Another Newly Built South Florida Condo Quagmire Rears Its Head In WPB

In West Palm Beach, Florida, The Daily Business Review reports:

• The Whitney, a newly built condo development in downtown West Palm Beach, has joined the growing number of developments hit with foreclosure lawsuits. California-based lender iStar FM Loans is seeking to foreclose on about 146 unsold units, or about two-thirds of the 210-unit building, which was completed in mid-2007.

Highlights from the story:

1. The foreclosure revolves around $37 million which is allegedly due, but has not been paid,
2. The principals behind Evernia Properties, the project developer, are first-time developers (Editor's Note: ???) Enrique Dillon, Ricardo Djmal and Ricardo Weinstein,
3. The principals are also investors in another project under foreclosure, the Villa Mare & Yacht Club Residences in Boca Raton, a 160-unit conversion project that defaulted on a $50 million loan from Ocean Bank,
4. Dillon, a native of Argentina who was a computer exporter and principal of several technology-related businesses before becoming involved with real estate developments (Editor's Note: ???), is chief executive officer of Evernia Properties,
5. The current mortgage holder acquired its interest by assignment from from California-based Fremont Investment & Loan, the original project lender, only two days before its July 1, 2007 payment-in-full due date,
6. Subcontractors have been stiffed out of payment for their services and some have filed mechanics' liens on the project,
7. Most of the unsold units, according to the sales & marketing agent, are in contract,
8. Reportedly, those contract purchasers who want to close on their purchases and move in can't because of "lien issues" - since Nov. 14, no units have closed at the Whitney, according to Palm Beach County public records,
9. There are other contract purchasers who have apparently changed their mind about buying units in The Whitney; thirty-seven lawsuits from buyers seeking to back out of their contracts have been filed,
10. Contract purchasers put down deposits of 20% of the purchase price - only half of which was required to be held in escrow; if the property is foreclosed, contract holders may find themselves out of luck with respect to the 10% that the developer pocketed.

For more, see Condo Meltdown: Lender seeks foreclosure on WPB’s new Whitney project (if link expires, see if this link works).

For story update, see (4-14-08) The Palm Beach Post: Deal in works to save condo facing liens.