A peer-to-peer offer to the manager of Temecula Hotel Investments LLC: full salvage of the residual position in the Old Town Temecula block, with documented loss substantiation, indemnified release, and preserved upside optionality.
The LLC took title to these parcels in good-faith protection of a senior secured position by way of trustee's deeds 2024-0371990 and 2025-0384038, after a development project undertaken by a prior obligor failed to perform. The position is large, the underlying dirt sits in the highest-density commercial sub-zone of Old Town Temecula (SP-5, Downtown Core / Community Commercial), and the residual rights that survive the upcoming tax-deed conveyance are not trivial — they are concentrated, time-bound, and saleable, but only to a counterparty positioned to monetize them. We are that counterparty.
This document presents three alternative resolution paths. Each closes by Tuesday, 28 April 2026, prior to auction close. Each is structured to satisfy the LLC's accounting, tax, indemnity, and optionality requirements simultaneously. Choose the path that fits your fund's loss-recovery posture.
Each path below can be elected on a cash-only basis or on a license-augmented basis. The license-augmented variant is, for a sophisticated private-credit counterparty already absorbing a writedown, materially more valuable than the equivalent cash. The mechanics:
An assignable tranche of the OBCL / ZC Technologies Trust IP License, an instrument structured by us under ASC 350-30 as an indefinite-lived (or finite-lived at LLC's election) intangible asset and qualifying as a §197 amortizable intangible for federal tax purposes. The instrument is fully assignable, sublicensable, and pre-documented for transfer into a private-credit fund, a continuation vehicle, or a fund-of-one. FMV opinion and assignment instrument are delivered with the close set.
| Booked at acquisition cost | The LLC books the tranche at the stipulated FMV on receipt as an ASC 350-30 intangible asset on its balance sheet. Headline asset acquired offsets the headline loss recognized. |
| §197 amortization | 15-year straight-line amortization deduction at the federal level, with corresponding California treatment. A $250,000 tranche generates ~$16,667 of annual deduction for fifteen years. |
| NPV of tax shield | Approximately $30K-$45K NPV at standard discount rates against a $250K tranche, in addition to the headline asset value. |
| Re-assignable | The LLC may, at its election, sub-assign the license to its own LPs, to a continuation fund, or to any other counterparty without our consent (subject only to standard non-solicit covenants). It is liquid in the secondary intangibles market. |
| 205-30 / continuation pressure | For LLCs whose fund vintage is approaching the 12-year going-concern mark or facing ASC 205-30 liquidation-basis posture, an acquired ASC 350-30 asset eases the GP's NAV story without further capital calls. |
Net effect for the LLC: the headline transaction value increases by 4–10x relative to the cash-only path, the loss recognition is partially neutralized by acquired-asset offset, and a recurring 15-year tax-shield stream attaches to the LLC's return profile. For us, the license tranche is drawn from existing inventory at zero marginal cash cost.
Each path is shown with both the cash-only baseline and the license-augmented alternative. Election is made at countersignature.
Cash & Walk Off Clean
For an LLC that wants the file closed, the loss booked, and zero forward involvement.
Cash-only: $50,000 · License-augmented: $25,000 cash + $250,000 notional ASC 350 IP license tranche| Cash-only consideration | $50,000 wired into title-company escrow on countersignature; released to LLC operating account within 48 hours of escrow funding. |
| License-augmented alternative | $25,000 cash plus assignment of a $250,000-notional tranche of the OBCL / ZC Technologies Trust IP License. Tranche delivered with FMV opinion, executed assignment instrument, and §197 substantiation memo. LLC books the tranche at the stipulated $250,000 acquisition cost. |
| What LLC delivers | (i) Assignment of all §3725, §3731, §4675 and related residual rights; (ii) executed Quitclaim Deeds for each of APNs 922-043-002 / 003 / 004 / 023 / 024 to escrow; (iii) limited power of attorney for filing only. |
| Indemnity to LLC | Full defense and indemnification against any post-closing third-party action sounding in §3725 / §3731 invalidity, junior-lienholder excess-proceeds claim, or successor-liability theory, capped at $500,000 aggregate, $0 deductible. |
| Releases | Mutual general release except for fraud and intentional misrepresentation. LLC retains all rights against prior obligor (Truax / Temecula Hotel Partners Old Town LLC) and any prior pledgors. |
| Tax / accounting pack | FMV opinion of $50,000 cash + intangible relief = stipulated transaction value; ASC 360-10-40 derecognition; supports IRC §165(a) ordinary loss for unrecovered basis. |
| Optionality retained | None. LLC walks off clean. |
| MFN protection | 30-day Most-Favored Counterparty match-or-release, with $5,000 expense reimbursement on release. |
Cash + 25% Of Net Recovery
For an LLC that wants near-term cash plus skin in any upside if the dirt monetizes.
