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Archive for Thursday, August 18, 2011

Bella Sera residents hope to expand community after sale

August 18, 2011

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The granite is polished, the pool is filled, the outdoor kitchen is stocked, and the lobby still “looks like a four-star hotel.”

Now, all that is missing are people to live here.

The handful of residents at the Bella Sera at the Preserve complex are hoping that soon will start changing as an area bank works to take over the multimillion dollar condominium development along Bob Billings Parkway near Wakarusa Drive.

M&I Marshall & Ilsley Bank is in the process of foreclosing on the property after the development group that built the project back in 2006 has fallen behind on its payments. The sheriff’s sale for the property will be at 10 a.m. today at the Judicial and Law Enforcement Center, 111 E. 11th St.

“The neighbors who are here are anxious to get more neighbors,” said Tammy Steeples, who lives at the development.

Steeples estimates that only 13 of the approximately 50 condominium units are occupied. According to court documents, the development has struggled financially. The project received a $16.28 million loan in 2006, but the loan went into default as the development group fell behind on the payments. About $13.45 million remains unpaid on the loan, according to court records.

She said the development is extremely nice. It includes a swimming pool, a huge patio, an outdoor kitchen, a media room for up to 20 people, a bar area and a lobby that “looks like a four-star hotel.”

But she said the development group — which was lead by Lawrence businessman Jes Santaularia — got the project started at the wrong time. The real estate bubble burst, and home and condo sales dried up.

Steeples said since word of the foreclosure began to circulate a few weeks ago, several community members have been asking whether there would be a buying opportunity at the development.

“We’re hoping that this will really allow them to start selling again,” Steeples said. “Maybe there will be some bargains out here for awhile.”

The sale includes about 38 unfinished condo units, plus a vacant lot that is adjacent to the property. It wasn’t immediately clear whether today’s auction would sell the condo units individually or whether all the property would be sold in bulk. A spokeswoman with the Sheriff’s Department did not know, and the attorney handling the foreclosure for the bank was unavailable for comment. But the legal filings suggested the property would be sold in bulk.

That makes it unlikely that many individuals will be bidders. The minimum bid for the property will be the $13.45 million owed on the loan, and the state’s foreclosure laws require the winning bidder to submit a cashier’s check for the full amount shortly after the auction has concluded.

Comments

thuja 3 years, 1 month ago

Its fun to play rich guy with money you borrowed and create useless buildings, eh Jesss.

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3 years, 1 month ago

UPDATE: I covered the auction this morning. It sold to the bank, but not for the amount owed on the loan. It sold for $2.75 million. Normally, the opening bid on a foreclosure is what's left unpaid on the mortgage. But in today's world, I guess that is not always the case. I talked with the attorney for the bank and she said operations at the condo complex would continue as normal. She said the bank would be looking to take offers on the property. There were many Lawrence developers in the crowd this morning, but none bid. The bank's bid was the only bid. It sounded like the bank may entertain offers from individuals who want to buy a single condo unit. Thanks, Chad

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alfie 3 years, 1 month ago

AS REPORTED; That makes it unlikely that many individuals will be bidders. The minimum bid for the property will be the $13.45 million owed on the loan, and the state’s foreclosure laws require the winning bidder to submit a cashier’s check for the full amount shortly after the auction has concluded. Where did you get this information?

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alfie 3 years, 1 month ago

"The minimum bid for the property will be the $13.45 million". Yet they paid 2.75 million, i would have paid more but was told the minimum bid will be 13.45 million. Explanation is in order

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hail2oldku 3 years, 1 month ago

I didn't read this story when originally posted, but I could have told you that was wrong. You may have been willing to pay more than the 2.75 million the bank bid, but they would have bid you up to that 13.45 million if you had participated. They opened with the 2.75 and now Jess and his development corp will be stuck with a 1099 forgiving the difference between the two amounts. That's a hell of a lot of "income" that he's going to have to declare even though he never saw a dime.

I'm sure the bank would be happy to sell the property to you for around 4 million now. Heck they may even finance you.

