Posted May 16, 2008, 5:50 PM
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Join Date: May 2006
Posts: 5,095
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So much for the "85% sold" that we've heard about in the past...
Quote:
The Summit at Copper Square LLC named in $3.1M lien filed by The Weitz Co.
Phoenix Business Journal - by Jan Buchholz Phoenix Business Journal
A $3.1 million lien -- the second-largest in Maricopa County this year -- has been filed against the limited liability company that developed The Summit at Copper Square condominiums in downtown Phoenix.
In its claim, The Weitz Co. names The Summit at Copper Square LLC and buyers of 86 of the new high-rise units at 310 S. Fourth St., just west of Chase Field.
Weitz, the general contractor on the 23-story luxury condo project, began construction in December 2005. The first of the 165 units were delivered to buyers in November 2007.
Weitz filed the lien within a 120-day window after completing construction, as prescribed by state law, and after sending the developer a required 20-day notice of its intent to file.
The lien was filed May 9 at the Maricopa County Recorder's Office. Only one larger mechanic's lien -- $5.6 million -- was filed this year. Wespac Construction Inc. filed it against Phoenix Plaza PT LLC, according to Mesa-based research company Ion Data Express.
Weitz said the $3.1 million is for labor, material, fixtures and tools for which it has not been reimbursed. The company seeks interest on the current balance, accrued interest until the balance is paid, and attorney fees.
In a statement issued by Mike Bontrager, president of the Southwest business unit of The Weitz Co., the matter "is part of normal business process and should not be interpreted as anything else." He said the company has a good relationship with developer David Wallach, and he is confident the issue will be resolved to everyone's satisfaction.
Wallach agreed, saying the lien filing is "not unusual." He referred to it as a "procedural matter." Weitz, he said, already has been paid $55 million and will get what it's owed.
"I don't think Weitz is worried about getting paid $3.1 million," Wallach said.
He said final payment to the contractor "is taking a little longer than expected," but sales have been steady since November and as more units are sold, the company will pay Weitz what is owed.
That may be small consolation to the condo buyers. At least one buyer who did not want to be identified said he received notification of the lien May 13 via e-mail from The Summit at Copper Square.
"The people who are named unexpectedly in liens are some of the most frustrated people in construction," said Joel Sannes, a construction attorney at Lake & Cobb PLC. "It's frightening."
Sannes said he has never seen anyone lose their home because of a mechanic's lien, but receiving a notice is often unnerving. "When you look at it, it looks like you could lose your home," he said, but generally the primary parties involved will find a way to resolve the problem.
Some of the condo owners at The Summit could face roadblocks if they want to sell or refinance their units.
Such blanket liens, which name anyone with an interest in the property, "can make life difficult," said Dan Boughton, title manager at Camelback Title Agency.
To protect themselves, Boughton encouraged owners at The Summit to notify the title company where they closed on their property that the mechanic's lien has been filed. The title company can determine whether the lien affects their ability to convey or refinance the property.
Jim Balsbaugh, senior vice president of Stewart Title & Trust of Phoenix, said title insurance policies differ, so the implications may be more severe for some.
"Some buyers may have exposure," he said. "It depends on the title insurance that the buyers obtained."
It's possible that some pending sales, which Wallach said would help pay off the lien, could be delayed or canceled as a result of the lien.
Sales for The Summit are soft, with only 86 of the 165 unit sold. The Phoenix Business Journal reported last year that condos were selling at the property for $440,000 to $1.35 million.
"It could put a chill on (sales) and stop them completely," Sannes said.
Sannes said he expects to see more cases being resolved through lien foreclosures and bankruptcies as a result of the tight credit market.
Wallach stands by The Summit as one of the most solid Phoenix has to offer. He said payments on the construction loan to First National Bank of Arizona are in order.
"I don't know anyone who has taken $35 million off their construction loan since November," Wallach said. "It probably makes us one of the healthiest (developments) in the Valley."
The Summit at Copper Square is Wallach's first development in Phoenix. Through his firm, W Development LLC, Wallach also is developing the 32-story Omega condos at Second Avenue and Adams Street in downtown Phoenix.
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