TRUST AGREEMENT
March 2, 1964
Recorded at Book 6953 page 519

“This Trust may be referred to as the
GOLDEN RAIN FOUNDATION...
This is a business trust
A business trust is an agreement set up for the
control and management of assets and property.
Th...
Why was the TRUST
established?
The Trust was established to meet
requirements to finance a project to be
known as Leisure ...
BACKGROUND
To better understand
why the Trust was necessary
• The federal government passed the National
Housing Act and created the Federal Housing
Agency (FHA) to administer Sectio...
Moulton Ranch Circa 1960
courtesy of Orange County Archives

As land in the cities and suburbs became more
scarce and more...
Rossmoor Corporation was a community
development company headed by Ross Cortese.

• In the 1960s Cortese negotiated the pu...
Golden Rain Foundation (GRF) of
Laguna Hills was incorporated in
1962 to provide services and
community facilities to the ...
Trust Agreement
• The Trust Agreement was created with the
GRF Board as Trustee and (a not yet member
occupied) Mutual One...
In essence the GRF Trust is a
“Construction Contract”
To meet the demands of United California
Bank (Mortgagee) assuring t...
Three Major Parts of the Trust
• The Agreement that actually sets up the Trust.
• Exhibit B which states the Terms of the ...
Who Owns the Trust?
The Trust is wholly owned by the Mutuals.
It is an Asset of the Mutuals.
The Golden Rain Foundation
do...
GRF has a Dual Role
As a Nonprofit Mutual Benefit Corporation

As TRUSTEE

Articles of Incorporation
November 19, 1962

Tr...
The Mutuals’ Dual Role
AS TRUSTORS

AS BENEFICIARIES

The Mutuals have
provided all of the
funding to acquire or
construct...
The Trust Estate includes:
• All Trusteed Sums received from the Mutuals
to become Trustors/Beneficiaries.
• All parcels o...
Highlights
of the
Trust Agreement
• Trustee Duties are to:
– Perform all acts contemplated, necessary or
desirable to carry out the plan of operations of th...
• Trustee shall have, in addition to all powers,
rights and privileges provided by law for
trustees, all powers necessary ...
• The Trust shall terminate 60 years from
the date March 2, 1964 or 21 years after
the death of specific named individuals...
• Other projects could become a Trustor
and Beneficiary by adopting and agreeing
to the terms of the Trust and depositing
...
“Trusteed Sums”
Trusteed Sums varied per Mutual ($600 - $5,230).
As a result, the beneficial interest or percentage
of own...
Specific
Terms in Exhibit B,
as amended
2. “It is specifically understood and agreed
that completion of all the Improvements as
planned is dependent upon the deve...
3. “In the event Leisure World is not fully
developed, the Improvements will of
necessity be proportionally reduced.”

4. ...
5. “Golden Rain in its said capacity as Trustee
shall maintain the Improvements and the
grounds and equipment in good repa...
7. GRF, at its discretion, shall refund/credit to the
members of the Cooperatives their proportionate
share of sums in exc...
10. “Within 90 days following the end of
each fiscal year GRF shall furnish the
Cooperatives… with a complete annual
finan...
11. Any Cooperative other than MUTUAL ONE
may become a party to the Agreement upon
the execution of an Addendum, by
supple...
13. Exhibit B “is not intended to end and does not
diminish any obligations imposed on GRF by the
Regulatory Agreement” (E...
Schedule C is the list of Community
Facilities Planned for the
18,000 dwelling Units

Only 12,736 units (70.75%)
were cons...
Exhibit II (Schedule C)
Estimated Costs of Community
Facilities
2 Club Houses with Pools

5 Clubhouses

$1,440,000

1,594,...
Amendments to the Trust
• Trustee may not unilaterally alter, modify or
amend the Trust, except if required by federal,
st...
Trust Amendments
• March 30, 1964
Book 6992 Page 599
– Amended “Exhibit B” by adding paragraphs 6, 7, 8 & 13

• February 1...
Termination of the Trust
• The Trust may be terminated at any time by the
written election, delivered to Trustee, of all t...
Some questions need to be answered
• Where does GRF, as Trustee, get the authority to
continue adding Community Facilities...
You can read the original Trust Documents on:
– The Laguna Woods Village website under
GRF General Information/Governing D...
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GRF Trust Agreement Presentation

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GRF Trust Agreement Presentation

