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June 1984. Derrick was the managing general partner of each
partnership. The primary business purpose of each partnership
was to acquire and hold for rental and resale, existing
condominium units located in property developments near the Park
City, Utah, ski resort area.
During December 1983, Derrick made a $10,000 capital
contribution and a $220,000 loan to each of the three
partnerships. At the end of December 1983, Derrick, on behalf of
each partnership, drafted and executed informal purchase
agreements (December agreements) to acquire condominium units.
Each partnership was to purchase 7 condominium units in 1
development and 16 condominium units in another, for a total of
69 units. The December agreements required a $10,000 downpayment
per condominium unit ($690,000 total), with the balances to be
paid in two installments: One on July 2, 1984, and another on
either December 27 or 30, 2013. The aggregate installment
obligations of the partnerships are as follows:
16 Condominium Units 7 Condominium Units
Partnership July 2, 1984 Dec. 27, 2013 July 2, 1984 Dec. 30, 2013
Pebble Beach $3,699,539 $11,602,773 $1,570,808 $4,362,378
Cypress Point 3,763,989 11,796,111 1,505,538 4,189,221
Spyglass 3,688,132 11,568,533 1,582,378 4,393,074
As an example, a single condominium unit had a $658,655 selling
price, a $154,284 first installment due July 2, 1984, and a
$494,371 second installment due December 27, 2013.
The December agreements, in addition to setting forth the
payment terms, required the sellers to place in escrow the deeds
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