Rescind and Replace

Posted by Herb James

There are several reasons why the subsidy agreement (i.e., Lease and Management Agreement) between the SGCC and the HOA needs to be rescinded and replaced.

One reason is the de-valuation of our property caused by:  (1) Liens and (2) Uncertainty

1.)  Liens

This agreement has encumbered all of our properties with over a $6,000,000.00 lien (collectively).  We are obligated to pay this lien for the benefit of approximately 172 owners of a private golf club.  This was not a voluntary lien placed against our properties, it was levied without our knowledge or consent.  Normally, a lien is granted or agreed to by the property owner, such as a mortgage or HOA fees (at time of purchase).  Not in this case.  In this case, Party #1 (a private golf club) negotiated with Party #2 (builder-controlled board) to force Party #3 (property owners) to pay Party #1 over $6,000,000.00 without Party #3’s knowledge or consent.  This is a clear violation of the CC&R’s.   Our property values have diminished, because we are now responsible for subsidizing the operational deficit of an insolvent, private golf club through this lien.

This de-valuation is exacerbated, because this $6,000,000.00+ lien may only be the first lien placed against our properties for the benefit of a private golf club.  In the funding section of the “trigger event” (page 8 section IV, subsection 10 of the Lease Agreement) is a requirement that the amount of money the HOA pays the golf club will increase, if the golf club looses members.  (The “trigger event” is the building of a clubhouse, which the club members will own.)  For example, if 20 members leave the club, the HOA is required to increase its’ payment to the club by approximately $29,000.00+ per year (a potential increase of $87,000.00+ over 3 years) just to cover construction costs.  The requirement that property owners pay more to the golf club, if club membership decreases, is currently limited to construction costs.  However, a linkage or obligation has been created, for the first time, which causes a financial burden to accrue to the property owners, if membership in this private golf club decreases.  This action, on the part of the board, is consistent with the obligation, again for the first time, that property owners must subsidize the operational deficit and construction costs of this private golf club.  As with any forced subsidizing, subsidies only increase.

2.)   Uncertainty READ MORE