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.

4 thoughts on “Is the Honeymoon Over?

  1. I guess the wealthy country club members expect the rest of us to support their chosen life style. Reminds me of my 22 year old granddaughter.


    The five page letter from the SOA attorney to the president of the Somersett Golf and Country Club is too long to show here. However, below are a few key sentences from it. Firstly, since as of the date of this posting more than 30 days have passed, just what is the Board doing and why aren’t all association members being kept informed?

    “Finally, it is written to provide you formal notice that the Club is in default under the terms of the Lease.”

    “This will serve to notify you that the Club has 30 days to cure such defaults.”

    “This will serve as a demand for such information no later than 30 days after the date hereof.”

    “If the Club has not met its obligations as set forth herein in by 30 days from the date hereof, and/or if the Club fails to meet any of its additional obligations pursuant to the Lease, then the Association will take legal steps to enforce the Lease.”

    “Ultimately, as I have stated elsewhere in this letter, if the Association is forced to seek our advice on a regular basis to ensure that the Club, as the tenant, complies with the terms of the Lease, ultimately the Association will take steps to terminate the Lease.

    “The Association is not interested in how the Club members, including you, feel with respect to the terms of the Lease.”

    “The Association is going to enforce the terms of the Lease and it going to act as a landlord and exercise any and all rights it has under the lease.”

    “If necessary, the Association will step in as the Operating Manager.”

    “The foregoing is not intended as a waiver of any of the Association’s legal rights and remedies, all of which are hereby expressly reserved.”

    “The Association is a corporation and the board members owe a fiduciary duty to all members of the Association.”

  3. I was in attendance at the October BoD meeting. I was unaware of this issue until it came up. During homeowner Q&A I requested the BoD to place the issue on the next (December) Board agenda so homeowners can be apprised of all the issues. Hopefully the Board will be able to report that each of the breaches has been remedied.

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