While the infamous seven-bedroom home at 224 Sea Cliff Avenue, which was on the market for $19.675 million back 2016, appeared to have sold for $71,000 in a foreclosure auction last year, the “winning” bidder didn’t realize that the foreclosing party was a junior lender and the property would have come with around $17 million in senior debt and liens still attached to its deed.

The trustee sale was subsequently voided, which is a rarity, and the deed to 224 Sea Cliff ended up being taken back by the junior lender last August when a “do over” auction failed to generate another “winning” bid, a transfer that might appear as a “$50,000 sale” elsewhere.

Quickly “cleaned up” as pictured above, 224 Sea Cliff returned to the market listed as a “beautiful blank canvas ready for renovation,” with “HUGE potential,” for $17.5 million this past September but hasn’t sold.

And with a new notice of default having been filed by one the senior lien holders a few months ago, 224 Sea Cliff Avenue, which includes a private walkway down to a secluded beach cove below, is now slated to be foreclosed upon again next month.

We’ll keep you posted and plugged-in.

UPDATE (6/7): The foreclosure auction for 224 Sea Cliff Avenue was cancelled the day after we highlighted it, as noted below, but the notice of default remains. We’ll keep you posted and plugged-in.

Comments from Plugged-In Readers

  1. Posted by NFSF

    The little cove is very cool. Hope someone goes something nice with it after it’s completely redone.

    • Posted by Tor

      The least they could do is repaint the stairway to blend in a little better.

  2. Posted by Sierrajeff

    Odd that the junior would foreclose without paying off the senior – they’ve essentially wasted their legal fees and transaction costs (and, apparently, some clean up / reno costs too).

  3. Posted by soccermom

    I believe the foreclosing loan is now on a balance sheet that leads up to Wells Fargo.

    They should have the resources to ensure they understand the chain of title, and now that the previous occupants have been booted out by the foreclosing junior loan, there is no “evicting people during the pandemic” media coverage to worry about.

    The WF loan dates from 2007, chain of title is a mess, but this foreclosure would apparently wipe out multiple junior lenders, including an individual’s self-directed 401K plan, and several private note. Swim with the sharks…

    We might finally get a market-clearing transaction out of it, but more likely it will be delayed again and postponed again.

  4. Posted by Dixon Hill

    The LB bots, evident in comments to the 2012 item, are notably absent today.

    • Posted by Notcom

      I believe that was during a brief period of non-confinement.

  5. Posted by Jeffrey W. Baker

    Interesting that this train wreck is in foreclosure but current on property taxes (122k/yr, yikes) while I can think of other trophy properties in SF that are not in foreclosure but are half a million or more in arrears to the Treasurer.

    • Posted by soccermom

      This is because the Assessor’s Office is the queen mother of foreclosures.

      When a county takes a property through a tax auction the action wipes out all recorded interests in the parcel.

      Even if you are a lender and your loan is not being paid, you want to keep taxes current so that your interest in the property is not wiped out by a tax auction. A lender could add these tax payments on the amount owed by the borrower.

      • Posted by Brahma (incensed renter)

        And in addition, lenders who pay to keep the tax auction at bay can add in interest, penalties and fat, fat fees to the amount in arrears for doing so. That can add up and in many cases can swamp the original amount owed on the actual loan.

        • Posted by soccermom

          Correct. Like most professions, lenders don’t work for free.

      • Posted by Neighborhood Activist

        All correct… but if I’m not mistaken, the SF Assessor’s Office (or Treasurer) doesn’t actually start down the foreclosure path until a property is 5 years in arrears. Or that was their policy a few years ago, I’m not aware that it has changed. (There was a commercial property owner in my neighborhood who was whining for additional entitlements on his property, all the while he was four years delinquent on property taxes. That just seemed wrong to me, but that’s a whole different topic.)

        But I can understand why a lender holding an eight-figure note might prefer to pay the taxes rather than take any risk, however small, that a more prompt foreclosure process might occur.

  6. Posted by DAA

    Has this property been occupied or should future bidders also expect a Pandora’s box of deferred maintenance?

    • Posted by Neighborhood Activist

      I assume that “blank canvas ready for renovation” means Pandora’s box is already open.

      • Posted by The Milkshake of Despair

        Yeah, buyer will likely do a big overhaul. Isn’t it a rule for properties in this league that they must be remodeled at least once every decade?

      • Posted by DAA

        Touché

      • Posted by SFRealist

        At this point, I wonder how much the total tax payments (which the lender will want to be paid back for) plus the required deferred maintenance costs are. Neither number goes down the longer this stretches on.

        • Posted by Brahma (incensed renter)

          Right. It’s highly likely that both numbers are well into the range where potential buyers will decide that this home is not worth the investment (paying off the senior lender, etc.), so this home will not change hands unless and until the senior lender forecloses and all the junior debt gets wiped out.

          The junior lender should have already written off this loan as a total loss a few years ago now.

    • Posted by PropertyJane

      The family has been living in Tahoe

  7. Posted by VC

    Come on, with an address number like that it is easy to see why one must avoid at all costs. 24 = easy death in Chinese. Rookies….

  8. Posted by InclineJJ

    Sale Status: Cancelled on 06/02/2021
    TS Number: 00000007190119
    ASAP Number: 4731840

  9. Posted by InclineJJ

    His County Property Taxes:

    Property Taxes
    Assessed Value $$8,910,286
    Land Value $$6,237,204
    Improvements $$2,673,082
    Annual Taxes $$111,573

  10. Posted by SocketSite

    UPDATE: The foreclosure auction for 224 Sea Cliff Avenue was cancelled the day after we highlighted it, as noted by a plugged-in reader above, but the notice of default remains. We’ll keep you posted (and plugged-in).

  11. Posted by InclineJJ

    That could mean there was a technicality on sending him papers, having him sign them. Posting the property or a simple typo on the sale notice. I am thinking it will be reposted and republished.

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