Remember the olden days (a few years ago) when folks one-upped you with rehab horror stories? Those were kinder, gentler horrors than today’s “distressed property” market – and you can take that to the bank.
The Roos sale is turning out to be a doozy. To recap, the park district is the buyer, the Troyanovsky (The Russian) LLC is the owner and seller, and Harris Bank is the lender presently holding the mortgage note. Presumably, the LLC’s loan is significantly greater than the present value of the Roos, so the owner and lender are negotiating who will take the loss at sale, and in what manner. Ouch.
This is the interminable, nightmarish aspect of distressed property sales that you hear about. Harris could decide to foreclose, or take a deed in lieu of foreclosure, or negotiate a short sale, all while the buyer hangs around rather helplessly. Normal folks become sputtering bundles of rage and create new swear words during this unpredictable process.
The latest wrinkle in the Roos sale is that an LLC partner has declared personal bankruptcy. Legally, I’m told, the bankruptcy must be finalized before the short sale can proceed.
I know. I, too, thought the point of an LLC was to un-personalize a deal by forming a corporation but, times being what they are, this LLC loan has personal “guarantees” (liens) attached to it.
The good news is that all parties still have compatible goals. The very good news is that if the buyer is smart and patient and, most importantly, uses attorneys who specialize in these things, it can get a seriously wonderful bargain. It appears the park district is doing all these things.
The specifics of this update come from Park Director Larry Piekarz (bless him) and the park district’s attorney, Charlene Holtz, with Tressler LLP. Both were impressively forthright and knowledgeable. Mike Polachek, a specialist with Tressler, is taking the lead on our park district’s behalf.
As a realtor, not a lawyer, I can only say that the Roos scenario makes sense as I’ve heard it all before in various distressed deals and classes. Perhaps this deal is more difficult because of the greater losses, but maybe not. A colleague just reported closing a residential short sale after three years, and a recent estimate put Chicagoland distressed properties at 50 percent of total stock. Whatever it is we’re in, it’s the new normal.
Once Harris and The Russian LLC reach an agreement, then the park district and the bank can renegotiate its sales agreement. This will account for changes in property condition and the real estate market, final structural-engineering reports (two have been done), and land contamination and remediation (minor ink and solvent detection).
I’m sure the above was riveting but you might be wondering: where the heck is our referendum money?!? That’s the easy part – it’s sitting in an account at Forest Park National Bank gathering interest at 1 percent. The levy from our referendum brings in about $500,000 a year and the account now holds about $650,000. Roos architects and attorneys are paid from this account.
Piekarz restated the Board’s commitment to use referendum monies solely for the Roos plans. The park district’s board is planning a residents’ forum in the near future, so bring your questions and concerns.
Also, if you’re a serious big shot at Harris Bank, do what you can to push this sale along and call Larry Piekarz with the happy news.
Cheers.
