Trustee proposes $625,000 Colony rec lease settlement

The Colony Beach & Tennis Resort Association reached a three-way settlement last week with parties involved with a longtime disputed Colony recreational facilities lease.

U.S. Bankruptcy Chapter 7 Trustee Douglas Menchise — who controls everything regarding the rec lease and a rec lease judgment for $2.5 million — filed a motion June 19 asking U.S. Bankruptcy Judge K. Rodney May to approve a settlement that involves the association paying $625,000 in cash for all Menchise’s rec lease rights.

The settlement, if approved, sets up a future showdown between the association and Colony Lender LLC over who owns the resort’s disputed rec lease.

Colony Lender has claimed for years the lease came with property it foreclosed upon in 2008 and has attempted to get unpaid taxes and rent for the lease going back to October 2008 plus interest. Recently, Colony Lender and Unicorp National Development were issued sanctions they are appealing in regard to lawsuits filed against all Colony unit owners, in which they sought $5 million in damages for unpaid rent plus interest on the lease.

The association, meanwhile, has contended for years the interest Colony Lender owns consists only of real property and does not include the rec lease.

If approved by May, Menchise will transfer his lease rights with respect to 80% of the rec lease property and other leases involved with the recreational property.  

If approved, the association steps into Menchise’s shoes and takes over his position, which also contends he controls the rec lease outright.

Colony Lender, which owns 95% rights to the rec lease land that includes the tennis courts and surrounding recreational property, claims its acquisition means they bought the next 60 years of the rec lease and they can try to collect rent from the lease.

If this settlement is approved, the trustee is removed from the mix and the association will claim it owns the rec lease and it has the right to bury the lease and the disputed $2.5 million rec lease damages claim.

For more information, pick up a copy of Wednesday's Longboat Observer.

Contact Kurt Schultheis at [email protected].