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. 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. 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. BACKGROUND
To better understand
why the Trust was necessary

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Highlights
of the
Trust Agreement

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. • 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. • 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. • 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. “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. Specific
Terms in Exhibit B,
as amended

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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!