Deferred Equity membership

References to Desert Mountain Club members as “owners” or having “equity” in the club is misleading. The Desert Mountain Club operates as a non-profit social corporation. Non-profits have members, not owners. Desert Mountain “equity members” have no right to any share of club assets. On sale or dissolution, all assets of a non-profit have to be distributed to another non-profit corporation.

The 1986 Club bylaws suggested that ownership of the Desert Mountain Club would be transferred to members after 2000 but provided no specifics about that transfer (page 10).

The deferred equity membership plan for Desert Mountain was launched with an announcement and a plan dated July 1994. Existing members were invited to convert to deferred equity status at a cost (member contribution) which started at $25,000 (page 2) This announcement did not disclose that members who paid to convert to deferred equity status would also be liable for a $65,000 fee on resignation. Members who did not buy a deferred equity membership have not been held liable for a fee on resignation.

The cost of deferred equity membership increased in increments to $325,000 (page 5) in 2010 but then declined to $140,000 in 2011 (December 30 letter). As of August 2017, the Desert Mountain Club was asking $45,000 for memberships.

In May 2014 the Club announced that memberships would be sold at offering prices set by members. A new member could join by paying the lowest price at which any membership was offered. The difference between the offering price and the $65,000 transfer fee collected by the Club had to be funded by the resigning member. Memberships have sold for as little $15,000, obligating the resigning member to pay $50,000 to comply with Club bylaws.

The Desert Mountain Club had 2,028 deferred equity members on December 10, 2010 (page 6).

On December 10, 2010, there were 116 memberships on the surrender list (page 30). The oldest name on that list dated from January 2004. Four years later, the number of memberships offered for sale had grown to 139. (May 23, 2014 announcement, first paragraph)

For 2015, dues and assessments for golf members total $23,300 including a food and beverage minimum of $2,000 per year and a special assessment of $4,500. The Club claims that members are contractually bound to all future changes in Club bylaws. (December 29, 2014 complaint, page 2, paragraph 8)

The Club claims the right to collect 12% interest, a 10% late charge and attorney fees for delinquent payment of dues. (Letter of December 22, 2010)