Information for Terrasol owners only – Do not distribute or share this information outside of the Terrasol owners group.
Litigation Settlement Opportunity Announcement
At the 2019 Annual HOA Assembly, a Resolution was unanimously approved by Homeowners directing the Terrasol HOA Board of Directors, to use their best efforts to negotiate a prudent settlement of our decades long dispute and related litigation between Terrasol and MasDac. [NOTE: MasDac is the Mexican partnership that had acquired and claimed title to the disputed properties and has litigated against Terrasol to exercise its ownership rights.] Accordingly, in March of 2019 the board commenced to negotiate a settlement in accord with owner’s resolution.
Under the direction of HOA President Steve Sankowich and with the financial expertise of HOA Treasurer Greg Newton, the board-initiated contact with MasDac. Over the past 9 months we have held extensive meetings, discussions and negotiations with MasDac to come to terms for a Settlement that is long-overdue. After detailed review and diligence of the proposed Settlement, your HOA Board has unanimously approved the terms of this settlement.
NOTE: HOA owners will decide whether the proposed Settlement will be approved by Vote at the February 14 and 15, 2020 Annual Assembly in Cabo.
Your Board unanimously believes the settlement is in the best interests of the Terrasol HOA and represents a great opportunity for owners to regain control of our resort after all these years of dispute, cost and concern.
Your Board unanimously recommends that owners consider the settlement terms and vote FOR the SETTLEMENT in all related resolutions at our Annual Assembly in February 14 and 15, 2020.
Highlights of the Settlement:
- Settlement will end years of litigation and end the dispute that has resulted in a dark cloud of uncertainty and concern over Terrasol for decades
- Settlement will also end Legal defense costs of over $100K+ per year (note that past litigation defense has already cost HOA owners over $1 million)
- Terrasol will acquire clear titled ownership to all of our disputed Common Areas
- Title to the Reception & Admin building with its terrace and basement
- Title to our beloved (and profitable) Palapa Bar Restaurant
- Title to our Service Area – giving us assured access to our utilities including Desal Plant, water, electric and maintenance areas
- The building site called Caracol whose development rights are currently owned by MasDac
- Settlement will end the risk that Mexican Courts could over-rule our defense and a Developer could construct buildings that may block views or otherwise jeopardize our rights to the quiet enjoyment of our resort
- Settlement will require a one-time Special Assessment.
- A Special Assessment to enable the Settlement will be voted upon at the Annual Assembly. Assuming the Settlement is approved:
- The Board recommends owners pay FULL ASSESSMENT in order to assure required cash flow to complete the Settlement
- A 5% Discount will be offered for owners who choose to pay ASESSMENT IN FULL (if paid in full by March 31, 2020)
- The discount will also be available for owners who choose to pre-pay up to 2 years of regular maintenance dues
- The Assessment can be partially financed at owner choice; Installment payments including principal and interest would be added to quarterly dues statements.
- The Board recommends owners pay FULL ASSESSMENT in order to assure required cash flow to complete the Settlement
Details with respect to the Settlement and Special Assessment are included in the presentation attached to this communication
Your Board has concluded the Settlement is both an urgent and vital opportunity for Terrasol to regain control of its future for all time.
In contrast, the Board has concluded that the outcome of our legal defense is uncertain and poses an untenable long-term risk to homeowners.
Settlement is a vastly superior alternative to an uncertain future of expensive litigation that jeopardizes Terrasol owner condominiums.
The Board encourages owners to enthusiastically embrace this opportunity for Settlement to lift the dark cloud of litigation and uncertainty that has hung over Terrasol for too many years.
Please carefully review this letter and the attached Presentation where many of your questions may be answered. Contact any of the Board Members (shown below) with your questions and concerns. Your Board is available to you to help understand and evaluate the Settlement. Our goal is to obtain your yes vote via Special Proxy prior to February 1st, 2020.
