The District of Columbia Court of Appeals recently determined, in Williams v. Kennedy, that a conveyance of ownership interests in a rental property does not constitute a sale under D.C.’s Tenant Opportunity to Purchase Act (TOPA) if the transfer involves only existing owners and “no new third party.”

The decision is significant because it is the first TOPA case of its kind to reach the Court of Appeals. The precedential ruling means TOPA’s provision granting tenants the right of first refusal to purchase the property is not triggered when multiple individual owners reallocate their interests but do not bring in a new owner.

In Williams, two married couples, the Kennedys and the Martins, and one individual, Mr. Robinson, jointly purchased a four-unit rental property. Mr. Martin died, and his wife conveyed their interest to the Kennedys, who later transferred part of their interest to Mr. Robinson. When the Kennedys proposed in 2016 to convey their remaining ownership interest to Mr. Robinson (to make him the sole owner), tenants received notice, but not an opportunity to purchase. A tenant, Ms. Williams, filed suit contending the TOPA provision should apply. 

The court analyzed TOPA and determined the key substantive rights granted to tenants under the law are explicitly tied to involvement of a third party in the transaction. Based on this analysis, the court found the transfers did not constitute sales for the purpose of TOPA, whether or not the controlling interest shifted among existing owners. Ms. Williams argued the oft-cited stipulation of TOPA that the law should be construed to strengthen the bargaining position of the tenants. The court rejected this position, however, and instead found that the intent to benefit tenants must yield where TOPA unambiguously requires a different result.