With the sudden $2.1 million price cut for the infamous seven-bedroom home at 224 Sea Cliff Avenue, which was foreclosed upon by a junior lender last year, having failed to move the property, the home is now in the hands of a bankruptcy trustee, the agent for whom is now soliciting offers for the home, “no later than October 30.”

Keep in mind that a bankruptcy trustee can’t simply accept an offer for a property that won’t make any lien holders whole, at least not without an agreed upon settlement, which could be a relatively high bar to clear, and an “accepted” offer could potentially be overbid as well.

We’ll keep you posted and plugged-in.

Comments from Plugged-In Readers

  1. Posted by soccermom

    Who or what entity is going through bankruptcy and has an appointed trustee?

    If title is in the name of the junior lender who foreclosed previously, then is it that the junior lender is going through bankruptcy?

    If it’s the original bad actor owner who (or whose company) is going through bankruptcy, didn’t he/it lose the right to sell the house after the first complete foreclosure auction?

    I know the dirty Range Rover and the peeling basketball hoop are gone from the front yard, so the original guy and his family are out. The place is empty. So who is going bankrupt?

    • Posted by Notcom

      I know the dirty Range Rover and the peeling basketball hoop are gone from the front yard, so the original guy and his family are out

      Maybe they’re just taking Muni: there’s still service…isn’t there?

      • Posted by soccermom

        The house is not occupied AFAIK.

        • Posted by Fishchum

          It is not. I toured it a few weeks ago and it’s barely habitable. It needs a complete gut job remodel.

  2. Posted by BobN

    “no later than October 30″

    Whose interests are served with a short deadline like that?

    • Posted by Justin

      I bought my place in July, and listings were moving at a pretty fast pace like that. One weekend of viewings, and then offers on a Tuesday or something. (Mind you, I can afford a fungible one-bedroom condo, not an icon, so I agree with you that this seems like a weird listing strategy.)

    • Posted by soccermom

      I think some source has slipped bad info to our editor.

      • Posted by SocketSite

        Nope, we’re good.

        • Posted by soccermom

          So what entity or person is in bankruptcy? The junior lender who foreclosed? This doesn’t make sense.

  3. Posted by Jimmy the Kid

    A note holder can assign the note to an LLC and BK the LLC. I don’t know if that is what happened. But it could be a strategy to get the property sold. Once a bid is accepted there can be overbids or competing offers. The BK gets it into federal court with lots of authority to act on behalf of the creditor.

    • Posted by soccermom

      Why would you put your LLC through BK?

      Why not just lower the price? This doesn’t make sense…

      • Posted by Jimmy the Kid

        A jr lender can prevent a sr note from foreclosing by filling a Bk. And has a chance to recover something.

        • Posted by soccermom

          Delaying a senior lender’s foreclosure would make sense if that is what is happening. But of course, wholly bad faith. These people all deserve one another.

  4. Posted by DAA

    Given the debt and it’s current condition, is there any possible upside for this property or is it negative equity no matter how you do the math?

    • Posted by soccermom

      One would need to carefully go through all of the liens attached to the property but IIRC there was something like $40mm secured against the property. The original borrower was, I believe, cross-collateralizing other commercial loans with this (his then primary) residence (before jail). It’s probably a good case study in seniority of title, but as for now it’s a dogfight between the various junior lenders.

      I believe way, way, way, more than $15mm remains outstanding, ($20mm alone from 2004 loans) so the current owners who have declared bankruptcy are just wasting everyone’s time.

  5. Posted by Nubile

    FYI, the CCSF publically red tagged 224 Sea Cliff last week for the failing rear cliff. The 224 Sea Cliff engineer’s report is filed with the SF Building Dept. by esteemed engineers TUAN & ROBINSON (SF) which affirms the entire rear cliff is sliding/failing and needs extensive bolts and shotcrete to repair…. Three contractors who have done several Sea Cliff homes on the block have already bid $7M to $15 to repair ONLY the failing cliff hazard at 224 Sea Cliff!!!!!!!

    Also, no title company will insure Sea Cliff because the former title holder (Brugnara) has ongoing litigation in CA Superior Ct. claiming he still is legal owner!!!! And he has won all of the hearings in court thius far!!! The red tag, engineer’s report, contractors bids, litigation are all public record and available for public viewing. The broker Levinson, has hid these reports, bids and litigation from the public… the house is worth only a few million dollars when you deduct the required capital costs of the cliff repairs pursuant to the CCSF red tag.

    • Posted by SFRealist

      And whatever it’s worth, it’s worth less and less every year as it sinks deeper into the litigation/financial quicksand. Who is paying the property taxes?

      • Posted by Nubile

        Your missing the point SFRealist: THE CAPITAL REPAIR COSTS TO FIX THE RED TAGGED CLIFF ARE $7M TO $15M !!! This is NOT renovation costs of the house.

        • Posted by SFRealist

          I was making a separate point, but you seem much more excited about this than I am. Have a good day.

  6. Posted by SocketSite

    UPDATE: Heads Up.

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