Your Board is committed to transparency in communicating the terms of the Settlement. Many thanks for your attention to this matter that is vital to Terrasol’s future.
Your Board of Directors and Surveillance Committee members are available to all owners, to help understand the Settlement, receive and communicate your feedback, and/or answer questions or concerns via Phone numbers, email addresses or in person.
Board Members
|
Steve Sankowich, President |
iwp1@aol.com | (415)867-5894 |
|
Jim Engram, Vice President |
jimengram@centurylink.com | (719) 208-6477 |
|
Greg Newton, Treasurer |
gnewton351@gmail.com | (541) 480-3065 |
|
Mary Lee Green, Secretary |
maryleegreen7@gmail.com | |
| Don Van De Water, Grounds Maintenance | donterrasol@gmail.com |
MX 52 1 624 117 8407 |
Surveillance Committee
| Joe Power | powerboat2405@yahoo.ca |
52- 624-168-9256 MX |
| Marcie Telford | marcietelford@yahoo.com | (208)582-2065 |
| Walt Lane | wlane@netstandard.com | (816)805-8000 |
| Scott Buhrmann | buhrco@aol.com | |
| Mark Rubin | markgrubinmd@gmail.com |
Voter & Annual Assembly Information
February 14 & 15, 2020
NOTE: PROXY FORMS MUST BE COMPLETED IN INK BY THE VOTING HOMEOWNER WHO IS ASSIGNING THE PROXY
- Special Assembly – Settlement of Litigation
- Annual Assembly
Legal Docs & Timeliness
Timeline
- February 2019: Unanimous vote at HOA annual meeting for Board to pursue a settlement of the dispute
- March 2019: HOA dialed MasDac and asked “do you want to talk”
- March 2019: Kickoff in-person meeting both sides talked about years of distrust, frustration and expensive litigation
- Both sides talked about how “unfair” and “wronged” they were by the other party
- Both sides agreed to stop recycling legal threats and airing yesterdays anger
- Both sides agreed to negotiate by looking ahead, not to the past
- Both sides agreed to put on hold any pro-active litigation
- April – July 2019: Ongoing conference calls around priorities of each side
- August 2019 – In person meeting & first “term sheets” were exchanged
- September 2019 – November 2019: Ongoing negotiation of “Letter of Intent”
- December 2019 – Agreed on a Letter of Intent
- December 2019 – Signed Legal Settlement Contract
- Subject to many conditions and protections, including HOA vote as elsewhere described in this presentation
In-person Meeting
Kickoff in-person meeting both sides talked about years of distrust, frustration and expensive litigation
- Both sides talked about how “unfair” and “wronged” they were by the other party
- Both sides agreed to stop recycling legal threats and airing yesterdays anger
- Both sides agreed to negotiate by looking ahead, not to the past
- Both sides agreed to put on hold any pro-active litigation
In-person Meeting
Kickoff in-person meeting both sides talked about years of distrust, frustration and expensive litigation
- Both sides talked about how “unfair” and “wronged” they were by the other party
- Both sides agreed to stop recycling legal threats and airing yesterdays anger
- Both sides agreed to negotiate by looking ahead, not to the past
- Both sides agreed to put on hold any pro-active litigation
Steps to Finalize Settlement
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Complete legal “conditions to close”
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Termination of litigation
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Financial Settlement: Angel Lenders pledge to fund closing costs and service capacity upgrades
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Complete Lease / Terms for amenities
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Annual Meeting: Approval of Resolutions and Bylaw Amendments Necessary to Complete Settlement
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Approve Settlement
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Approve Special Assessment
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Approve 2020 HOA dues
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Close the transaction- including all legal, documentary and financial aspects
Q&A for Owners
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Terrasol will participate in, and advocate for, fair resolution so HOA members who get a chance to gain fidocomisso/titles
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Note that there is a wide diversity of situations and circumstances among these members
Differing unpaid purchase price, unpaid taxes, and other unpaid fees -
MasDac will make an offer to each member
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Each member may consider, accept or reject proposal
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Each member should evaluate their individual situation & decide best alternative
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Those deciding to accept MasDac offer will also be obligated for full HOA Special Assessment
- Developer is interested in typical amenities, such as Restaurant/bar, Spa, Gymnasium, & concierge services
- Developer believes the presence of attractive amenities will increase the sale-value of their units and improve return on investment
- Amenities would be available to and benefit existing owners
The lease between Terrasol and Developer will be like commercial leases for like amenities.