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Sigmund 3 years, 1 month ago

alfie (anonymous) says… "That makes it unlikely that many individuals will be bidders. The minimum bid for the property will be the $13.45 million owed on the loan, and the state’s foreclosure laws require the winning bidder to submit a cashier’s check for the full amount shortly after the auction has concluded. Where did you (cub reporter and PR hack, Chad Lawhorn) get this information?"

Likely from the Sheriffs office spokeswoman (the one who also didn't know exactly what was included in the sale) or one of the bidders (trying to limit possible competition since the attorney handling the foreclosure for the bank didn't return his call).

It is also likely that M&I was the winning bidder as normally banks will bid the price at least close to amount they are owed. If M&I is the winning bidders they get a $10 million loss on the original loan to use to offset other income or gains, the property, and probably a deficiency judgment in the near future against the development group. Pretty sweet outcome and bet they are glad Chad Lawhorn was "mistaken" on the details.

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alfie 3 years, 1 month ago

(cub reporter and PR hack, Chad Lawhorn). Hey Sigmund these were you words not mine. i think overall chad does a decent job reporting, not sure about this time though.

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3 years, 1 month ago

This does deserve some explanation. Simply put, it was poorly written yesterday. It was the expectation of many, based on how sheriff's sales typically go, that the bank would bid what was left on the mortgage. But that is not how I wrote it. Again, could have been written better, should have been written better. No ill intent involved, just sloppy writing as I was wrapping up the day yesterday. My apologies. Thanks, Chad

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Kontum1972 3 years, 1 month ago

hmmmm...make a nice frat house...or bordello of blood

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Jeff Cuttell 3 years, 1 month ago

I suggested the Homeless Shelter should go there way back when. That would be a great spot.

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George_Braziller 3 years, 1 month ago

"The project received a $16.28 million loan in 2006."

"About $13.45 million remains unpaid on the loan, according to court records."

That means $2.83 million had been paid on the mortgage.

"It sold to the bank, but not for the amount owed on the loan. It sold for $2.75 million."

How can the bank "buy" something they already technically own. The purchase price is slightly less than what had been paid on the mortgage. Did they "buy" it for what had been paid on the mortgage? Is the purchase price just a number that has to be legally recorded or did the bank have to write a cashier's check to itself?

In a nutshell the bank now has full legal ownership of the building. But, I'm both confused and curious as to how the transaction takes place.

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KU_cynic 3 years, 1 month ago

I think the idea is that if no one wants to buy the asset for what the bank is owed then the bank itself will keep the property.

The foreclosure auction supposedly happened this morning, but I've seen no updates on what happened.

So, LJW, what happened?

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MISTERTibbs 3 years, 1 month ago

Look at Chad's 11:05 posting above. That's what happened.

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George_Braziller 3 years, 1 month ago

I figured it out on my own. The bank "bought" it for $2.75 million but by doing so they are now responsible for all the contractor liens filed against the property so all of those will have to be paid.

The actual out-of-pocket expenses will probably be about five times the recorded sale price.

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alfie 3 years, 1 month ago

(cub reporter and PR hack, Chad Lawhorn). Hey Sigmund these were you words not mine. i think overall chad does a decent job reporting, not sure about this time though.

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Sigmund 3 years, 1 month ago

George_Braziller (anonymous) says… "How can the bank "buy" something they already technically own."

Because technically they didn't own it. They held a interest in the property to secure the loan they made to the owners, who technically owned it. When the owners failed to make payments M&I brought a action to have the courts seize the property and sell the property to the highest bidder and send them the proceeds. They bid on the property and bought the property, (they will send a check to themselves) and now they technically own the property.

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George_Braziller 3 years, 1 month ago

It's a matter a semantics. When I bought my house I took out a mortgage and the property was legally recorded in my name. However since I was using money from the mortgage company to buy the house they really did own it until I paid back the money they were letting me use.

I was owner of record but I didn't actually own it. The mortgage company did.

It is however all mine now. Paid off a 30 year mortgage in 12 1/2 years.

