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Wenatchee, Washington. The Staffields paid $2,297,000 for the
real estate, borrowing a portion of the funds from the Washington
Trust Bank.
In December 2000, the Staffields gave the real estate to
petitioner. In a certificate of corporate resolution dated
December 28, 2000, petitioner agreed to accept the real estate
and to assume the outstanding mortgage obligation, which was then
about $1.4 million. Washington Trust Bank did not modify the
original loan; the Staffields remained personally liable on the
mortgage.
Leases
When the Staffields purchased the real estate and at all
relevant times thereafter, the real estate was subject to
preexisting long-term leases; the tenants were a sporting goods
business and a cellular telephone business. Petitioner
characterizes the leases as “triple net leases”, contending that
the leases require “little or no expenditure of time or funds by
the Lessor” and that petitioner is entitled to reimbursement from
the lessees for “virtually all” costs it is required to pay under
the terms of the lease agreements.
On April 18, 2001, petitioner entered into a management
agreement with Kiemle & Hagood Co., which agreed to lease,
manage, and operate the real estate for a $250 monthly fee and a
percentage of future rents on any new leases with new tenants.
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Last modified: November 10, 2007