Tellico Village organization files suit over late assessments

By Hugh G. Willett
The Tellico Village Property Owners Association has filed suit to recover delinquent assessments from a real estate company that owns hundreds of lots in the upscale lakeside community.

The suit alleges that the owners of the property have engaged in a conspiracy to encumber the lots with Deeds of Trust to hamper collection efforts.

According to the suit, about 354 lots formerly owned by National Recreational Properties Inc. and now owned by CS Paradiso Holdings LLC, have been in delinquency since as far back as 2007. The total amount owed between NRPI and CS Paradiso could be as much as $718,365.41 as of October 2010, the suit alleges.

Several years of Loudon and Monroe County property taxes are also delinquent, the suit alleges.

A message on an answering machine at the headquarters of NRPI in Irvine, Calif., said that because of the current economic climate, the company was no longer in business. CS Paradiso is headquartered in Chevy Chase, Md. The company did not respond to requests for comment.

The suit further alleges that the owners of the lots subsequently encumbered the properties using a Deed of Trust to subordinate TVPOA liens against the property.

By executing the Deed of Trust Amendments, the defendants "intentionally and knowingly contrived to indefinitely encumber title to each Tellico Village lot in which defendants acquired any legal or equitable interest so much beyond its fair market value as to effectively destroy the TVPOA's assessment lien and its ultimate remedy of foreclosing such lien in case of non-payment," the suit said.

The suit also alleges that "shell" companies or "alter ego" companies have been used to complicate the collection process. The suit requests that the court disregard these shell companies and hold defendants Jeffrey P. Friedan, CEO and director of NRPI, and the other responsible parties, including CS Paradiso, liable.

The suit would seek to void the Deed of Trust filings so that the POA could exercise liens and sell the lots and use the proceeds to pay the back assessments. The suit also requests relief in the form of treble damages based on claims of breech of contract.

Collection of past due assessments has been a controversial issue in Tellico Village for several years. In 2009, a group of residents calling themselves "Tellico Village Watchdogs" challenged the POA to increase activity on delinquent assessments, which had begun to rise with the slowing economy.

"Prior to filing suit, the POA had filed liens for past due assessments against all the properties that are the subject of the litigation in accordance with the POA's collection policies and practices," the association said in a prepared statement.

According to the POA, the number of lots in arrears on assessments has dropped this year but the total amount owed has continued to rise. A representative of the association declined to provide the actual amount in arrears.