldon was transferred to IMDel, thereby putting IMDel in Thai's control at the time the deed was received. Appellant argues that these circumstances, taken together with Alem's admission that the reason he structured the deal in this way was to avoid the requirements of the Sale Act, create genuine issues of material fact as to whether the transaction carried out in compliance with the Stock Sale Agreement of June 25, 2003, met the definition of the term sale established in West End Tenants and Twin Towers. The argument of the Tenants' Association will have particular force if, as it claims, the deed transferring the property to IMDel was delivered after the Stock Sale Agreement was signed and after IMDel was already in the exclusive control of Thai (who was the sole officer, sole director, and 99% owner of that company). [6] This sequence of events is contested by IMC, which claims that the property was transferred to IMDel on June 21, before the Stock Sale Agreement was signed. The record contains two versions of the deed, identical except for the date. The date of the authentic deed and the date of its delivery are contested material facts which may prove determinative in deciding whether the transfer of the Eldon to IMDel was a mere reorganization of corporate assets, or a thinly disguised sale to a third party. There is no doubt that general and absolute title was transferred from IMC to IMDel, and there is at least a respectable argument that this occurred in return for consideration of value which flowed from L Street Building to IMC. Therefore, this transaction may well have been a sale under subsection (a).