Legal Representation and Action

A consortium of 4 law firms is now representing 8 TICs. I have engaged them and am putting up $3000. Our initial goal is to get the rents paid to a separate asset manager so that the funds do not go into the DBSI black hole. We also want to make sure that the mortgage is paid for November. As many of you know DBSI is pulling the plug on many buildings and not paying the mortgage. I hope most of you will chip in based on your percentage ownership. The initial cost will be less than $200 per investor. (You can figure out your percentage by dividing $3000 by your percentage). The lawyers can file with the court by Wednesday or Thursday of this week so there is hope that we can have the rent payments sent to our rep beginning next month.

My address is: Geoffrey Gray
c/o CarePaths Inc.
310 N Front St, Ste 4-262
Wilmington, NC 28401


Here is the letter sent me by the Fogg Law Firm of Boise Idaho.

Geoffrey -

We understand TIC owners frustration and sense of helplessness resulting from the current position of DBSI. We have been receiving a growing number of inquiries regarding owners rights and liabilities. Our initial goal, like yours is to save those assets that are or should be providing some security and income for the TIC owners. Although the rights of the TIC owners are clear in our mind, the process is somewhat convoluted. For the buildings where we have begun the process of “taking over” it appears we will have to obtain a court order, instructing the property manager, tenants (corporate and non-corporate), leasing agents, etc. to provide certain information, and cooperation. Additionally, we are contacting the lenders to the determine the status of the mortgage payments, insurance and other reserves, and hopefully negotiate deferrals (if necessary) allowing us time to sort everything out. We have arranged for a national property management company to pitch their services to TIC owners if the current property management company fails to, or is unable to work with us. We have also arranged for an asset manager to pitch his services to the TIC owners should that be desired or necessary.

The TIC owners are going to need to be actively engaged in these choices once we have protected the flow of funds from lease payments and have made sure the current liabilities are covered. As far as your contribution, the TIC agreement provides that the expenses of any single owner to protect the property will be reimbursed by the other owners – at some point. Additionally, what we have learned from other buildings is that DBSI Housing has placed specific leasing qualifications that may or may not be reasonable for the market and location and may have had an adverse affect on leasing the building. The process flow looks some like the following:

1. Review current agreements specific to your property,

2. Contact Lenders, Property Management Company, Assets Manager, Tenants, etc.,

3. File complaint in Ada County for breach of contract with motion for a TRO instructing above to cooperate,

4. Obtain lease and loan documents,

5. Contact tenants with instructions regarding the payment of future lease payments,

6. Put appropriate measures and management structure in place to assure liabilities are paid and residuals are distributed.