You might remember a story I wrote this fall about some of the issues at the Nantucket project in Leucadia. Eight brand new $2 million homes were the project’s first phase, and they are next door to three papered-up, half-finished houses and some empty foundation slabs.
The project was halted midway through when Bank of America cut off construction funding to Carlsbad-based Barratt American because of the slumping housing market. The project is now in receivership and a court-appointed firm is working to liquidate those projects to make up for the lapsed payments.
I checked in this afternoon with the sales agent on one of the houses in that development — it’s listed as a short sale for $1.2 million even though its owners have a mortgage for $1.5 million. There have been several issues associated with that listing, but the agent, John Kline, said one big one seems to be close to going away.
The owners stopped making payments, Kline said, but the notice of default has yet to be filed on the property, signaling the beginning of foreclosure. Their situation:
A group of investors, including a Barratt employee who has since been laid off, paid about $1.9 million in December 2006 for the house, which has an outdoor built-in barbeque and an in-ground hot tub. The investors leased the house back to Barratt American to use as the company’s model home, and the developer converted the garage to use as an office and a showroom.
Kline said he’s expecting within a couple of weeks that the city will allow the owners to apply for a certificate of occupancy, which would allow people to live in the house instead of using it for an office.
Up until now, Encinitas city officials have withheld that certificate until the developers make good on a promise to build two affordable units. Those units have not been built.
Without that certificate of occupancy, the owners of this house have had an extremely hard time selling it. The owners of the short sale are hoping the city will apply the hold instead to an unsold new house on the cul-de-sac.
That’s been the hang-up in selling the short sale, Kline said.
But now: “Things are happening,” he said. “It’s logical, so hopefully logic rules.”
Another issue for the buyers — even if the city does waive the hold on selling the house — will be converting the garage back to a garage before the certificate of occupancy can be issued, Kline said.
I put in a call to the Planning Department in Encinitas but didn’t hear back this afternoon.
We’ll keep you posted on the status of this sale.