  1. 1. TRUST AGREEMENT March 2, 1964 Recorded at Book 6953 page 519 “This Trust may be referred to as the GOLDEN RAIN FOUNDATION TRUST”.
  2. 2. This is a business trust A business trust is an agreement set up for the control and management of assets and property. This type of trust has trustees who take responsibility for the management of the assets in the trust. The trustees manage the assets not for their own gain and benefit, but for the benefit of one or more trustors/beneficiaries.
  3. 3. Why was the TRUST established? The Trust was established to meet requirements to finance a project to be known as Leisure World, Laguna Hills
  4. 4. BACKGROUND To better understand why the Trust was necessary
  5. 5. • The federal government passed the National Housing Act and created the Federal Housing Agency (FHA) to administer Section 213 as an indirect way of stimulating the economy. • Section 213 guaranteed mortgage financing at low interest rates for housing that met FHA specifications and conditions. • Banks and other lenders were the Mortgagees who actually provided the financing.
  6. 6. Moulton Ranch Circa 1960 courtesy of Orange County Archives As land in the cities and suburbs became more scarce and more expensive, developers moved further out into rural areas.
  7. 7. Rossmoor Corporation was a community development company headed by Ross Cortese. • In the 1960s Cortese negotiated the purchase of some Moulton Ranch land to build a large-scale community. • Rossmoor needed Capital to purchase the land, develop it, and construct the facilities. • The acquisition of the property and the construction of Improvements would be financed by the sale of stock of Cooperatives and mortgage loans insured by the Federal Housing Authority (FHA).
  8. 8. Golden Rain Foundation (GRF) of Laguna Hills was incorporated in 1962 to provide services and community facilities to the housing corporations of Laguna Hills. • The incorporating and early directors of GRF were employees of Cortese. The first resident was elected to GRF Board in 1966.
  9. 9. Trust Agreement • The Trust Agreement was created with the GRF Board as Trustee and (a not yet member occupied) Mutual One as the Member and Trustor/Beneficiary. • None of the lenders would have funded the development and FHA wouldn’t have insured the loans without a mechanism to insure the future development and management of the Trust properties and services.
  10. 10. In essence the GRF Trust is a “Construction Contract” To meet the demands of United California Bank (Mortgagee) assuring that specific Community Facilities and Offsite Improvements would be acquired, built, managed and operated by GRF/Trustee for the benefit of the Mutuals/Trustors.
  11. 11. Three Major Parts of the Trust • The Agreement that actually sets up the Trust. • Exhibit B which states the Terms of the Trust. • Exhibit C (amended as Exhibit III) which was the Regulatory Agreement between GRF and the FHA.
  12. 12. Who Owns the Trust? The Trust is wholly owned by the Mutuals. It is an Asset of the Mutuals. The Golden Rain Foundation does not own the Trust. GRF manages the Trust assets for the benefit of the Mutuals.
  13. 13. GRF has a Dual Role As a Nonprofit Mutual Benefit Corporation As TRUSTEE Articles of Incorporation November 19, 1962 Trust Agreement March 2, 1964 Regulated by Corporations Code Regulated by Probate Code Corporate Members - Voting Members Resident Members - No Vote Mutuals – Trustors as well as Beneficiaries of the Trust Statutes and Bylaws establish the rules by which the corporation will be run. Bylaws usually set forth how members vote for the board of directors, the number and term limit of members of the board of directors, the duties of the board, the duties of the officers, meeting requirements and other incidental provisions. The Trust Agreement specifies the purpose of the Trust along with the terms and conditions by which the assets are to managed and ultimately distributed to the Beneficiaries. All affected parties and the courts are legally bound by the provisions of a Trust Agreement.
  14. 14. The Mutuals’ Dual Role AS TRUSTORS AS BENEFICIARIES The Mutuals have provided all of the funding to acquire or construct the planned Community Facilities and Offsite Improvements. The Mutuals provide the continuing funding to pay for the expenses of the Trustee in administering and operating the Trust.
  15. 15. The Trust Estate includes: • All Trusteed Sums received from the Mutuals to become Trustors/Beneficiaries. • All parcels of land and all Improvements acquired or constructed. • All sums paid to Trustee by the Mutuals to cover costs of maintenance of the Improvements. • Any other money or property held by or received in Trust.
  16. 16. Highlights of the Trust Agreement
  17. 17. • Trustee Duties are to: – Perform all acts contemplated, necessary or desirable to carry out the plan of operations of the Trust Agreement. – Provide annual financial reports to the Mutuals detailing the Trustee’s operations. – Retain all funds that are part of the Trust Estate in a separate bank account.
  18. 18. • Trustee shall have, in addition to all powers, rights and privileges provided by law for trustees, all powers necessary to carry out the duties imposed on Trustee by the Trust Agreement and, in all such cases, Trustee shall have sole discretion. • With respect to all such transactions Trustee shall have no liability except for willful and wrongful misconduct.
  19. 19. • The Trust shall terminate 60 years from the date March 2, 1964 or 21 years after the death of specific named individuals (their birthdates are from 1954-1963). • Project when completed will contain an estimated total of 18,000 dwelling units. • Specific Improvements and Community Facilities were listed.
  20. 20. • Other projects could become a Trustor and Beneficiary by adopting and agreeing to the terms of the Trust and depositing Trusteed Sums. • In the event a project was not financed by FHA, GRF would determine the amount of the Trusteed Sums.
