Is the Honeymoon Over?

Somersett United
Somersett United

Apparently not all is well between the Somersett Owners Association (SOA) and the Somersett Country Club (SCC) regarding the current Lease Agreement.

For those who may not be aware, at the beginning of 2015, the SOA and the SCC entered into a Purchase and Leaseback Agreement for the SCC land and water rights. Under which the SOA purchased the SCC land and water rights for $2.75M (financed by homeowner assessments) and subsequently leased back such to the SCC at $1000/year for a term of 90 years. The Leaseback Agreement was quite detailed and contained specific conditions placed on the Tenant (i.e., the SCC) by the Landlord (i.e., the SOA).

On October 14, 2016, the SOA Attorney, Michael Schulman, issued a not so cordial letter to the SCC with regard to the SCC’s perceived nonconformance with certain provisions of the Lease Agreement. In doing so, Mr. Schulman also took exception to the manner in which the SCC has in past addressed SOA concerns.   In his letter, Mr. Schulman states: “Unfortunately it appears that such attitude continues in that you treat the legal documents executed between the Club and the Association as mere inconveniences and you continue to operate the Club as if it owned the golf course property. This is not acceptable to the Association.” He further states “Hopefully the members of the board of directors of the Club will take this letter seriously and begin to fulfill the obligations of the Club under the Lease. The Association did not enter into this transaction lightly. The Association certainly did not enter into the transaction so that the Club could obtain financing for its clubhouse and flaunt its duties under the Lease.

The Attorney letter addressed issues associated with the lot line adjustment for the SCC clubhouse parcel in addition to serving as a formal notice to the SCC that it was in default under the terms of the Lease with respect to the following areas:

  • Water pump inoperability and failure to repair
  • Golf driving range maintenance
  • Alterations to leased property and failure to obtain SOA consent
  • Water pump and irrigation system training
  • Canyon 9 Golf Course water and electricity use billing

Under the Lease Agreement, the SCC has 30 days to correct defaults, which time has now passed. It will be interesting to see how these defaults have been or will be resolved and if the SOA will have to take further legal action to enforce the Lease. In closing, Mr. Schulman stated: ”it is the Association’s intention to act as a reasonable landlord, but that requires that the Club, as the tenant, to act reasonably and fulfill its obligations under the Lease.”

It is well known that this website was strongly opposed to the SOA purchase of the SCC. That the SCC was originally conceived as a separate entity from the SOA and should have remained as such, controlling its own destiny without SOA assessment subsidies. However, the SOA members voted for the purchase agreement and now must live with its consequences. Hopefully these issues can be resolved without placing any future financial burden on Somersett homeowners.