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At the time investments in L&C Springs were being promoted,
the apartment units in the L&C Properties maintained a high
occupancy rate due to employees of Eastern, National, and Pan
American Airlines who were based at the Miami International
Airport.
On October 30, 1981, L&C Springs entered into an agreement
with Tanglewood to purchase for a stated consideration of $2.8
million Tanglewood's ownership interest in the Florida land trust
that held title to the L&C Properties and that held title to the
underlying land. L&C Springs' stated $2.8 million purchase price
for the L&C Properties was reflected solely by a seller-financed,
nonrecourse $2.8 million promissory wrap-around note from L&C
Springs (the L&C Note) in favor of Tanglewood.
At the time of the above transaction, Tanglewood's $1.6
million mortgage note and the three existing mortgages relating
to its 1980 purchase of the L&C Properties were not paid off.
Those mortgages remained outstanding and were wrapped by the $2.8
million L&C Note. In other words, L&C Springs' payments to
Tanglewood on the $2.8 million L&C Note were intended to be used
by Tanglewood to make payments due on Tanglewood's $1.6 million
mortgage note.
Effective simultaneously with the above transaction, L&C
Springs exercised an option set forth in the L&C purchase
agreement to reduce the stated purchase price for, and to alter
significantly the nature of, its ownership interest in the
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Last modified: May 25, 2011