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Getting the Most Out of Your Equity Golf Club Membership

Wed 2nd Nov, 2016 | Blog by

By: Rachel Kerlek, Esq.
Equity (n)

:fairness or justice in the way people are treated

:a share in a company : a share of a company’s stock

Merriam-Webster’s Learner’s Dictionary

My father, an avid but inconsistent golfer, would argue that there is certainly no “fairness or justice” in the game of golf. However, in southwest Florida, particularly in the 1990s through the early 2000s, the term equity was synonymous with golf memberships – a prospective member of a golf club would make a deposit, sometimes referred to as an equity contribution, in exchange for the privilege of being a member with full rights to golf and other amenities. These equity memberships varied in price throughout the years, but often were more than $100,000. Though expensive, equity memberships were appealing for two main reasons:

1) The number of memberships in these clubs was limited, offering a sense of exclusivity, and

2) The equity contributions or deposits were refundable.

The refund policies between golf clubs varied, as each club, was governed by its own unique set of membership documents (typically consisting of a membership plan, bylaws, and rules and regulations). One thing that each and every supposed equity club had in common was that, upon the occurrence of a certain set of events, the member who paid a significant equity deposit would receive a large portion, if not all, of the deposit back after he or she resigned.

Most frequently, the right to a refund was triggered by the club selling a certain number of new equity memberships to “replace” the resigned members’ memberships. Upon the sale, the resigned member received a refund of some percentage of his or her contribution, often depending upon the price of the “replacement” memberships.

However, in 2007/08, golf clubs began to experience the same economic difficulties that spread throughout the country as a result of the Great Recession. In response, clubs utilized a provision in the membership documents that gave the club the right to amend its membership documents in order to change the types of memberships offered and/or its refund policies.

In some cases, clubs simply removed the refund policy altogether. In other cases, a club would claim that it “could not” resell the required “replacement” memberships. In reality, however, the club’s supposed inability to sell the “replacement” memberships was the result of its refusal to offer more equity memberships. Alternately, it would offer other, non-equity memberships at a far more favorable price point such that the “replacement” memberships were effectively eliminated. As a result, individuals who paid tens or even hundreds of thousands of dollars for equity (i.e., refundable) memberships attempted to resign and take advantage of the contractual refund policy offered by the club at the time they joined, were told they were simply out of luck. These practices continue today.

Greg Woods, one of the firm’s founding partners, represented several of these aggrieved individuals in some of the pioneer cases on this issue. Mr. Woods argued that the club could not use the “right to amend” provisions in order to do away with the members’ refund rights. Rather, the “right to amend” provisions were intended to deal with non-contractual items such a tee times, attire, dues and the like. The trial court and the court of appeals agreed with Mr. Woods, and the law is now well-settled that a club cannot use “right to amend” provisions to deprive a member of his or her contractual right to a refund.

To this day, more than eight years after the economic downturn, the firm continues to represent former club members in their fights to obtain refunds from clubs that have changed the rules in utter disregard of their initial promises of “equity.”

WWMR&G team member Rachel Kerlek, Esq., practices in the areas of commercial, business, real estate, construction and trust and probate litigation. She also handles issues related to land use and zoning on behalf of landowners, homeowners’ associations and local government entities.


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