I-Team Exclusive: Land Lease Limbo
Peter Daut
PALM SPRINGS, Calif. (KESQ) – Dozens of people in Palm Springs are fearful they may lose their homes. They own their homes, but the land is leased from a member of the Agua Caliente Band of Cahuilla Indians. To renew that lease, he is demanding higher monthly payments– and a $100,000 signing fee. And it’s all perfectly legal.
I-Team investigator Peter Daut went to Saddlerock Estates, which is located off Palm Canyon Drive near Via Sonoma, and met with residents whose homes are on leased land. Debby Luna has lived in her home for 17 years, and hoped to stay there for the rest of her life. But now that has suddenly changed, after she and 23 other homeowners received a letter from the attorney representing Agua Caliente tribal member William McGlamary, who owns the land her community sits on.
“I have my house up for sale, because I have to try to get something out of it,” Luna said.
The community’s master lease was created back in 1977 and set to expire in 2042, but McGlamary’s attorney David Jacobs wrote that McGlamary now wants each homeowner to pay an additional lease that would expire in 52 years. Homeowners would have an immediate monthly payment increase of $450, which would also increase by 20 to 30 percent every five years. That’s on top of the $200 per month lease they’re already paying. Jacobs said this was based on fair market rents from an appraisal in 2019. But additionally, homeowners also have to pay a whopping $100,000 “signing fee” by December 31st.
“I can’t believe he would do this. I mean to me it’s cruel,” Luna said.
If they pay by September 1st, that amount would drop to $85,000, but they would still have to pay an additional $15,000 in attorneys fees and $2500 in tribal charges. And if they don’t, they will end up losing their homes.
“He’s not giving you a chance to do anything. It is just final, come up with that money. I said, ‘How am I supposed to come up with this money?’ I sent him an email back. He said, ‘Well get a loan,'” Luna said. Daut asked her: “Will you have to move?” She answered: “We have to walk away from our homes once the lease is up if you can’t pay that money.”
Digging into the sublease from 1977, it is all clearly outlined. In Article 3, the term of the lease is noted to February 9, 2035. A seven-year extension was granted after a time lag for development. In Article 20, all building improvements, excluding removable personal property shall remain on the property after termination of this lease and shall become the property of the lessor or the master lessor, as the case may be. In Article 24, titled “Holding Over,” this lease shall terminate and become null and void without further notice upon the expiration of the term. It goes on to say the lease cannot be renewed unless signed and agreed upon by both parties. So that means to get lease terms back to a 30-year term, which is required by mortgage lenders, a new lease agreement must be signed. And that means pay.
“I don’t have another place to go,” Saddlerock Estates HOA president Dave Buck said. Buck has lived in his home for nearly two decades, and said the HOA has been trying to negotiate with McGlamary in good faith but to no avail.
“I don’t think many people here have $100,000. So I would say what happens is that in 2042 we just have to walk away,” Buck said. Daut asked him, “Did you ever imagine anything like this would happen?” He answered, “No. They’re taking our home away from us. How do you come up with $100,000 and you get practically nothing for it.” Daut asked, “What would you say to someone who is considering buying a home on leased land?” Buck answered, “I’d tell them they’re crazy.”
HOA attorney Michele McKee said, “As an attorney it’s always frustrating when you feel like there’s not a lot more you can do.” She also pointed to a recently renewed land lease for a similar community nearby. Sunshine Villas was built around the same time as Saddlerock Estates. Their lease was renewed last year and now expires in 2076. The land is owned by another tribal member. Turns out their lease was renewed for a one-time fee of only $10,000. And in 2042, when the new lease goes into effect, their monthly fee will be $662.
“It’s very hard to fight, because the Indians it’s a contract negotiation. You can’t force someone to enter into a contract that they don’t agree to,” McKee said. Daut asked her, “Are you hopeful that the tribe will get involved, and what do you want to say to the tribe if they’re watching this?” She answered: “If this happens and these homes go back to Mr. McGlamary it will completely ruin the value of Indian land. And that is of interest for a lot of people. There’s a lot of economic interest at stake here that we should come to some type of reasonable solution.”
McKee sent Jacobs a proposal informing him that “a significant number of our residents are seniors living on fixed or limited incomes. These are middle-class people, not millionaires. The terms of your proposal– such as the $100,000 “signing fee” per unit– are not only truly unaffordable, but entirely out of line with comparable and recent leasehold renewals in the area.”
Jacobs then wrote back in part: “Your most unwelcome letter comes a day late and a dollar short…” adding “the homeowners at Saddlerock Estates have enjoyed their low rents for many years and may continue to enjoy those low rents for almost seventeen more years. This is what they bargained for when they purchased their units…” and “William’s offer remains open until December 31, 2025. This is the only successor lease he will offer for Saddlerock Estates.”
Daut also reached out to Jacobs, asking what he would like the homeowners, as well as the public, to know about this situation and if there is still room for negotiation. His response: “The homeowners at Saddlerock Estates have no need to be concerned whatsoever. They have enjoyed low land rents since 1977 when their rent started at $60/month and now is just $200/month and will continue to be very, very low through May 31, 2042 when their leases expire by their terms.”
But Debby Luna, who also happens to be Native American and a member from a different tribe, sees it very differently. She now wants to sell her home, but does not know if anyone would even buy it.
“It just makes you want to cry, because I love my home and then we have to leave and not even have a chance. It’s devastating to me,” she said.
Daut reached out to the Agua Caliente Band of Cahuilla Indians and the Bureau of Indian Affairs. They would not comment.