  21. 21. “Trusteed Sums” Trusteed Sums varied per Mutual ($600 - $5,230). As a result, the beneficial interest or percentage of ownership that each Mutual has is not in direct proportion to the size of its membership. Mutual United Third Mutual Fifty TOTAL Trusted Sum Percentage $11,340,430 58.5 % 7,597,428 39.2% 450,950 2.3% $19,388,808 100.0% Period Mar. 1964 to June 1968 Nov. 1969 to Sept. 1981 1974
  22. 22. Specific Terms in Exhibit B, as amended
  23. 23. 2. “It is specifically understood and agreed that completion of all the Improvements as planned is dependent upon the development of Leisure World being fully completed….” “and Golden Rain shall not be obligated to construct the Improvements to a greater extent than required by the actual development of Leisure World, or to expend thereon any more money than it receives from time to time in trust as provided in paragraph 1 hereof” [instructions for Trusteed Sums]
  24. 24. 3. “In the event Leisure World is not fully developed, the Improvements will of necessity be proportionally reduced.” 4. “No Cooperatives shall be obligated to pay for Improvements more than its respective increment contributed to said trust.”
  25. 25. 5. “Golden Rain in its said capacity as Trustee shall maintain the Improvements and the grounds and equipment in good repair.” 6. “Golden Rain shall operate and manage the Improvements and provide administrative, recreational and medical services for the benefit of the members of the Cooperatives and their successors in interest at cost and on a nonprofit basis. The cost shall be included in the monthly [assessments]charged on a pro rata basis to the members by their respective [Mutuals].”
  26. 26. 7. GRF, at its discretion, shall refund/credit to the members of the Cooperatives their proportionate share of sums in excess of the amount expended or obligated after the end of each fiscal year. 8. GRF, in its sole discretion, shall determine the rules and regulations relative to the use of the Community Facilities and the extent of services to be provided in connection with them. Use of any facilities by non-members shall be subject to the prior written consent of 2/3 voting power of GRF.
  27. 27. 10. “Within 90 days following the end of each fiscal year GRF shall furnish the Cooperatives… with a complete annual financial report, prepared/certified by a Public Accountant or CPA and based upon examination of its books and records.”
  28. 28. 11. Any Cooperative other than MUTUAL ONE may become a party to the Agreement upon the execution of an Addendum, by supplementing Exhibit I and by performing all other duties subject to the conditions and restrictions as an original party to the agreement.
  29. 29. 13. Exhibit B “is not intended to end and does not diminish any obligations imposed on GRF by the Regulatory Agreement” (Exhibit C/III). [Regulatory Agreement terminated when the final FHA insured mortgages were paid.] In the event of conflict between the Amended Exhibit B and the Regulatory Agreement (Exhibit C/III), the Regulatory Agreement will prevail. In the event of conflict between the Amended Exhibit B and the Trust Agreement, the terms of Amended Exhibit B shall prevail.
  30. 30. Schedule C is the list of Community Facilities Planned for the 18,000 dwelling Units Only 12,736 units (70.75%) were constructed and no additional units are planned.
  31. 31. Exhibit II (Schedule C) Estimated Costs of Community Facilities 2 Club Houses with Pools 5 Clubhouses $1,440,000 1,594,000 Auditorium 570,000 Riding Stables 158,750 Maintenance Building 512,405 18 Hole Golf Course Guard Houses & Gates 2,095,300 64,000 Administration Bldg. 790,680 Improve Park 260,000
  32. 32. Amendments to the Trust • Trustee may not unilaterally alter, modify or amend the Trust, except if required by federal, state or local governmental agency. • The Trust may be altered, modified or amended by written instrument executed by the Trustee and all beneficiaries of the Trust.
  33. 33. Trust Amendments • March 30, 1964 Book 6992 Page 599 – Amended “Exhibit B” by adding paragraphs 6, 7, 8 & 13 • February 1, 1966 Book 7838 – Amended Exhibit C, the Regulatory Agreement between GRF and FHA. • October 4, 1968 Book 8841 Page 215 – Amendments added to include condominiums - This amendment was cancelled and superseded September 29, 1971 • September 29, 1971 Book 9845 Page 89 – Amendments added to Provisions to include condominiums – Amended Paragraph 8 of Exhibit B to specify that non-members could not use any facilities without prior written consent of the Cooperatives exercising two-thirds of the voting power of Trustors.
  34. 34. Termination of the Trust • The Trust may be terminated at any time by the written election, delivered to Trustee, of all the Beneficiaries of the Trust. • Promptly following the termination of this Trust, the Trustee shall render an accounting to each of the Beneficiaries and shall distribute all the Trust Estate, subject to any debts or other obligations, to the Beneficiaries, in the form of undivided interests proportioned to their respective Trusteed Sums.
  35. 35. Some questions need to be answered • Where does GRF, as Trustee, get the authority to continue adding Community Facilities and Improvements? (See Exhibit B Terms, #2,3,4 ) • What gives GRF get any authority to perform services in Mutual common areas? (See Exhibit B Term, #6) • Should the Corporate Members give GRF consent to allow non-members to use Trust facilities? (See Exhibit B Term, #6) • Is there a termination date or is it “not intended to end”? (See Exhibit B Term, #13) • Can the Mutuals be Co-Trustees? • When and how should the Trust be amended?
  36. 36. You can read the original Trust Documents on: – The Laguna Woods Village website under GRF General Information/Governing Documents – Residents’ Voice Website – Association of Co-ops and Condos Website Thank You!

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