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days of 1983, at a time when the loans due Western Savings were
in default.
Prior to January 1, 1984, Derrick paid the escrow agent,
Western States Title Co., $690,000. The $690,000 was the sum of
Derrick's $10,000 capital contribution, and $220,000 loan, to
each of the three partnerships ($30,000 plus $660,000). In early
1984, Derrick notified the condominium management company of the
partnerships' ownership. During January 1984, the partnerships
caused an insurance agency to inspect the condominiums in
connection with the purchase of liability and casualty insurance.
An insurance binder was executed on January 17, 1984. From the
time of the December 1983 agreements, Derrick was generally
responsible for overseeing the management companies, which
collected rents, advertised for rentals, paid expenses, and
handled the day-to-day condominium operations. Derrick also was
involved in the repair and maintenance of some of the
condominiums, including water leaks.
By letters dated February 15, 1984, Western Savings
acknowledged the partnerships' inquiry about financing 48-unit
and 21-unit groups of condominiums with loans, in the aggregate,
of up to $10,700,000 and $3,939,000, respectively. Western
Savings had been the lender to prior condominium owners. During
April 1984, the partnerships opened bank accounts, yet the
accounts had limited activity during April and May 1984. The
activity did involve the receipt of rental income from
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