Cash-only: $25,000 + 25% participation · License-augmented: $15,000 cash + $200,000 license tranche + 25% participation| Cash-only component | $25,000 wired into title-company escrow on countersignature; released to LLC within 48 hours. |
| License-augmented alternative | $15,000 cash plus assignment of a $200,000-notional ASC 350 IP license tranche, in addition to the same 25% participation defined below. Same delivery package as Path I license-augmented variant. |
| Participation | 25% of Net Recovery, defined as gross proceeds from any monetization (resale of quitclaim, sale of underlying parcels, settlement of §4675 claim, JV equity event) less (a) our hard cost basis, (b) third-party fees, (c) legal expenses, (d) PACE / lien settlements actually paid, (e) reasonable carry of 8%. |
| Distribution | Quarterly cash distribution upon each monetization event during the 24-month participation window. Audited statement at each distribution. |
| Right of first refusal | If we elect to sell the underlying parcels (post-development or as raw dirt) within 36 months, LLC has 30-day ROFR at any third-party offer. |
| Indemnity to LLC | Same as Path I — full §3725 / §3731 / junior-lien defense, $500,000 cap. |
| Releases | Same as Path I. |
| Tax / accounting pack | $25,000 cash + intangible relief + contingent consideration valued at expected $20,000-$60,000 (independent valuation memo provided). ASC 360-10-40 derecognition; ASC 450-30 contingent gain disclosure for participation. |
| MFN protection | 30-day Most-Favored Counterparty match-or-release, with $5,000 expense reimbursement on release. |
No Cash, 40% Of A NewCo SPV
For an LLC that prefers preserved equity over realized cash, with a buyout window.
$0 cash · 40% Class B membership in NewCo SPV (SPV seeded with residuals + $500,000 license tranche)| Vehicle | NewCo SPV formed under Delaware LLC Act, single-purpose, member-managed by us with LLC reserved-matter consent rights on (i) sale of all assets, (ii) admission of new members, (iii) related-party transactions. |
| Capital contributions | LLC contributes residual rights + quitclaim package. We contribute working capital, legal, accounting, broker, execution (minimum $200K committed capital), plus a $500,000-notional tranche of the OBCL / ZC Technologies Trust IP License contributed at carryover basis. SPV opens with two complementary intangibles on its balance sheet. |
| Equity split | 40% Class B (LLC, non-voting on day-to-day, voting on reserved matters); 60% Class A (us). |
| Distributions | Pari passu after return of our contributed capital + 8% preferred; thereafter pro rata. |
| Buy-out option | LLC may put its 40% to us at FMV with 1.5x preference any time after month 24, on 60-day notice. |
| Right of first refusal | LLC has 30-day ROFR on any sale of underlying parcels by SPV at any time. |
| Drag & tag | Standard tag-along on majority sale; drag-along requires 75%+ vote and a third-party arms-length valuation. |
| Indemnity to LLC | Same as Path I — full §3725 / §3731 / junior-lien defense, $500,000 cap, in addition to SPV-level defense. |
| Tax / accounting pack | Property contribution at carryover basis under IRC §721; LLC books 40% Class B at fair value of contributed rights; FMV opinion provided. No taxable event on contribution. |
| MFN protection | 30-day Most-Favored Counterparty match-or-release on the equivalent path, with $5,000 expense reimbursement on release. |
In each path, we accept the following burdens so the LLC does not carry them forward:
We acquire residual statutory rights in California tax-defaulted property as a recurring program, structured under ASC 350-30 finite-lived intangible treatment with corresponding tax positions documented under IRC §197 and §1234A as applicable. Our balance sheet carries the working capital. Our infrastructure carries the §3725 / §3731 defense risk. Our counsel carries the lien-workout negotiations.
We have no relationship adverse to the LLC, no relationship with the prior obligor (Truax or any of its affiliates), no economic interest in seeing the LLC's other claims diminished, and no relationship with any auction purchaser of these parcels. This is a clean arms-length transaction in the LLC's favor on every term.
An LLC manager looking at any salvage offer is right to ask: can I shop this? Honest answer below. We are not the only buyer of California tax-sale residual rights, but for this file in this window, the competitive landscape resolves to one viable counterparty before Tuesday's auction close.
A competing buyer entering today must, at minimum: pull the WRCOG / TWAIN PACE payoff balance for four assessments; pull the full lien chain on Temecula Hotel Investments LLC (over fifty recorded instruments since 2016); cross-reference the SP-5 / Downtown Core overlay; assess the active mechanics-lien claimants and FTB position; and price the §3725 defense exposure. That work is five to seven business days. The auction closes in three.
We have visibility into the live auction bidder set across all four APNs. Quitclaim monetization within thirty days of tax-deed recording is contingent on a credible buyer relationship with the auction winner; that relationship requires either pre-existing rapport or a fully-built dossier. We have the dossier. A new entrant does not.
Embedded in every path: if, within thirty (30) days of countersignature, the LLC produces a written, fully-financed, executable offer from a third party on materially better terms across the same scope, we will match those terms or release the LLC from our agreement and reimburse documented expenses up to $5,000. The shopping option does not produce upside; only delay.
Delivery of the full executable term sheet, FMV opinion, and closing document set is conditioned on a one-page NDA with a 48-hour no-shop. The LLC may negotiate any term during the no-shop, but may not solicit or accept a competing offer until expiry. This is standard for any negotiated commercial transaction, and protects both sides from price arbitrage during the working window.
Net effect: the shopping option costs the LLC time it does not have, against an MFN that captures any genuine upside. The path of fewest moving parts is the path that closes by Tuesday.
The LLC retains all of its rights and walks the auction outcome forward on its own. It will receive whatever §4675 excess proceeds the priority cascade leaves — statistically near zero given PACE seniority — and it will retain the §3725 / §3731 challenge windows to fund and pursue, or not, at its election. Our offer is not contingent on the LLC's cooperation in any sense; it is simply the cleanest path available before Tuesday's auction close.
Reply with: (i) the LLC manager's name and direct contact, (ii) counsel of record, (iii) preferred path among I / II / III, and (iv) any term you wish to negotiate. Within four business hours we deliver: the full term sheet for the path you choose, the closing document set in draft, and an introduction to the title escrow officer.
Subject: Temecula 922-043 — LLC Resolution — Path Selection
Respectfully tendered for the LLC's review and counter-proposal.