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somedude20 3 years, 1 month ago

Looks like an old folks home, it really does. Heck, I thought it would be a place for the blind since it is so darn nasty lookin.

U-G-L-Y you don't need no alibi you ugly , you ugly!

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George_Braziller 3 years, 1 month ago

It is pretty hideous. I drove by once when it being constructed and the first thing that popped into my head was Boca Raton Retirement Community. The second impression was Motel 6.

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Sigmund 3 years, 1 month ago

alfie (anonymous) says… "he (cub reporter and PR hack, Chad Lawhorn). Hey Sigmund these were you words not mine. i think overall chad does a decent job reporting, not sure about this time though."

Yes I know, that is why I put my words, "cub reporter and PR hack, Chad Lawhorn" clarifying the subjective pronoun "he," in parenthesis to indicate that those were not your words.

Be sure to "Like" Chad Lawhorn on his Myface page.

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Sigmund 3 years, 1 month ago

George_Braziller (anonymous) replies… "I was owner of record but I didn't actually own it."

Beg to differ, but yes you did, you technically owned the property.

A mortgage occurs when an owner (usually of a fee simple interest in realty) pledges his interest (right to the property) as security or collateral for a loan. A mortgage is only security on the loan you used to buy the property. Technically you are the owner of the property and technically the bank held a mortgage securing your loan.

If the bank owned the property they could kick you out of the property anytime they wanted even if you were current, which they can't. If the bank owned the property they would have to pay the property taxes, which they don't.

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George_Braziller 3 years, 1 month ago

That's what I said. On paper I "legally" owned the property and was responsible for the debt, insurance and taxes, but realistically the mortgage company owned it until the debt was paid. If I didn't live up to the contractual agreement they could take the collateral (house and property.)

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Reid Hollander 3 years, 1 month ago

I don't think you are getting it. Kansas is a lien theory state as opposed to a title theory state. You owned it, period.

So when you say "I was the owner of record but didn't actually own it" you are just wrong.

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lunacydetector 3 years, 1 month ago

...of course with a commercial loan, the bank can pretty much take anything back for all sorts of reasons.

don't banks have insurance to cover a portion of the mortgage so if there is a default and they play the paper formality to get it back, up to half is recouped from the insurance company, or am i mistaken?

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alfie 3 years, 1 month ago

NO THANKS don't do Myface

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formerlyanonymous 3 years, 1 month ago

I don't think the condo project failed because the housing bubble burst. I think it failed because the asking price for a condo is as much as a nice 4-5 bedroom house in Lawrence. Those with the money to live some place like that are more likely to want their own home and to pay someone else to do the landscaping and other upkeep work.

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Sigmund 3 years, 1 month ago

George_Braziller (anonymous) replies… "That's what I said. On paper I "legally" owned the property and was responsible for the debt, insurance and taxes, but realistically the mortgage company owned it until the debt was paid."

Actually what you said was "How can the bank "buy" something they already technically own." I mistakenly understood "technically" to mean "legally" or "in reality." The only way the registered owner doesn't technically own a property is if the bank doesn't "technically" hold a mortgage. I also mistakenly thought you wanted an answer to the question. My mistake.

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Sigmund 3 years, 1 month ago

lunacydetector (anonymous) replies… "...of course with a commercial loan, the bank can pretty much take anything back for all sorts of reasons."

Line of credit loans or secured by inventory maybe, but on a loan secured by reality, not without a default or other extraordinary circumstance like the owner is stripping out assets (fixtures, marble, wire) that impairs the banks collateral.

lunacydetector (anonymous) replies… "don't banks have insurance to cover a portion of the mortgage so if there is a default and they play the paper formality to get it back, up to half is recouped from the insurance company, or am i mistaken?"

There is no Fannie or Freddie like insurance for commercial properties that I know of. Commercial lenders generally hold their loans in their portfolio and service the loan personally. Of course if the bank makes too many bad loans and their reserves don't meet minimum standards, the FDIC can seize the bank, sell it to another bank, and guarantees up to $250,000 per depositor, per insured bank.

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