Woody F. Lemons - Page 17

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             Beach Property subject to the $4,700,000 loan from Anchor,               
             and it issued a promissory note, payable to the joint                    
             venture, in the amount of $887,500 (i.e., $5,587,500 less                
             $4,700,000).  Both the joint venture and the beach club                  
             treated the transfer of the Moonlight Beach Property as                  
             having occurred on or about January 16, 1986, the date on                
             which the permanent loan was funded and the construction                 
             loan was paid off, as discussed below.  The joint venture                
             retained title to the parcel of land on which the beach                  
             house was located.                                                       
                  On December 23, 1985, an application to register the                
             project under the Texas Time-share Act was filed with the                
             Texas Real Estate Commission.  The application was filed on              
             behalf of the beach club by the club's accountant, Mr. Tom               
             D. Winslett II.  On August 6, 1986, the Texas Real Estate                
             Commission notified the club that, as a condition precedent              
             to registration in Texas, the project would have to be                   
             registered and qualified in the State of California.                     
             Originally, Mr. Dixon and petitioner had not sought to                   
             register the project in California.  In part, this was due               
             to the fact that they had been advised that the project                  
             would not qualify under California law because of a so-                  
             called blanket encumbrance problem.  That is, under the                  
             proposed structure of the transaction, the permanent lender              






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