2019-09-17 Lot 1, Block 5 Findings per Attorney
Kim Olson
From:Mike Couri <mike@couriruppe.com>
Sent:Tuesday, September 17, 2019 1:19 AM
To:Adam Nafstad; Al Brixius
Cc:Kim Olson; Tina Lannes
Subject:Scherer Bros Lot, Lot 1, Block 5, Town Lakes First Addition
Adam,
I have checked the deed record on Lot 1, Block 5 Towne Lakes (the First Addition plat) which is now owned by
Scherer Bros Lumber Company. The Master Developer’s Agreement for Town Lakes (also known as the
Developer’s Agreement for Town Lakes First Addition) that was recorded as document no. 756748 in 2001
called for Lot 1, Block 5 is to be used as a sales office (which the Developer was to construct) until all lots were
sold by Developer, then it was to be deeded to the Homeowners’ Association for use as a community center or
other Homeowners’ Association use, likely as an Association common element. The Developer’s Agreement
required the Developer to build the sales office and required a pool to be built on the same property,
immediately adjacent to the sales office. The idea appears to be that the sales office would be a community
center/pool building with the pool on the same lot after all lots were sold.
The Towne Lakes Third Addition Developer’s Agreement required the Developer to build the pool in the Third
Addition, where it is currently located, which the Developer did construct along with a barn as a community
center. However, the Third Addition Developer’s Agreement was silent on what was supposed to happen to
Lot 1, Block 5, Town Lakes First Addition. That lot remained in the ownership of the Developer until it was
transferred to Scherer Brothers Lumber when the Developer went out of business in 2006. The lot was never
identified as a common element in the Declarations for the development, nor was the lot ever transferred to
the Homeowners’ Association. Lot 1, Block 5 was not defined as a common element in the original Town
Lakes First Addition Declaration.
On September 9, 2009, The City and Scherer Brothers entered into an agreement recorded as document no.
st
1133448. That agreement affected Lot 1, Block 5, Towne Lakes 1 Addition and several other lots Scherer
Brothers received from the Developer. Under this agreement, Scherer Brothers paid the City $19,000 in
overdue water bills that were unpaid by the Developer and the City agreed that Scherer Brothers would have
no liability or responsibility for performance under the Development Agreement that is different from the
liability or responsibility for performance of the owners of similarly situated lots that are subject to the
Development Agreement. The idea here was that by paying the $19,000, Scherer Brothers would not be
responsible for any other debts or obligations of the Developer as a successor to the Developer. I do not
believe this 2009 agreement affected the status of Lot 1, Block 5, Town Lakes First Addition.
At this point Lot 1, Block 5 is still bound by the terms of the Towne Lakes First Addition Developer’s Agreement
in that it can only be used as a community center/pool or other HOA use. Because the First Addition
Developer’s Agreement was only between the Developer and the City, the City and Scherer Brothers (as
successor to the Developer) can modify the terms of the Developer’s Agreement and release the use
restrictions on Lot 1, Block 5 and release the Developer from its obligation to deed the lot to the Homeowner’s
Association. That would clear the way for Scherer Brothers to develop the lot residential purposes, or perhaps
even split the lot into two lots.
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If the City Council wanted to release Lot 1, Block 5 from the terms of the Developer’s Agreement, I would
suggest that we enter into an agreement with Scherer Brothers that would require the lot to be governed by
the residential restrictions of the First Addition Developer’s Agreement, and require that the lot be brought
into the Homeowner’s Association (if that is still possible) so that it is under the same architectural standards
as the other Towne Lakes lots. I also suggest that the Homeowners’ Association be informed of the City’s
intent and that it be given a chance to comment on the proposed transaction.
Michael C. Couri
Couri & Ruppe, P.L.L.P.
705 Central Avenue East
P.O. Box 369
St. Michael, MN 55376
763-497-1930
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