Having a golf course as a part of your community can be a benefit in terms of views and property values, however, not so much if the landscaping is not properly maintained or if more money is going out than coming in. If your association does not own its golf course or shares it with a third party owner/operator then the agreement governing the use of that course is crucial to keeping the people who own, operate, use, and live next to, the golf course satisfied.
A good agreement does at least the following:
- Clearly describes who maintains and insures what and who pays for what, including a clear description/formula for the parties’ respective contributions.
- Provides clear procedures, including established timelines, for an acceptance of the proposed annual budget by the parties, and allow for deviations from the budget during the year for unexpected occurrences. Also, if the golf course is not brining in enough revenue to offset its expenses, then the association’s share of that deficit, if any, must be addressed.
- Addresses capital improvements, including how they are agreed upon by the parties, budgeted and replaced.
- If a developer is involved and the course will ultimately be turned over to the association, the agreement accounts for a clear turnover procedure that describes when the association’s maintenance responsibilities begin and any conditions for a delayed start of this maintenance (e.g., improvements not in a turnover-ready condition).
- If a developer is involved, the agreement accounts for reserve contributions at turnover, including being sure that if the improvement is not “new” then it is properly funded at turnover.
- Sets forth a comprehensive indemnity agreement that addresses who is responsible for defending whom if a claim is filed that relates to the golf course improvements and operations.
- Provides for dispute resolution, possibly mediation with a right to go to court and inability of the party who did not consent to mediation to recover attorneys fees in litigation.
- Provides for allocation and duty to pay attorneys fees.
- Provides for recording the agreement (or a memorandum of it) so that it runs with the land and bind all successors.
- Provides for periodic meetings between the boards of the involved parties (and any essential other parties, such as finance and golf committees, legal and accounting advisors) to discuss the administration of the agreement, things on the horizon, or any other issues/concerns as people see them. This ensures a consistent line of communication, critical to a successful relationship.