- 168 -
secured by notes of limited partners", and thus petitioners
contend that the 16 promissory notes were "adequately
secured" without regard to the value of the real estate.
Second, they argue that "the real estate was never legal
security for the promissory notes; therefore, the value of
the real estate in 1985 is irrelevant." We disagree.
Each of the 16 promissory notes states that it "is the
Note described in and secured by a Deed of Trust dated
February 1, 1985, on property located in HARRIS COUNTY,
State of TEXAS", and each note sets forth the address of
the property. Each related deed of trust provides a legal
description and an address of the property securing the
note. Those documents are complete in and of themselves
and make no reference to "an $80,000 line of credit from
Community". In form, each of the 16 promissory notes
purports to be secured by one of the 16 properties.
Furthermore, petitioners do not take issue with the premise
of respondent's argument that each of the 16 promissory
notes that was issued by EPIC, the general partner of each
partnership, to CSL, an affiliated savings and loan
associate, is a nonrecourse obligation. Accordingly, we
agree with respondent that none of the promissory notes can
be treated as bona fide indebtedness unless petitioners
prove that the amount of the debt does not unreasonably
Page: Previous 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 NextLast modified: May 25, 2011