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less than the full value of the cluster home or condominium.15
The purchase agreement required the owners to obtain petitioner's
permission to assign or convey the property; this indicates that
cluster home owners had the right to assign or convey their
cluster homes, although as a practical matter transfers had
occurred in only two instances as of the time of the trial. The
Declaration of Condominium gave condominium owners the right to
lease or rent their units with petitioner's approval of the
prospective tenant; the Declaration of Condominium also provided
that petitioner could not unreasonably withhold its approval. On
balance these facts support the conclusion that the transactions
were sales, rather than mortgages.
In the early years of its business, petitioner was unable to
obtain commercial financing for the construction of its
retirement community and was in need of funds. The accelerated
payment schedule for cluster homes to be built as compared to
those already built supports this. However, petitioner's
continuing need for funds after constructing the initial units is
not shown by the record in this case.
Petitioner assumed an obligation to repurchase the cluster
home or condominium for a minimum of 76 percent of the original
purchase price when the purchaser died or decided to sell the
unit. If the unit were totally destroyed by fire or other
15 Petitioner points to the repurchase price in support of
its contention that the transaction is a mortgage. Petitioner
does not address the nature of the excess of the original price
over the repurchase price, nor the fact that the repurchase price
decreases over 7 years and then remains constant thereafter.
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