- provisions governing allowable use
- provisions for quality and standards consistent with Terrasol
- provisions requiring adherence to HOA bylaw requirements
- provisions requiring approval of HOA of plans and changes affecting Terrasol
- provisions will be in-force in the event MasDac sells its lease rights
HOA has committed to diligence, prudence and skepticism from beginning of negotiation, contracts and vote. These principals will carry forward to legal transfer of titles and closing of the Settlement
- Terrasol legal protections will be in Settlement Agreement
- Our Legal team will “leave no door ajar” to control risk
- All conditions to close (that protect us) must be complete before closing
- Board is targeting engagnement of an additional lawyer to re-confirm legal protections are in place and assured
- Board continues to carefully monitor transparency in dealings
Become knowledgeable about this settlement and share with your
neighbors
- Ask questions of the Board
- Ask someone who has given you good counsel in the past
It is interesting that the 20 years of ingrained emotions go both ways – as both sides feel the situation is unfair to them;
- both parties are infected by years of distrust, frustration and expensive litigation
- Both parties have felt they were “unfairly wronged” by the other party
- In 9 months of negotiation:
- Both sides agreed to stop recycling legal threats and airing yesterdays anger
- Both sides agreed to negotiate by looking ahead, not to the past
- Both sides agreed to put on hold any pro-active litigation
• We cant change the past; we can try to reach for a better future
Our interests are aligned with MasDac both want construction period to be completed as soon as possible
Agreement will include construction activity limits similar to other resort development projects:
- No work dates around peak holidays
- Continuous construction allowed for period up to 3 yrs from start
- Developer project planning and execution to consider owners and guests enjoyment of Terrasol
- The settlement will include extensive and explicit protections to prevent such an occurrence now or in the future
- Terrasol will undertake to legally combine Phase 1 and 2 upon closing of the transaction , and MasDac will be required to vote 100% in favor of such action
- Terrasol will endeavor to restore titles to “Common Area” status with special protections under Mexican law
The HOA exists to provide services to all Terrasol owners.
- All owners will benefit from upgrades and quality enhancements to services & amenities for years to come
- The largest item is upgrade of old Desalination plant. This would be a near-term cost even without the Settlement
- New owners who buy developed units will share in these costs, and will ultimately reduce the level of HOA dues into the future
We negotiated timeshare / fractional to keep our Special Assessment affordable to all owners
Timeshare is similar to owners who rent their units today
Any timeshare activity will be limited to just the 20 to 25 units MasDac develops;
- It will be a small operation
- They may find it not feasible due to this small size, and simply sell or rent units
This small operation must abide by Terrasol By-Laws and regulations to ensure our quiet enjoyment
Specific Timeshare provisions will include:
- Permitted sales activities
- Number of sales-people allowed
- Behavioral standards
- Limited days of week and hours per day
- Safety and security requirements
- All provisions will protect owners’ peaceful enjoyment of Terrasol.
In the event a multi-floor garage in Service Area is necessary, it becomes an asset to Terrasol and would pay for itself with garage fees.
Terrasol possibilities include:
- Out of sun parking with storage lockers
- Pedestrian sky bridge to Reception area
MasDac has option to provide input on design of possible garage, in the event they wish to add and pay for levels for office condo type spaces to generate profit.
Provisions will ensure against adverse impact of additional levels.
