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Orange County Mental Health Services (Health Services) was in
effect, under which Interstate agreed to sell commercial lots 14
and 15 (lots 14 and 15) to Health Services. In order to preserve
the rights of Interstate's joint venturers in that pending sale,
on June 25, 1990, those joint venturers established a trust
(Interstate trust) to which Interstate quitclaimed lots 14 and 15
and in which OIP and Alpha each held a 25-percent, and Xway held
a 50-percent, beneficial interest. On the same date, OIP, Alpha,
and Xway entered into an addendum to the trust agreement which
created the Interstate trust. That addendum provided that if the
sale of lots 14 and 15 to Health Services were not completed by
September 10, 1990, the contract of sale between Interstate and
Health Services with respect to those lots would be terminated,
the Interstate trust would be dissolved, and specified portions
of lots 14 and 15 would be deeded to OIP, Alpha, and Xway as
beneficiaries of that trust.
On July 26, 1990, (1) Interstate3 purchased from OIP lots 11
and 12 for $470,000 ($470,000 purchase price) and (2) Xway
purchased from OIP OIP's 25-percent interests in lots 14 and 15
for $700,000 ($700,000 purchase price). Mr. Canty and OIP wanted
to structure the foregoing sales so as to qualify under section
3Although Interstate, the joint venture, was dissolved after
two of the three joint venturers redeemed their interests therein
on June 25, 1990, Xway, the remaining joint venturer and sole
owner of Interstate after those redemptions, decided to use the
name Interstate when it purchased lots 11 and 12 from OIP.
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Last modified: May 25, 2011