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I'm going to make you start paying for it, and you're going
to be paying the side who has to pay attorney's fees,
because you're not practicing the law the way you should be.
The parties subsequently settled. The agreement required
McMahon to relinquish any interest in NII and the Burke Building.
In return, it required petitioner and the other named defendants
to pay McMahon the sum of $32,500 and also required petitioner to
issue a $252,500 note to McMahon and his wife (McMahon Note).
The McMahon Note provided for 7-percent interest per annum
compounded annually starting on January 1, 1988, with any unpaid
principal and interest due and payable on December 31, 1997. If
the Burke Property were to be sold, however, the note would
become immediately due and payable. The note was nonrecourse
and, because a first mortgage holder with a superior claim to the
property already existed, was secured by a second deed of trust.
Around the time petitioner settled the McMahon litigation,
it was trying to refinance the Burke Property and also exchange
it under section 1031 for another piece of property. Both of
these transactions might have replaced the current first mortgage
holder with another. Consequently, as part of the settlement
agreement, petitioner negotiated for and received a subordination
agreement. The agreement provided that, so long as the amount of
the first mortgage did not increase, petitioner could refinance
or enter into a section 1031 exchange without a "sale" occurring,
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