Manager Ultimatum – Take My Deal or Get Sued

BAW4.2We launched this website www.beware-at-whistler.com in the last few weeks to warn others of the economic and political risk of investing in Whistler Phase 2 real estate.  If you read The Problem” section of this website you will fully understand why.

This post is about how the manager continues to try to force people to work with him. In recent days several of us have been served with a lawsuit by the Nita Lake Lodge manager.

Why did the Nita Lake Lodge Manager sue us?http://www.dreamstime.com/royalty-free-stock-photography-lawsuit-lawyer-his-office-showing-document-text-written-image40229267

We are minority investors and unit owners in a Whistler Phase 2 development called the Nita Lake Lodge. Our project has a majority unit owner who unilaterally appointed himself manager to consolidate control, announced that our original Rental Pool Management Agreements (RPMAs) were terminated then said here is the new revenue share deal, take it or get sued.

Let’s put this in context.  This manager has been very skillfully combining three things to intimidate and bully other owners; (1) a lending relationship with the previous manager, (2) a majority ownership of the units in the project (which he acquired from the previous manager), and (3) the Whistler covenant.  

As we’ve seen, if you’re willing to do things like not pay people for using their property and secretly switch out the locks off their doors so you physically control their property, you can go a long way with these three things.

Here’s how:

  • Using the lending the relationship with the previous manager, the investor put pressure on the previous manager to step down, and worked out a private deal between the two of them about project management going forward.  Under the deal the new manager was to assume control of the front desk and the obligations of that manager.  Now the second manager has control of the front desk and cash.
  • In a transition at a major project like this, the right thing to do would be to have competitive bidding for the management job.  This manager didn’t want that.  Instead, using his majority power as owner, the manager prevented anyone else from bidding for the manager job.  He controlled rentals and use of everyone’s property, didn’t share anyproceeds for more than a year of use of others’ property as required under the deal he assumed, and then later declared the deal he assumed to be retroactively terminated.
  • Other owners didn’t think such a retroactive termination was at all plausible, and didn’t want to keep working with this manager, whatever the terms.   But just for sake of argument, assume the earlier deal was terminated.  Once the manager terminates your rental agreement, he has no way to force people to work with him.  Either he owes what he owes for a year of use of your property and any use going forward, or he has no right to use it.  He has to pick.

But this is where the third thing, the covenant, comes in.  This covenant is the linchpin of the manager’s approach because as he uses it, it gives him enormous leverage to threaten and intimidate owners into accepting him as their manager on whatever terms he dictates.

Whistler has a rule that says projects should have a single manager, unless Whistler uses its discretion to release units from it.

Relying on this covenant, this manager says that since he’s the self-appointed single manager, if he can’t manage owners’ property, then no one, including the owners, can use it.  This by the way, is not what the covenant says – nowhere in the covenant is the manager given any authority to keep people out of their property.

Other owners in our project are from around the world, and many are seasoned business people who feel that what this manager is doing is wrong.

They don’t want to sign a new deal with someone who’s shown a propensity to not pay them for long periods of time, and who does things like switch out locks and bully them.  They also understand that if they sign a new deal – even if it’s under duress- they may be stuck with someone who engages in this kind of conduct for a very long time.

So they don’t sign the new deal.  They are blocked by the manager from entering their own property for the last nine months.

Now the manager realizes he has to generate more leverage.  How does he do this? By bringing a lawsuit that among other claims, seeks to force the owners to accept him as manager.

It’s important to note how critical the Whistler covenant is to this manager’s strategy. It’s the thing that in the hands of the manager, keeps the owners from being able to use their rooms or rent them out through another manager.  It’s also the only basis the manager asserts as a reason why he can force people to work with him.  In the hands of this manager, the covenant  has become a license to do all kinds of things that would otherwise never be tolerated.

Odd, how can the City of Whistler (the RMOW) be ok with this type of abuse of their rules?

So pay attention fellow Phase 2 owners or potential investors……if they sit on the sidelines when things get rough for us, they’ll likely do it to you.

This manager is a professional investor and lawyer. He has been previously sanctioned by the BC Law Society for misusing client trust funds and violating a court order. Not the type of manager you hope manages your Whistler property for you.

A final observation: the manager’s lawsuit earlier named some other owners and sought damages relating to disputes the new manager had with the old manager from almost three years ago, but now that these owners have thrown in the towel on accepting the new manager, they’re not getting sued anymore.  An interesting and oddly selective strategy.

The takeaway…….until the City of Whistler is willing to intervene when their covenant is being abused, Whistler Phase 2 real estate is simply too risky.

, , , , , , ,

Powered by WordPress. Designed by Woo Themes