Canyon Lake



Re: CLPOA – Lake Lease Issues

Dear Members:

As most of you are aware, this office has the privilege of acting as general counsel to the Association. A situation has arisen in Canyon Lake that requires some immediate and special responses from any Broker who is doing any business within Canyon Lake. The Canyon Lake Property Owners Association (CLPOA) and the Elsinore Valley Municipal Water District (EVMWD) are currently engaged in a substantial and complex dispute regarding the lake lease and condensed recreational agreements that CLPOA currently has with EVMWD as well as the pricing of that lease. These are very complex issues. The material fact is that the litigation is pending. Anything beyond the material fact of the pending litigation is probably beyond the scope of the Broker’s license and duties. Therefore, it is our recommendation that you hand out the Disclosure that has been posted on the Association’s website and sent to a number of the Brokers, and caution Agents to not say anything else for fear that they may misstate a fact and/or law. We suggest clients initial each page and copies be retained in your files.

The situation may change on a daily basis. We have been in contact with principals on both sides and will keep the members of the Association up to date as best as we can. We do not represent either CLPOA or EVMWD and are acting solely on behalf of the brokerage community as counsel for the Association.

California law, CalBRE regulations and case law mandate that Brokers and Agents disclose material facts. We have researched the differentiation between a fact and an explanation ofthe potential ramifications of those facts. There is clear legal authority that you are required to disclosure material facts, but the scope of your license does not permit you to discuss the potential ramifications of those facts, particularly complex legal facts. In this situation, there are many potential ramifications and they are very complex. Impacts on property values, pending escrows and the possible resolution of these cases are all still to be decided. The Association has been very assertive in allowing us to meet with and speak with the attorneys for both side and we have done so on your behalf. We will continue to monitor the situation and as information becomes available to us, we will notify the membership.

Very truly yours,
John V. Giardinelli
Association Counsel