While slated to be foreclosed upon, again, in July, the courthouse auction for the infamous seven-bedroom home at 224 Sea Cliff Avenue was canceled the day after we highlighted it and the notice of default on the property, which was issued by a senior lender in February, has now been rescinded as well.
And having been on the market for $19.675 million back 2016, foreclosed upon by a junior lender last August and then returned to the market, having been quickly “cleaned up” and listed as a “beautiful blank canvas ready for renovation” with “HUGE potential” for $17.5 million this past September, 224 Sea Cliff Avenue has just been listed anew by a Southern California broker for $15.375 million, positioned as “an opportunity to create a JEVEL property worthy of go into Architectural Digest could it be 25 or 30 Million when done absolutely,” all verbatim, and touting: “Formerly had celebrity-resident.”
Despite being cleaned up and reduced, the blank canvas has yet to sell.
And the Sea Cliff mansion, which comes with a private walkway down to the secluded beach cove below, is now slated to be foreclosed upon again next week with a published opening bid of only $4.8 million!
But as noted by a plugged-in tipster, it’s another junior lender that’s leading the charge this time around and there appear to be seven (7) senior debt obligations and/or liens that the “winning” bidder would assume, debts which had been estimated to total over $15 million, not including the $1.2 million that was lent by the party that’s now attempting to foreclose, last year.
We’ll keep you posted and plugged-in.
I am a tennis pro, not a finance pro. Can someone spell out a possible scenario for how this financial mess came to be? An athlete that had a ton of cash, got a mortgage, blew her/his cash, and defaulted? But how could seven loans occur?
As linked above, you might want to start here: An Infamous Sea Cliff Hideout Is Listed for $19.675 Million.
Apologies, I followed the link trail to the art dealer fraud story. What a fall from grace.
Fall from…”grace”????
I think you got lost somewhere on that trail, ‘cuz
Honey, that weren’t no saint there !!
It’s possible to use one property as a security for a second property such that if debt is not repaid on the second property, the lender can take possession of the first property.
I believe the defaulted former owner was a speculator who used this home as security for other loans on which he defaulted. This wasn’t a ‘normal’ mortgage situation.
So let me see if I’ve got this straight. The buyer has to pay off $16.2 million in debt obligations. Is the bid on the property separate from that? I imagine it would take at least an additional $5 million to bring the house into shape. The stairway to the beach is a disaster and if it reflects the condition of the rest of the house I can’t begin to imagine the renovation costs. Decorating would also be a seven figure proposition. I could see it ultimately selling for $25 million if a total renovation is done but would that make it worthwhile?
Close. The proceeds from the foreclosure auction would satisfy the $1.2 million obligation while the seven senior notes/liens would remain.
Which implies that the only rational bid for this auction is a well into the millions less than the $4.8 million reserve. The foreclosing note holder has to have done this calculation.
So I can only assume they are proceeding under the assumption that in a city filled to the brim with fly-by-night speculators, flippers and other assorted other hangers-on in the real estate “game”, someone is going to make a rookie mistake and bid on this property thinking that they are making a “deep value” play and not realize that they are still on the hook for satisfying the outstanding debt. Like the “winning” bidder who acquired it for $71,000 in the foreclosure auction in 2020.
More likely they’re proceeding in order to displace the lender that previously foreclosed on the property, take possession and then try to flip it themselves.
Yikes. So $5M down incurs another $15M in debt on a God-knows-how-much-work-it-needs fixer-upper? $20M is what 190 Seacliff comps at, *before* repairs, which is a better property by just about any metric.
These lenders need to work something out with each other and cut their losses or they’re going to be paying property tax on this behemoth until it falls in the water.
When this is all over, I hope some writes a long article about all the twists and turns and mistakes people made. But it ain’t over yet.
The house is also sitting on the edge of the cliff. Over time this will decay an give way where the ocean will gobble it up an the ocean wil spead it acoss the sea. Say good bye to your money
The financial mess of this property aside, I wonder what the cost is for maintaining and shoring up that private walkway to the cove.
Unless someone is doing maintenance on it every single year, the whole thing will have to be replaced.
[The auction has been] Cancelled.
UPDATE: Infamous Sea Cliff Mansion Now in the Hands of a New Trustee