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Court Rules In Favor Of Tenants Association In Case Challenging 95/5 Transactions, Concluding That Transactions May Have Been “Shams”

Tycko & Zavareei LLP represents the tenants association at 1823 Newton Street, N.W., in the Mount Pleasant neighborhood in the District of Columbia. The building was sold twice – once in 2002 and again in 2004 – without any notice to the tenants. The tenants brought a lawsuit, alleging that their rights under the D.C. Rental Housing Conversion and Sale Act were violated. In this decision, Judge Robert E. Morin of the D.C. Superior Court ruled that the two transactions – both of which were structured as so-called “95/5” sales – may have been “shams” that violated the Act, and denied the defendants’ summary judgment motions, thereby giving the tenants the right to proceed to a trial on their claims. To read that ruling, click here.