Thanks to a “plugged in” tipster (and homeowner at the Beacon), we have the scoop on some big Beacon news: the class action lawsuit against The Beacon has been dismissed by Catalano without prejudice. (No word on the status of similar suits filed against The Metropolitan or Watermark.) Also from our tipster:
One other good piece of news that we homeowners received was that the ground lease was terminated 3 years early and in January everyone received a deeded interest in their unit (rather than the leasehold interest that we were sold). In my book, that makes my unit more valuable than when I bought it!
Overall, I’m really happy with my unit. Its a great location and a great place to live. I’m sure I’d get flamed for saying that by the “condoistas” on your site, but the truth is I’m happy and I didn’t pay $1,000+ psf so I never expected it to be the St Regis.
This should brighten the weekend for the sales office (20 units left the last time we checked) and any owners who are currently trying to sell (~15 resales currently listed) as it removes the stigma of pending litigation and increases the pool of potential lenders.
Celebratory party in the clubhouse/pool? You know where to send our invitation.
∙ A Big Bad Lawsuit At The Beacon [SocketSite]
∙ A Class Action Suit At The Metropolitan? [SocketSite]
∙ Now Serving: The Watermark [SocketSite]
∙ A Sales Office Shakeup At The Beacon? [SocketSite]
Congratulations on now owning land you leased. However, the lease was expiring and ownership would have automatically reverted to you anyway, so I’m pretty sure that the increase in property values would be minimal, and in three years, there won’t be any effect at all.
There IS however, an effect that is tangible. Unless you were already on the hook to pay them, you’ll be paying property taxes for the next three years that would have otherwise been paid by the leaseholder! Ouch!
[Editor’s Note: Not quite. See comments below.]
“class action lawsuit against The Beacon has been dismissed without prejudice.”
I’m not a lawyer or anything close to that so what does this mean? Did they settle or the judge threw out the case or ??
[Editor’s Note: Catalano dismissed the lawsuit without prejudice, not the judge. No settlement.]
Here’s what Wikipedia has to say about lawsuits being dismissed without prejudice:
http://en.wikipedia.org/wiki/With_prejudice
The lawyers and plaintiffs got NOTHING. They dismissed the case themselves.
First poster about the ground lease:
Not true. It was a 99 year ground lease with a 5 year option to purchase, so the lease still had 98 years to run. All of the money was escrowed up front. The purchase was accelerated by 3 years and homeowners didn’t come out of pocket at all. As far as I know there is no tax effect either as this was pre-wired in the beginning so it’s tax-neutral.
People can say it doesn’t matter from a value standpoint, but all I know is that I bought a groundleased property (at an appropriate discount in my estimation) and now I own fee title. We can debate if that’s worth something, but I’m certain that my investment isn’t worth LESS!
I heard that one of the main events in this saga was that Catalano needed a certain percentage of the homeowners to sign on to make it a class action lawsuit. He didn’t get enough people to sign up for the lawsuit in the Beacon so it was not granted “class action” status by the judge. I guess the economics of such a lawsuit work if it is a class action case but aren’t worth the trouble if you are representing only a few homeowners. I’d expect a similar outcome at the other two properties, but it aint over till its over with these things.
Regarding the following comment: “the lease was expiring and ownership would have automatically reverted to you anyway” in the first posting, this is not correct.
It was a ground lease between Catellus (leaseholder) and Beacon (lessee). Upon expiration of the lease, the land would have reverted back to Catellus. The purchase of the land was an option. This option was exercised ahead of schedule. As far as the tax issue is concerned, the condo owners have been paying full value, so there is no tax consequence in this accelerated purchase.
When this project was first on the market, I believe there was a certain percentage of discounting in the minds of the buyers because of this ground lease and the associated obstacle in financing. Now that there is land ownership and the financing is much easier, there is an added value to the units.
I can honestly say that it has been very pleasant living at the Beacon, and owning the land is an additional bonus. My unit faces north and it stays cool year round and it’s extremely quiet. Besides, I think this has got to be the most convenient location in the city, with easy access to highways and public transportation.
I receive my property tax bill. Does it mean I was not suppose to pay it because it was a leasehold. The original “owner” (i.e. Catellus) suppose to pay it?
You are supposed to pay it. The change in leasehold to land ownership made no difference.
So will prices/sales in the Beacon increase now that the cloud of litigation has been lifted? I’ve seen it happen with other developments. If not, were sellers failing to discount for the litigation in the first place?
If I were selling, I’d certainly increase prices! I think that most people discounted the lawsuit anyway because that Lawyer was so shady, so maybe they didn’t need to drop pricing.
I was at the sales office yesterday (Sunday) to check things out. They said they sold six units that week – and only have 13 left, mostly one bedroom units. The office was very busy too. The sales agent said that when they first started selling units with the ground lease, it confused people and as a result limited the pool of buyers somewhat. He said that now with theBeacon being “normal” fee title, it should increase the overall desirability and, thereby, value… I guess time will tell. I looked at a couple of the one bedroom units with views of the bay… they’re bigger than I thought they’d be, and really nice views. All in all a great project.