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April 17, 2014

How Should Clubs and Resorts Share?

Often, clubs and resorts are located in master planned projects that include multiple land uses, including residential and commercial real estate. They typically share common infrastructure and common area, including entry features (both manned and unmanned), roadways, signage, landscaped and natural swale areas, medians and open space, sidewalks, paths and trails, drainage and irrigation systems, and utilities. In addition, clubs and resorts often want to share services and other costs to create efficiencies and economies of scale.

Clubs and resorts should structure the arrangements for the sharing of infrastructure, common area and services in order to achieve important goals and avoid problems. Important considerations include:

  • Maintaining infrastructure and appearance of common area consistent with the quality standards of the club and resort;
  • Sharing of costs so as not to disproportionately burden the club or resort;
  • Minimizing interaction with property owners so as not to unduly burden management;
  • Providing mechanisms for enforcement of payment of costs by all parties, including assessment and liens with respect to residential units;
  • Providing for continuation of arrangement after sale or foreclosure of project component or bankruptcy of owner;
  • Guaranteeing access to club and resort by customers and guests;
  • Minimizing liability and possible property owner or property owner association lawsuits; and
  • Avoiding possible objections from current or future lenders or investors.

Proper structuring of the cost sharing arrangement and common property governance starts with land planning. Club and resort owners should review the proximity of the club and resort to entry points and amenities and, if possible, try to maintain ownership of any important road and land area that materially impact the experience for the club member or resort guest.

In addition to considering the traditional master property owners association structure, club and resort owners should consider alternate arrangements, including neighborhood associations, cost sharing declarations and agreements, and community development districts.

Sharing of common area and costs in a master planned project often is necessary or desirable. Careful planning of the structure for the sharing of costs and governance will avoid problems that could materially impact the value of the club or resort.

©2014 Greenberg Traurig, LLP. All rights reserved.

About the Author

Shareholder

Glenn A. Gerena is a community development and hospitality attorney, whose practice focuses on structuring and documentation for recreational club membership programs and community governance. Glenn has significant experience in a variety of transactions and agreements involving recreational facilities, resorts and residential and mixed use communities.

561-955-7617

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